Survey: Auto Industry Foresees EV and AV Litigation Ahead in 2023

Litigation related to electric and autonomous vehicle technology is a top concern for key automotive decision makers in 2023. // Stock Photo
Litigation related to electric and autonomous vehicle technology is a top concern for key automotive decision makers in 2023. // Stock Photo

Buoyed by consumer demand and legislative support, respondents to the 2023 Automotive Trends survey from Dykema, a national law firm with practices across Michigan, enter the year in a period of cautious innovation.

The report compiled insights from key decision makers to understand what trends will have the greatest impact on the automotive industry in the following year and beyond.

The top responses from the survey reveal an industry-wide focus on legal benefits and risks tied to new electric and autonomous vehicle technologies. Perhaps unsurprisingly, the primary risk concerns for the industry in 2023 include lawsuits tethered to electric and autonomous vehicle technologies.

As shortages in raw materials, parts, and labor linger, almost 46 percent of respondents believe that supply chain litigation between customers and suppliers will be a key issue this year. Patent litigation also is on the rise in the automotive industry.

With vehicles becoming what are essentially computers on wheels—complete with cutting-edge technologies — more than 32 percent of respondents agree that possible patent infringement litigation is an increasing risk. As these new technologies take hold, respondents envision that there might be a ramp up of recalls and warranty cost-recovery litigation and class action litigation.

The report also indicates potential roadblocks ahead for the industry, such as broader antitrust oversight, dynamic changes in rules for noncompete agreements and overtime compensation, and pressure to navigate environmental, social, and governance (ESG) initiatives.

Supply chain woes also remain top-of-mind for respondents. The lingering effects of the COVID-19 pandemic’s supply chain disruptions (amplified by global unrest and inflationary pressures) continue to ripple across the industry. Findings also indicate that a continued shortage of skilled workers should remain in 2023.

Respondents see this as a multifaceted issue that they expect will live on through shortages of both raw materials, 81 percent, and labor, 63 percent. In 2022, there was a marked increase in supply chain litigation, which had dwindled substantially following the pandemic.

Increased costs — of labor, transportation, and raw materials — were viewed by 79 percent of respondents as having an outsized impact on the supply chain in 2023. We expect to see the industry employ more creative contracting concepts this year to address these rising costs, from volume- and index-based pricing to pricing escalation clauses, cost-sharing terms, and other provisions that offer more flexibility, with such flexibility sometimes tied to cost transparency.

When asked about the top labor and employment concerns facing the industry, 77 percent of respondent’s cited employee demands to continue working from home — more than double any other response.

Dykema’s survey polled a select group of executives from organizations that included original equipment manufacturers, suppliers, industry publications, advocacy groups, and outside financial, accounting, and legal support across the automotive industry.

The full report is available to view here.