Contents

DISASTER

• Japan quake halts multiple automakers

• Suppliers recover faster after earthquake

• Quake losses approach 20k vehicles

EXPANDING

• T+H expands Jalisco tube production

HUMAN CAPITAL

• Mexico auto parts jobs down 91k

• Schaeffler offers retirement to 1.3k

LITIGATION

• Tesla gains court access to tooling

MERGERS, VENTURES, ACQUISITIONS

• GM extends SAIC venture through 2046

• Chery invests in $75M KG Mobility

OPENING

• Minth breaks ground in Alabama

• Baolong launches North Carolina production

PRODUCTION DECREASE

• Lucid pushes Cosmos launch into 2027

PRODUCTION INCREASE

• Leapmotor begins Indonesian local assembly

• BYD July sales keep growing

• Chery exports exceed 200k monthly

• Volvo adds XC60 South Carolina production

REGULATION

• New US tariffs widen parts exposure

• USMCA uncertainty weighs on Mexico

SHUTDOWN

• Danube drought & energy curbs affect Dacia, Ford

SUPPLY CHAIN

• Headlight shortage costs Li 4k in production

• GAC Honda localizes Chinese sourcing

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Disaster

Toyota, Nissan, Mitsubishi and Daihatsu suspended output July 31 after a 7.1-magnitude earthquake hit southwestern Japan on July 28, killing at least 35 people and disrupting suppliers including Aisin and Renesas. Toyota extended shutdowns at three Kyushu sites through at least the second shift of August 5, covering the Miyata assembly plant for Lexus, the Kanda engine plant and the Kokura hybrid powertrain plant. Miyata has an annual capacity of 430k vehicles and exports about 90% of output. Toyota also idled its Tahara plant in central Japan for the week of Aug 3-7, a site roughly 370 miles from the quake zone with no damage reported, which points to parts supply rather than facility damage as the binding constraint. Between the two, US import exposure runs across the Lexus GX, NX, RX and IS, the 4Runner and the Land Cruiser. Nissan extended suspensions at both Kyushu assembly plants through August 5 on parts delays, and Mitsubishi cut output at its Mizushima minivehicle plant from the night of July 30.

The supplier layer is where the resilience question actually sits. Aisin, whose plant near the epicenter makes doors, engines and other parts, appears to have fared better than in 2016, when damage to that same site caused a door component shortage that halted Toyota assembly nationwide. CFO Daisuke Kondo said seismic measures added since 2016 held damage to some water pipes despite stronger shaking this time, though he gave no restart timeline. Renesas will restart its Kawashiri wafer fabrication plant in phases from August 5 and expects pre-quake levels within three weeks, after fallen ceiling panels, cracked walls and water leaks. Its Nishiki assembly and test site, which handles a large share of automotive microcontrollers, has already resumed. Kumamoto also hosts TSMC, Sony and Tokyo Electron, all working through inspections and phased restarts. Renesas took months to recover after the 2011 quake and stalled vehicle production worldwide, so a three-week path back would mark a genuine change in outcome. The compounding risk is timing, since a global memory shortage driven by AI data center demand leaves very little slack elsewhere in the semiconductor base.

By August 3, the industry tally had widened toward 20k lost vehicles. Honda, which had halted only a Kumamoto motorcycle plant, will suspend its Yorii plant north of Tokyo Aug 5-7 and its Suzuka minicar plant Aug 6-7, neither of them damaged. Yorii builds the Civic, Prelude, Freed, HR-V, ZR-V and Step WGN. US inventory impact is negligible, since American Honda imported just 5.6k cars from Japan in the first half of 2026, under 1% of its US sales. Nissan put its own loss at around 5k vehicles, Mitsubishi expected Mizushima back to full operation on August 5, and Toyota's Miyata suspension alone runs about 1.7k vehicles a day, or roughly 10k across the outage. Honda idling undamaged plants hundreds of miles from the epicenter is the clearest illustration of how far a Kyushu supplier event travels. In a just-in-time system, the propagation runs both directions, because suppliers also stop when the assembly plants they feed go down.

Expanding

T+H Automotive has completed a roughly $5M expansion of its plant in Tlajomulco, Jalisco, adding a production line for intermediate tubes using technology the group developed globally. The investment is modest, but the timing is worth noting. It lands in Jalisco's automotive cluster at a point when broader supplier investment in Mexico is stalling amid trade-rule uncertainty.

Human Capital

The aggregate labor picture in Mexico is moving the other way. INEGI's monthly manufacturing survey put employment across vehicle, truck, body, trailer and parts manufacturing at 742k workers in April, down 50k from a year earlier and 107k over two years. Parts makers absorbed 91k of that two-year job loss, against 10k at vehicle and truck assembly and 6k at body and trailer makers. Labor economist Willebaldo Gomez estimates auto parts losses reach roughly 180k measured against pre-tariff employment, part of a 240k decline across all Mexican manufacturing. Gomez attributes the contraction to cost flexibility and automation, and says trade uncertainty has weakened union leverage in wage and contract reviews. The concentration in parts rather than assembly is the signal for risk teams. Tier 2 and Tier 3 suppliers are shedding labor capacity that will be slow and expensive to rebuild if volumes return.

Schaeffler will cut its German workforce through an expanded phased-retirement program, with about 1.3k employees, or 1.2% of total staff, expected to take the early pension offer. The measure carries a one-off charge of roughly $59M this year, with savings starting in 2027 and unfolding over four years, CEO Klaus Rosenfeld said.

Litigation

A federal judge granted Tesla a temporary restraining order and writ of replevin on August 4 against Angstrom Automotive Group, giving Tesla immediate right of entry to recover Cybertruck stamping tooling from Angstrom's Troy, Texas facility. Tesla filed the emergency suit in late July after Angstrom said on July 13 that it planned to close the site, which houses Tesla-owned die-cast tools, trim dies, fixtures, cutting tools, gauges and X-ray equipment. Tesla alleges that a shipment of 700 finished parts never left the building, that its representatives were turned away on July 21 despite arriving with law enforcement, and that Angstrom then sought an extra $250k a week to keep operating. Those claims are unadjudicated, Angstrom has not responded publicly, and a fuller hearing is still to come. Cybertruck output at Giga Texas appears to be recovering, with an aerial observer counting roughly 100 or more units in the outbound lot on August 5 (a lot count rather than a production figure, though the timing points to the tooling dispute having been the binding constraint). The case is a reminder that owning tooling on paper is not the same as being able to reach it. Purchasing teams carrying tooling assets at distressed suppliers should know where that property physically sits and what their retrieval rights look like before the supplier decides to close.

Mergers, Ventures, Acquisitions

General Motors extended its 50/50 joint venture with SAIC Motor for another 20 years, through 2046, keeping China as both a development base and an export hub. GM will prioritize Cadillac and Buick in China and discontinue Chevrolet sales in the domestic market, with Chevrolet production continuing through the separate SAIC-GM-Wuling venture for export. Buick and Cadillac models built in China are scheduled to ship to Mexico, South America, the Middle East, Africa and other Asian markets starting later this year with the Buick Electra E7, and GM confirmed it has no plans to export Chinese-built vehicles to the US. The extension follows a restructuring begun in 2024 that carried more than $5B in non-cash charges, plant closures and model cuts after China sales fell to under half the 4M-plus units GM sold there in 2017. Separately, GM is moving Chevrolet Aveo and Groove production from China to Ramos Arizpe from 2027 under a $1B program, after Mexico imposed tariffs of up to 50% in January on vehicles from countries without free trade agreements. The two moves are consistent. China supplies engineering and export volume to markets that will still take it, and North America absorbs what tariffs have priced out.

Chery has agreed to invest $75M in South Korean automaker KG Mobility through convertible bonds, a stake of about 10% if fully converted. The two will explore sharing global production capacity, distribution channels, supply chains and service networks, with top-management task forces covering automotive semiconductors, robotics, raw materials and steel. The deal follows a platform license agreement in October 2024 and a joint development agreement in April 2025. Equity stakes and contract manufacturing let Chinese automakers tap underused local capacity and work around trade barriers, which is the structural reason this pattern keeps repeating across Europe, Southeast Asia and now Korea. For the existing KGM supply base, the practical question is whether Chery's own suppliers follow the platform onto Korean lines.

Opening

Minth Group broke ground on August 3 on a manufacturing campus of more than $430M in Gadsden, Alabama, on the site of a former steel mill, a project expected to create more than 1.3k jobs. Minth supplies exterior trim, body structural components, and aluminum battery enclosures. A $430M brownfield campus at that headcount implies a multi-plant footprint rather than a single line, though Minth has not disclosed product allocation, customers, or a production timeline.

Shanghai Baolong Automotive and partner Luftride have launched North American air suspension manufacturing in Mocksville, North Carolina, a $15.5M investment expected to create about 80 jobs. The 80k ft² facility will build electronically controlled air suspension components, targeting roughly 350k air spring assemblies and 200k air supply units a year once fully operational. Air suspension content has been migrating from luxury flagships into mainstream trucks and crossovers. A North American source for air springs and supply units gives OEMs a tariff-insulated alternative to importing those parts from Baolong’s Chinese plants, which is most of the reason the plant exists.

Production Decrease

Lucid is pushing the launch of its Cosmos crossover into next year after a second-quarter net loss of just over $1B, widened from $539M a year earlier. CEO Silvio Napoli said the delay is meant to avoid the quality problems that hit the Air and Gravity launches and to make sure the Saudi Arabia plant is ready for the ramp. That plant should start production in early 2027 and ramp in the second half, but Napoli said timing depends on suppliers completing their own localization near the site, and that Lucid would import parts if they run late. The company identified $1.4B in cash savings this year, including $500M in capital spending, about $200M in operating expenses, and $600M to $800M from inventory reduction. Second-quarter deliveries rose 19% to 3.9k, and production rose 24% to 4.7k. Building a supplier base around a greenfield plant in a market with no existing automotive ecosystem is the harder half of this timeline, and Lucid has said plainly that it does not control it.

Production Increase

Leapmotor has begun local knock-down assembly in Indonesia through Indomobil Group's PT National Assemblers unit, with the plant running since April and first B10 and C10 deliveries due in August. That gives the Stellantis-backed maker two knock-down bases in Southeast Asia alongside Malaysia. Local assembly avoids Indonesia's high tariffs on fully imported vehicles and improves access to government EV incentives.

BYD sold 419k NEVs at wholesale in July, up 21% year on year and its third straight month of growth. Overseas passenger vehicle and pickup sales hit a record 179k units, up 124.3% and about 43% of the month's total, implying domestic sales of roughly 239k, down about 9%. BYD said second-generation Blade Battery capacity still cannot keep up with demand and that overseas sales are constrained mainly by shipping capacity. Year-to-date sales stand at 2.2M units, down 10%. Two different constraints are binding at once: cell output at home and vessel availability abroad. Neither is a demand problem, which is the more useful read for anyone forecasting BYD's call-offs.

The export skew is sharper still at Chery. The group exported 202k vehicles in July, becoming the first Chinese automaker to pass 200k in a single month and setting a fifth consecutive monthly export record. Total July sales were 276k, up 23%, meaning exports made up 73% of the month, up from 53% a year earlier, and implying domestic deliveries of about 74k, down roughly 30%. Domestic sales for January through July ran around 488k, down about 40%. Chery began operations at the Rosslyn plant in South Africa acquired from Nissan on July 3, retaining all 692 employees and expecting to support nearly 3k supply chain jobs.

Volvo will begin building the XC60 at its Ridgeville, South Carolina, plant in January, adding at least 20k units a year to a site currently producing around 30k. The $1.3B factory opened in 2018 with capacity for about 150k vehicles and has run at an estimated 15% of that since S60 production ended in 2024, building only the low-volume EX90 and Polestar 3. Americas President Luis Rezende said the tooling has arrived, the line is being prepared, and the addition amounts to at least a full shift. US assembly will not fully insulate the XC60 from tariffs, because Volvo will keep sourcing components from Europe. A three-row extended-range hybrid is slated for the plant in late 2028. The XC60 accounted for 37% of Volvo's US brand sales in the first half, so this localizes the volume model rather than adding a new one. For the South Carolina supply base, it is the first meaningful volume the plant has offered in two years.

Regulation

US President Trump imposed new tariffs of 10% to 12.5% on goods from more than 80 countries on July 24 under Section 301, replacing a lapsed global 10% duty and citing allegations that trading partners failed to stop the flow of goods made with forced labor. Vehicles and parts already covered by automotive and metals duties are exempt, as are USMCA-compliant goods. Still, the auto tariff covers only a specific parts list including engines, transmissions, and other major components. Components off that list that do not come from Canada or Mexico, or do not meet USMCA rules, now fall under Section 301, which Boston Consulting Group says captures many nonmetal parts, electronics, interior materials and subassemblies. The administration is separately investigating China, the EU, Japan, South Korea and Mexico for structural manufacturing overcapacity, which could produce duties stacking on top of these. Trump also plans 50% tariffs on a range of Canadian goods from August 19, though vehicles and auto parts are excluded. Exposure falls in the gap between the two exemptions, which makes it a part number question rather than a commodity one.

Mexico is absorbing the same uncertainty on the investment side. Trade rules there face continuous recalibration after the US reportedly declined to extend the USMCA by another 16 years and moved to an annual review process. However, the agreement remains active through 2036. Citi's chief economist for Mexico, Julio Ruiz, said companies weighing plant capacity expansions have little reason to commit without clarity on the rules. Automotive accounts for 4.6% of Mexican GDP and about 23% of national exports, and production from January through April reached 1.3M vehicles, up just 0.9%. Exporters also face tightening USMCA labor scrutiny, with Mexico maintaining 660 federal labor inspectors against an international benchmark of 4,035. Accrediting a supply chain free of child and forced labor is becoming a market access condition rather than a compliance formality. With federal inspection capacity that thin, the burden of proof shifts onto buyers to audit their own Tier 2 and Tier 3 base.

Shutdown

Romania blew up a rock outcrop in the Danube on August 3 to redirect cooling water to the Cernavoda nuclear plant, after drought dropped river levels far enough to force one of its two reactors offline the previous week. Nuclearelectrica normally supplies a fifth of Romanian electricity. Renault-owned Dacia agreed to halt production until August 19 as a voluntary power reduction, part of roughly 200 MW of curtailment cited by Prime Minister Ilie Bolojan. Ford Romania's parallel output pause was a summer shutdown scheduled in advance rather than a curtailment measure. Upstream, Hungary's Paks plant, which normally provides about half of national electricity, was running at just over 10% of its 2 GW capacity after the Danube hit a record low. Low water is now a manufacturing input risk across Central and Eastern Europe, hitting power generation and river freight at the same time. Dacia's Mioveni complex is a high-volume (normally a car every 55 seconds), low-cost source for Renault. Roughly three weeks of downtime is real volume out of the European manufacturing system.

Supply Chain

Li Auto delivered 30.4k vehicles in July, down 0.86% year on year, a sharp narrowing from June’s 14.8% decline. A brief headlight supply disruption cut output of the all-electric Li i6 by about 4k units against plan in the second half of the month, product line head Li Xinyang said, with supply and production since back to normal and the company working with partners to catch up. The i6 is Li Auto’s most important model, at 21.4k deliveries in June, or 69% of the month’s total. The company posted an unexpected net loss of about $339M in the first quarter, with gross margin down to 7.9% from 20.5% a year earlier. A single lighting supplier taking 4k units out of the company’s volume leader is a concentration problem rather than a demand problem, and it is exactly the kind of exposure that gets missed because headlights rarely make anyone’s critical parts list.

GAC Honda will lean on Chinese suppliers and GAC technology to halve costs, lead times and hours in new product development, and is targeting a 20% gain in production efficiency, GAC Vice President Lin Zhibin said August 2. The joint venture is shifting from adapting Honda global models for China to defining products locally, starting with two China-exclusive electrified models over the next two years plus two new hybrids. The announcement came less than two weeks after Honda and GAC agreed to extend their partnership to 2038. Honda's China sales fell to 645k in 2025 from a 2020 peak of 1.63M, and GAC Honda's own sales dropped 53% year on year to 80k across the first seven months of 2026. Halving development cost by localizing the supply base means displacing incumbent Japanese suppliers on those programs. For Honda's traditional partner network, that is the more consequential line in the announcement.

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The first useful thing to know about the Kumamoto earthquake was not which plants went down.

It was that every train on Kyushu had stopped, including the Shinkansen; a cargo train had derailed at Yatsushiro; the airport runway was closed; the Kyushu Expressway was damaged; and 45k households had no power.

None of that names a supplier. All of it tells you production is at risk. We posted it as a Manufacturing Operational Impact Alert while the situation was still moving, days before the plant-by-plant picture resolved.

We publish these on our LinkedIn page as events surface. Follow along if you want them when they matter. Then read on.

Best,

Nick Gaydos
Editor

Contents

CLOSING

• Mata Automotive closes Slovakia plant

DISASTER

• Earthquake disrupts Kyushu automotive production

• Renesas, Sony, JASM halt operations

• Aisin, Mitsubishi, Daihatsu face shortages

EXPANDING

• Kia invests in Mexico EV3 production

• Fuji OOZX expands Guanajuato capacity

HUMAN CAPITAL

• BMW plans voluntary workforce restructuring

• Porsche expands job reduction program

LITIGATION

• Tesla seeks Cybertruck tooling retrieval

MERGERS, VENTURES, ACQUISITIONS

• SK On evaluates Factorial solid-state cell production

OPENING

• Huatai Mould opens first Americas plant

• Gentex targets Morocco production by 2028

PRODUCTION DECREASE

• Li Auto headlight shortage loses 4k planned units

• Audi reassigns 1,200 Neckarsulm workers

PRODUCTION INCREASE

• Battery production starts at BMW Woodruff

• BMW Debrecen reaches production milestone

REGULATION

• China inspects EV manufacturing compliance

RISK ANALYTICS

• CAR details tariff supply risks

SUPPLY CHAIN

• Bridge cuts Windsor-Detroit truck delays

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Closing

Turkish supplier Mata Automotive will close its plant in Nová Ves, in the Veľký Krtíš district of southern Slovakia, by November 30, cutting about 120 jobs. The site makes wood and carbon fiber interior trim for Cadillac, Aston Martin, JLR and Chrysler vehicles. Revenue had fallen from about $10.5M in earlier years to $6.5M last year, profit dropped to $126k, and headcount was already cut from about 220 in 2022. The company tied the closure to weak European demand. Low-volume cosmetic interior trim is among the first parts of the supply base to fail when European premium build rates soften, and re-sourcing wood and carbon fiber parts is a specialty search rather than a commodity one.

Disaster

A magnitude 7.1 earthquake struck the Kumamoto region of Kyushu on July 28, killing at least 17 people, damaging roads and cutting power to thousands of homes. Toyota suspended its Miyata, Kanda and Kokura plants in Fukuoka Prefecture from late July 29 through today, citing safety, logistics and supplier status. Miyata builds Lexus models including the ES sedan and the UX, RX and NX crossovers, has annual capacity near 430k vehicles, and exports roughly 90% of its output. Nissan Motor Kyushu and Nissan Shatai Kyushu, which build the X-Trail, Kicks and Serena along with the Infiniti QX80, Nissan Patrol and Armada, moved to partial suspensions on earthquake-related parts delays. Autos and semiconductors account for roughly two-fifths of the region’s industrial output, according to Japan’s industry ministry.

The Kumamoto semiconductor cluster took the same hit:

• Renesas halted its Kawajiri and Nishiki plants after fallen ceiling panels, wall cracks and water leaks.

• Sony Semiconductor’s Kumamoto Technology Centre remained down while the company assessed building and line damage.

• TSMC unit JASM evacuated its Kumamoto fab.

• Tokyo Electron stopped two sites and expects a full restart early next week.

• Mitsubishi Electric partially restored cleanroom work at two power semiconductor plants.

• Toppan reopened its Tamana site without resuming semiconductor component output.

• Ebara halted a Nankan plant that makes chipmaking equipment.

• Tokai Carbon partially resumed graphite electrode production at Ashikita.

Power semiconductors and image sensors from this cluster feed vehicle programs well beyond Japan, so the exposure is not limited to automakers with plants on the island.

The second-order effect is already visible:

• Aisin, a core Toyota Group supplier, halted its Kumamoto City plant while inspecting damage.

• Mitsubishi Motors has no Kyushu assembly line but suspended some production at its Okayama plant due to quake-driven supply disruption.

• Daihatsu suspended a small car plant and an engine plant in Kyushu, citing supplier issues.

Takahide Kiuchi of Nomura Research Institute estimated losses would stay below 1T yen, or about $6.11B, and called the production impact relatively temporary. Analysts have attributed most shutdowns to worker safety precautions rather than facility damage. Even where plants are undamaged, supplier-driven shortfalls usually surface days later, so the risk window for this event stays open into next week.

Expanding

Kia will invest $649M in Mexico between 2026 and 2028 to build the all-electric EV3 at its Pesquería plant in Nuevo León, shifting production from South Korea. The line is scheduled to start on August 4 and will launch at 27% local content, a target both Kia and the Mexican government intend to raise. Economy Minister Marcelo Ebrard said the program will create 500 direct jobs in 2026 and 1.5k more between 2027 and 2030, and that the plant will serve both domestic and export markets. The local content target is the actionable part for suppliers. A first EV line at Pesquería opens sourcing for battery packs, e-drive components, and EV-specific thermal and interior parts that the plant's combustion programs never required.

Fuji OOZX will spend about $10M to expand its Guanajuato plant, adding building space and new production lines. The Japanese company makes powertrain components including engine valves, and says the expansion will lift the Mexican subsidiary’s capacity to 2.3M units per month. Fuji OOZX framed the move as a response to shifting North American demand and to economic security and trade requirements under USMCA.

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Human Capital

BMW has reached an agreement with labor representatives on a workforce restructuring program built around voluntary severance. A person familiar with the matter told the Wall Street Journal the program could reportedly affect up to 8k workers in Germany, a figure BMW has not confirmed. Second-quarter EBIT fell 39% year over year, and revenue dropped 8% to about $35.85B, with the automotive operating margin down to 2.3% from 5.4%. BMW expects lower full-year deliveries and an automotive margin of 1% to 3%, against 5.3% in 2025. A 30% drop in Chinese sales is doing most of the damage, which means the German supplier base is absorbing a demand problem that originates outside Germany.

Porsche will cut 5k jobs through early retirement and other voluntary measures under an agreement with worker representatives, on top of 3.9k positions agreed last year against a base of roughly 42k employees at the end of 2025. In exchange, the company guaranteed the future of its core German sites and committed about $2.4B in investment through 2035, while workers accepted smaller bonuses and pay increases and less remote work. Chinese sales fell 32% in the first half of 2026 after dropping to 41,938 units last year, and US tariffs cost Porsche roughly $800M last year on a fully imported lineup. CEO Michael Leiters is due to deliver a full strategy in early October and has already moved to sell stakes in Bugatti and Rimac.

Litigation

Tesla filed an emergency complaint on July 23 in the US District Court for the Western District of Texas seeking access to tooling held at a Troy, Texas plant operated by Angstrom Automotive Group. According to the filing, Angstrom told Tesla on July 13 that it would close the plant and would not agree to a retrieval plan, then offered to keep the line running for an additional $250k per week, and about 700 finished components scheduled to ship on July 17 never left the building.

Tesla says a July 21 retrieval attempt accompanied by law enforcement was turned away, that replacement tooling would take five to six months to fabricate, and that several thousand customer-committed Cybertrucks are at risk. The complaint asks only for physical retrieval of the die-cast tools, trim dies, fixtures, gauges, and X-ray equipment Tesla says it owns, not damages or resolution of the underlying contract dispute.

Angstrom, which acquired the Troy plant from Anderton Casting in early 2025, has not publicly responded, and the court has not ruled. The key takeaway is that owning tooling and having access to tooling are different things, and a supplier closure notice is the moment that gap becomes expensive.

Mergers, Ventures, Acquisitions

SK On and Factorial Energy signed a memorandum of understanding to assess whether SK On's existing battery plants can support production of Factorial's FEST solid-state cells. The agreement is a feasibility study, not a manufacturing commitment. SK On has more than 200 GWh of annual capacity globally, roughly 100 GWh of it in the US, and supplies Hyundai, Ford and Volkswagen. Factorial is already working with Mercedes-Benz, Hyundai, Kia and Stellantis.

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Opening

Chinese tooling and casting manufacturer Huatai Mould will invest about $29.8M in its first plant in the Americas, at La Aurora Industrial Park in San Francisco de los Romo, Aguascalientes, Mexico. The site will produce high- and low-pressure casting molds, tooling, precision machining, and aluminum and zinc components, with roughly 250 specialized jobs and operations starting by the end of 2026. Huatai runs six plants in China, and this is its first production footprint in the Western Hemisphere. Tooling lead times and cost were named at this week’s CAR roundtable as a live constraint on reshoring. Chinese tooling capacity landing inside Mexico is one answer to that, and a complicated one for anyone sourcing against USMCA content rules.

Gentex has signed a letter of intent and selected a site for a plant in Morocco, targeting 2028 production of electrochromic mirrors and electronic modules for vehicles built and sold in Europe. COO Neil Boehm said European customers increasingly require regional manufacturing to derisk their supply base, and that Gentex expects to keep core technology production at existing sites to avoid creating excess capacity.

Production Decrease

A headlight supply shortfall cut Li i6 production by about 4k units against plan in mid to late July, product line head Li Xinyang said, and deliveries this month may fall as a result. Li Auto says headlight supply and vehicle output have returned to normal and that it is working with suppliers to recover the lost volume. The i6 accounted for 69% of Li Auto’s June deliveries, and the company posted a first-quarter net loss of about $339M with gross margin down to 7.9% from 20.5% a year earlier. A single lighting supplier moving 4k units of an automaker’s volume driver is a reminder that Chinese EV makers carry the same single-source exposure as everyone else, without the balance sheet to absorb it.

Audi will eliminate the night shift at its Neckarsulm plant in November, moving about 1.2k employees to daytime operations. Neckarsulm runs at 225k units of annual capacity, around 75k below previous years, and has not secured any battery-electric program after the current A5 and A6 life cycles. The end of A8 production frees space in the plant’s newest assembly hall, where Audi will consolidate A5 sedan and wagon variants. German press reports have linked the site to future Premium Platform Electric derivatives or Scalable Systems Platform vehicles. Still, Audi has not confirmed any allocation, and Volkswagen Group decisions are expected later this year.

Production Increase

BMW will start series production of high-voltage batteries at Plant Woodruff, South Carolina, in December, supplying the 2027 iX5 built at Spartanburg 15 miles away. The company has put about $1.7B into the two sites, and says at least six US-assembled EV models will draw on Woodruff batteries by 2030. Cell supply remains the open question. AESC paused construction of its $1.6B cell plant in Florence, South Carolina, in June 2025, and BMW is operating under a bridging agreement in which AESC ships cells from its global network to Woodruff, with the production location undisclosed. BMW says it intends to move to a US-based supplier afterward, which reads as an unresolved sourcing decision rather than a plan. Each iX5 pack holds around 1k cylindrical cells, so the volume riding on that decision is substantial.

The picture is better in Hungary. BMW built its 50,000th iX3 at Debrecen nine months after series production began, the fastest ramp at any new BMW plant, after adding a second shift in February. Orders are approaching 100k. Debrecen also started high-voltage battery production last fall, the same colocated pattern BMW is now replicating at Woodruff.

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Regulation

China's Ministry of Industry and Information Technology inspected GAC Aion and Xpeng's Zhaoqing plant on July 24, sampling vehicles and power batteries on site for national standard compliance and reviewing production consistency and intelligent connected vehicle safety capability. The visits follow a July 17 meeting in which the ministry told automakers to resist irrational competition and to identify production consistency, reliability, and durability problems both in-house and at key parts suppliers. The supplier language is the part to watch. Chinese regulatory scrutiny of production consistency is moving down the chain, so Tier 1s selling into Chinese programs should expect audit exposure they did not have last year.

Risk Analytics

• Resource: Center for Automotive Research executive summary, “Impact of Automotive Tariffs: Understanding the Effects on Parts, Tooling and Vehicles,” drawn from its June 17 roundtable at CAR MBS 2026. Worth circulating to purchasing and finance. Participants reported suppliers absorbing tariff costs to protect customer relationships in ways not visible to their automaker customers, tooling lead times and costs constraining reshoring for smaller Tier 3 and Tier 4 suppliers, and capital programs being delayed to fund near-term tariff exposure. CAR President and CEO Elizabeth Krear argues that policy moving faster than sourcing and tooling cycles produces less investment, not more.

Supply Chain

The Gordie Howe International Bridge has opened between Windsor, Ontario and Detroit, with a truck carrying auto parts among the first commercial crossings. The six-lane span ends the privately owned Ambassador Bridge’s near-century hold on large commercial truck traffic at this crossing. The Canadian Automotive Parts Manufacturers’ Association estimates about $29B in American-made auto parts enter Canada each year, most of it through Windsor. The Canadian Trucking Alliance estimates the new crossing will save roughly 850k hours of driver wait time annually and between $14k and $72k per month for a fleet, depending on size. {For just-in-time programs running across the river, the value is less the average time saved than the reduction in variance. APMA’s Flavio Volpe has argued the corridor was losing assembly and parts investment to the US Southeast and Mexico partly on logistics predictability.

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Contents

BANKRUPTCY

• Grupo Antolin gains US bankruptcy protection

DISASTER

• HL Mando inspection death triggers shutdown

EARNING DIP

• Hyundai profits fall despite record revenue

HUMAN CAPITAL

• Porsche German workforce cuts expand to 8.9k

• BYD launches export-driven 9k hiring expansion

LABOR DISPUTE

• Hyundai workers intensify Ulsan strikes

• Atlas robot plans complicate negotiations

• GM Korea workers continue partial strikes

• Unifor talks driven by GM product commitments

MERGERS, VENTURES, ACQUISITIONS

• Ford and Geely partner in Spain

• Honda extends GAC venture through 2038

• Volkswagen considers JSW India investment

OPENING

• NetShape opens second Queretaro plant

• Opel plans Algerian vehicle production

PRODUCTION DECREASE

• German Volkswagen programs face relocation risk

• Honda pauses Ridgeline production until 2028

PRODUCTION INCREASE

• SVOLT begins Hubei battery pack production

REGULATION

• US introduces new Section 301 tariffs

• Mexico resumes USMCA talks with US

• Canadian suppliers face August tariff deadline

• Senate advances Chinese ownership restrictions

• Connected-vehicle restrictions force resourcing

• “Ownership %” is the new “rules of origin”

RELOCATING

• Honda considers another North American plant

SUPPLY CHAIN

• CALB battery defects force extended warranties

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Bankruptcy

Grupo Antolin filed for Chapter 15 protection in New York to shield its US assets while a Spanish restructuring moves toward a court hearing in September or October. The interiors, lighting and exterior plastics supplier said it could not meet upcoming debt maturities after 2025 sales fell 11% to $4.2B, with more than one-third of revenue from North America. Ford, GM, Stellantis, Volkswagen and Nissan are major customers. Bondholders holding 67.2% of its senior secured notes are challenging a plan that would leave family ownership intact while offering some creditors better terms.

Disaster

A contract repair worker in his 20s died at HL Mando's plant in Poseung-eup, Pyeongtaek, South Korea, after being caught in a block processing tank that someone activated during an inspection. The Ministry of Employment and Labour has issued a stop-work order at the site and is weighing charges under the Serious Accident Punishment Act. At the same time, Gyeonggi police have opened a serious disaster investigation. HL Mando is a Tier 1 brake, steering and suspension supplier, so a prolonged stop-work order reaches multiple OEM programs.

Earning Dip

Hyundai Motor’s second-quarter net profit fell 11% to $1.96B as global vehicle sales dropped 6.9% and operating profit fell 21%. Wholesale sales fell 16% in South Korea and 11% in Europe, while fires at contract component suppliers also disrupted domestic output. The earnings pressure is landing alongside a second week of partial strikes, adding labor risk to weaker demand and higher material costs. (more ↓)

Human Capital

Porsche approved another 5k job cuts in Germany, lifting planned reductions to 8.9k, or roughly 39% of its 23k German workforce. The cuts will focus on administrative and engineering roles, with the 7.5k-worker Weissach development center expected to be hit hard. Deliveries are forecast to fall to about 250k this year from 320k in 2023, and Porsche wants to lower its break-even point to 180k vehicles. The October production-allocation review will be important for suppliers tied to higher-cost German plants, including Zuffenhausen.

Meanwhile, BYD is recruiting more than 9k workers at its Shenshan industrial base, including 4.8k at one Xiaomo division, 1.2k at another and 2k at the Ebu components plant. The site produced more than 300k vehicles last year and builds export models including the Song Plus and Song Pro. Hiring follows a 70% jump in first-half overseas sales to about 789k vehicles, with BYD targeting 1.5M for 2026.

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Labor

Hyundai Motor's union struck for four hours per shift from July 20 to 22, double the previous week's two hours, halting Ulsan production for up to eight hours a day once both shifts are counted. The union, which represents more than 40k workers, is also refusing overtime and weekend work. Talks are stuck on pay, with the company offering a monthly base increase of about $60 plus a bonus of 350% of base pay and roughly $6.8k in cash, against union demands of about $102 a month, an 800% bonus and a share equal to 30% of last year's net profit.

The dispute also carries an automation subtext that Hyundai is working to keep off the table. The company says its planned 2028 rollout of Atlas humanoid robots applies only to Metaplant America near Savannah, Georgia, and is not part of Korean bargaining, while the union has told management that no new-technology robot enters a plant without an agreement. The two sides are separately reviewing a wage overhaul that would convert overtime and night-shift allowances into fixed pay, giving workers more income stability if automation cuts hours. Hyundai owns Boston Dynamics outright and wants a plant capable of building 30k robots a year, so this is a recurring bargaining item rather than a one-off.

GM Korea's union is in the same fight, striking four hours across all shifts on July 21 and 22 in its second week of action. Workers want a monthly base increase of about $100, an annual bonus of roughly $20.2k, and a commitment to build new models at the company's Korean plants. GM Korea shipped 276k vehicles globally in the first half, up 10.5%, with exports up 12% to 270k units and headed mostly to the US, and it is targeting 500k units of production this year against 462k in 2025. With nearly all output going to the US, a longer walkout shows up in US inventory before it shows up in Korea.

Unifor will open contract talks with General Motors in Toronto on August 10, carrying a pattern set by a just-ratified Ford deal with 3% annual raises over three years. The union represents more than 4.6k GM workers in Ontario at Oshawa assembly, the CAMI plant in Ingersoll, St. Catharines and Woodstock. Unifor president Lana Payne expects harder bargaining than at Ford, since GM's Ingersoll plant and Stellantis's Brampton plant both sit idle with thousands laid off. Idle capacity is the union's weakest point, so product commitments rather than wages are the likely flashpoint.

Mergers, Ventures, Acquisitions

Ford and Geely will form a Europe-focused joint venture in the first half of 2027, with Ford holding 66% and Geely 34%, to share the Valencia plant in Spain. Ford will continue building the Kuga there and add its Bronco SUV from 2028; Geely will build two electric SUVs at the site starting the same year, and the two will jointly develop a crossover designed by Ford. Ford framed the deal as a way to pool volume and cut per-vehicle cost, with backing from Spain's national and regional governments. This follows Stellantis deals with Leapmotor in Spain and Dongfeng at Rennes, and it points to a European supply base that increasingly serves Chinese platforms alongside Western ones.

Honda extended its GAC Honda joint venture through 2038, two years before the current contract expires, despite a collapse in China volume. Honda's China sales fell to 645k vehicles in 2025 from a 1.63M peak in 2020, and first-half 2026 deliveries dropped 35% to 206k, with GAC Honda down 46% to under 90k. Honda says it will rebuild using locally sourced standard components, local next-generation technology, and new energy vehicles built on platforms supplied by its Chinese partners. That last point is the one incumbent Japanese and Western suppliers in China should read closely, since a shift to local standard components likely moves sourcing authority to the partner.

Volkswagen is in advanced talks to sell a stake in Skoda Auto Volkswagen India to the JSW conglomerate, per a Bloomberg report, with a deal possible within weeks. The capital would go to the unit running Volkswagen's Indian operations, which the group is leaning on for growth after exiting Russia and pulling back in China. A local industrial partner would bring pressure to raise Indian content, worth watching for suppliers currently shipping into the group's Indian plants.

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Opening

NetShape Mexico, a subsidiary of US supplier Shape Corp., opened a $13.6M plant at the FINSA Industrial Park in Queretaro, adding more than 260 jobs. The site builds structural components for modern vehicle architectures and follows the company's first Queretaro plant, which opened in 2010. Queretaro is still drawing structural work even with USMCA rules of origin under renegotiation, which suggests suppliers are betting the regional content math continues to favor Mexico.

Opel signed a memorandum of understanding with Algeria's AGM Holding on July 17 to build vehicles and engines in the country, which would make it the first automaker to manufacture engines in Algeria. The company says the site is planned as a full plant with body, paint and final assembly rather than a knocked-down operation. However, it disclosed no investment figure, capacity or timeline. Stellantis already builds Fiat models at Tafraoui, where it aims to lift output to 135k vehicles by 2028 from 53k in 2025, and is doubling capacity in Kenitra, Morocco. Output is aimed at Algerian customers rather than exports, so this adds capacity in North Africa without relieving the overcapacity Stellantis is carrying in Europe.

Production Decrease

Volkswagen will allocate future models to plants based on manufacturing cost rather than brand, production chief Christian Vollmer said in an internal interview, with decisions made jointly with the finance department. The group is targeting factory costs of about $3.5k per vehicle and sits roughly $1.2k above that, even after cutting German plant costs by more than 20% last year. Skoda's Czech sites already meet the target, with Kvasiny about a third below it, while Zwickau is approaching $4.6k per vehicle and Hanover runs into five figures. Volkswagen is planning for annual demand near 9M vehicles against pre-pandemic capacity of about 12M, has already removed 2M units, and is taking out another 500k in China with comparable cuts planned for Europe. The next-generation ID4 potentially moving from Emden to the Czech Republic is the test case, and any supplier tooled to a German site should assume its program is up for review.

Honda confirmed on July 23 that it will stop building the Ridgeline at its Lincoln, Alabama, plant later this year and restart in the third quarter of 2028, a hiatus driven by US emissions rules. The next truck will share revised components with the Passport and use an updated 3.5-liter V-6 to comply. Honda is separately developing a large-vehicle hybrid architecture with a new V-6, multiple motors and a lower-cost battery pack for the Ridgeline, Passport, Pilot and Odyssey in the early 2030s. A multi-year gap on one line means Ridgeline-specific tooling and Tier 2 volume at Lincoln go idle well before the replacement program funds anything.

Production Increase

SVOLT Energy started mass production at its battery pack plant in Daye, Hubei, on July 20, five months after breaking ground in February. The site runs two module lines and one pack line and is projected to reach roughly $295M in annual output value, supplying nearby GWM plants building the Gaoshan in Daye and the Tank in Jingmen.

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Regulation

The US will impose tariffs of 10% to 12.5% on goods from more than 80 countries starting today at noon, replacing the flat 10% duty that lapses the same day. The new duties run under Section 301 and are tied to how countries enforce bans on forced-labor goods, with Canada and the EU both set at 10%. Oil, gas, certain natural resources, goods qualifying under USMCA, and items already covered by Section 232 tariffs on vehicles and steel are exempt. For auto importers, the immediate change is narrow given those carve-outs, but a further Section 301 action covering 15 countries and the EU over manufacturing practices is still under investigation.

US and Mexican negotiators opened a third round of bilateral USMCA talks in Mexico City on July 21, the first formal discussions since Washington declined to extend the pact on July 1 and started a 10-year wind-down clock. The agenda covers autos, steel, aluminum, agriculture and labor, and it still includes a US proposal from May requiring 50% of the value of a North American-built vehicle to originate in the United States. Trade representative Jamieson Greer cited Toyota's Texas expansion and General Motors' $1.5B in costs to move production north as the outcomes the administration wants. Blocking Chinese back-door access is also on the table, and Chinese brands took 17% of the Mexican car market in the first half, up from 14%, despite 50% tariffs imposed in January.

Canada is on a separate and slower track. Prime Minister Mark Carney said he and President Trump agreed to accelerate talks ahead of a 50% tariff due August 19 on about $20B of Canadian exports, roughly 5% of what Canada ships to the US. That levy would break the pattern under which USMCA-compliant Canadian goods have largely escaped duties, and Carney says Ottawa concedes nothing until the US eases existing sector tariffs of up to 50% on vehicles, metals and forest products. US officials describe the Canadian track as stalled, so anyone with Canadian content should plan for the August date to hold rather than slip.

The Senate Commerce Committee approved a bill on July 22 that would codify and tighten the US ban on Chinese-linked automakers, including a provision barring any company more than 15% owned by Chinese entities. That threshold would capture Mercedes-Benz, which carries close to 20% passive Chinese investment, though the bill allows until 2030 to comply, plus waivers, and committee chair Ted Cruz said it needs changes before it can become law. Cruz also said a battery sourcing provision in the bill would add $5k to vehicle cost. Ownership percentage rather than component origin is a new kind of test, and it pulls equity structure into compliance scope for anyone selling into the US.

The compliance work is already reshaping sourcing. The current rule bans Chinese connected-vehicle software starting with model year 2027 and Chinese connectivity hardware starting with model year 2030. That hardware includes cellular IoT modules, satellite communications, external antennas, and microcontrollers. Because development cycles are long, suppliers need to be locked in now. Eagle Wireless in Solon, Ohio, formed in late 2025 to fill the gap, is growing from 140 employees toward 1k and targeting an annual run rate of 2M modules by the end of the third quarter, with revenue roughly doubling to nearly $100M this year. Non-Chinese modules run a 5% to 15% price premium; most ADAS hardware, including LiDAR, is not covered yet, and Eagle still builds on licensed Quectel designs it must replace before 2030, the same dependency pattern as Ford licensing CATL battery technology for US production. Chinese vendors still ship close to half the world's automotive cellular IoT modules, so the audit burden lands hardest at Tier 2 and below.

China will apply a 2% consumption tax to lithium-ion and other mature battery products from September 1, 2026, rising to 4% a year later, while sodium-ion and solid-state batteries stay exempt through 2028. Batteries a company produces for its own continued production are exempt, and tax paid on purchased cells can be deducted, so automakers that build their own cells avoid the cost and those that buy absorb it. CPCA secretary-general Cui Dongshu puts the impact at roughly 0.007 to 0.008 yuan per Wh, small per vehicle but tens of millions of dollars a year for an automaker building 1M units. The design is a straight subsidy to vertical integration, and it favors BYD, Svolt-backed GWM and Geely against anyone sourcing cells externally, foreign automakers in China included.

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Relocating

Honda is considering an eighth North American assembly plant as a production buffer, CEO Toshihiro Mibe told Yomiuri Shimbun on July 18, two months after the company indefinitely suspended its $15B EV supply chain plan in Canada. Honda's North American plants run near 90% utilization, and analysts expect any new site to land in the US if tariffs on Canadian and Mexican vehicles persist. About 75% of the 400k vehicles Honda builds in Canada each year go to the US, and its Alliston plants employ more than 4k people building the CR-V, Civic and four-cylinder engines. A US plant would not immediately displace Alliston, but it would put Canadian output into competition for future product, which is how Detroit Three capacity decisions have played out.

Supply Chain

CALB's 177-Ah lithium iron phosphate cells are at the center of a quality controversy in China after GAC Aion's Aion S recorded a wave of swelling, leakage and insulation failures, flagged by Xinhua on July 14. Third-party inspections attributed the faults to internal manufacturing defects, and failures cluster between 150k and 300k km, just past the point where commercial fleet vehicles leave warranty. GAC Aion extended coverage on affected commercial vehicles from 8 years or 150k km to 8 years or 300k km with free inspection, repair, or pack replacement, and CALB has committed to lifecycle responsibility and direct service. A repair engineer quoted by Xinhua blamed compressed validation cycles driven by market-share pressure at a supplier that installed 23.8 GWh in the first five months of 2026, up 36.3%. That is the same failure mode behind Vremt's $341M claim against Sunwoda and Zeekr's recall of 38k vehicles, and it argues for asking second-source cell suppliers about validation timelines rather than just capacity.

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Contents

BANKRUPTCY

• Lucid hires turnaround adviser amid strain

EARNING DIP

• Memory shortages drive automotive costs higher

• Seres swings sharply into first-half loss

• GAC losses widen despite sales growth

HUMAN CAPITAL

• Volkswagen targets another 50k job cuts

INDUSTRY DIRECTIONS

• Volkswagen shifts toward structural capacity reduction

• Chinese vehicle exports surpass 1M

LABOR DISPUTE

• Hyundai workers strike over humanoid robots

• Wage dispute threatens production losses at Hyundai

• Ford and Unifor reach tentative agreement

• UAW wins major supplier wage gains

OPENING

• Hyundai SK On battery plant starts

PRODUCTION DECREASE

• Honda ends US Prologue production

PRODUCTION INCREASE

• Mercedes expands Hungarian EV production

• Stellantis shipments surge in North America

• Bosch starts US silicon carbide production

• Gotion starts four overseas battery plants

REGULATION

• USMCA talks target stricter content rules

RISK ANALYTICS

• Chinese mineral curbs threaten global output

SUPPLY CHAIN

• Samsung advances Tesla AI5 chip production

• Gordie Howe Bridge adds border redundancy

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Bankruptcy

Lucid Group has hired AlixPartners to advise on a turnaround after a report that the EV maker could seek bankruptcy or go private, both of which the company denied. Lucid ended the first quarter with about $700M in cash against about $2B in debt. In late June, it laid off about 18% of its US workforce, including its chief operating officer, while cutting the second shift at its Casa Grande, Arizona, plant. Q2-2026 deliveries were 3.9k vehicles, barely ahead of a year earlier, and the majority owner, Saudi Arabia's Public Investment Fund, has so far kept the company funded. For suppliers on the Air and Gravity programs, a turnaround adviser, thin cash, and a single-shift plant are the standard checklist items that precede volume cuts.

Earning Dip

AI demand has turned memory chips into the automotive supply chain's newest cost crisis. Samsung, SK Hynix, and Micron have shifted 70% to 80% of advanced capacity to high-bandwidth memory and server DDR5, squeezing the general-purpose DRAM and NAND that vehicles use, and automotive buyers, roughly 3% of the global DRAM market, are struggling to secure allocation even at premium prices. Q2-2026 DRAM contract prices rose 58% to 63% quarter over quarter, NAND jumped 70% to 75%, and suppliers have already notified customers of further 20% to 30% DRAM and 35% to 40% NAND increases for the third quarter.

Seres chairman Zhang Xinghai says a memory chip that previously cost about $3 now runs nearly $15, adding an estimated $2.2k to $3k per vehicle at its Aito brand. Ford and GM have signed supply agreements with Micron to lock in allocation, while Chinese players are turning to cockpit-ADAS fusion architectures that share a single SoC and memory pool, yielding an estimated $300 to $440 per vehicle in savings. UBS sees the DRAM imbalance persisting at least through the first half of 2028, so this is a structural cost, not a cycle to wait out.

Seres expects a first-half net loss of $220M to $265M, a swing from a $435M profit a year earlier, citing rising prices for memory chips, industrial metals, and lithium carbonate, along with asset writedowns. Core subsidiary Aito, the Huawei partner brand, swung to a loss, and group sales fell 28% year over year in June. The speed matters: Seres was still profitable in the first quarter, so essentially the entire loss fell in the second quarter, a measure of how quickly input costs are moving.

GAC Group expects a first-half net loss of $600M to $675M, nearly double the year-earlier deficit, despite rising sales, growing exports, and improved gross margins. The joint ventures that have long funded the group are shrinking, with GAC Honda's first-half sales down 55.8% to 68k units and GAC Toyota slipping 9.4% in June, while the Aion and HYPTEC EV brands remain loss-making despite 88.5% sales growth. China's auto manufacturing profit margin fell to 3.4% from January through May, a five-year low. Volume no longer buys profit in China's market, and GAC is the clearest example yet of a legacy player bleeding from both the old business and the new one at once.

Human Capital

Volkswagen Group CEO Oliver Blume has outlined a plan to cut up to 50k more jobs globally, on top of the 50k already agreed with unions in 2024, arguing that the group's overhead is roughly one-fifth above competitors’. Four German plants are at risk: Emden, Hanover, Zwickau, and Neckarsulm, though Blume says there are “smarter options” than closures and points to an average 20% improvement in German factory costs over the past year. The group, which employs more than 657k people, is also reviewing a portfolio of more than 2k stakes and businesses after selling 51% of its ship engine unit, Everllence, for about $8.5B.

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Industry Directions

VW's plan stalled at a July 9 supervisory board meeting, where union opposition blocked closures and further cuts. The board instead announced a “Future Plan” to trim the model lineup by up to 50%, cut product complexity by up to 75%, and reduce annual capacity from 10M to about 9M vehicles, with little detail on how it would be executed. The stakes run past Wolfsburg: Germany’s auto industry has shed 125.8k jobs since 2019, a quarter of them in the past year, and Boston Consulting Group estimates Europe carries more than 20% excess vehicle capacity, about 5.4M units a year, with factory utilization near 60% against the 80% needed to run efficiently. For suppliers, German OEM restructuring is no longer cyclical cost-cutting but a structural resizing, and the footprint decisions made in the next year will set sourcing patterns for a decade.

One reason for that pressure keeps growing. Chinese automakers exported 1.1M vehicles in June, the first month above the 1M mark and more than 70% higher than a year earlier, even as domestic sales fell for a ninth straight month. The push is moving onshore in destination markets too, with Chinese OEMs planning to lift overseas production from 1.2M vehicles last year to 3.4M by 2030, BYD's Hungary plant opening later this year, and a second European site in the works. The average net margin across a basket of 12 global automakers has fallen to 1% from about 6% five years ago, and the EU is reportedly reconsidering whether to extend duties to battery-gasoline hybrids, which currently escape the tariffs applied to pure EVs.

Labor

Hyundai's roughly 40k-member Korean union launched a three-day partial strike this week, the auto industry's first factory stoppage centered on humanoid robots. The trigger was Atlas, the 6-foot-2 robot from Hyundai-owned Boston Dynamics, unveiled in January and slated for deployment by 2028 at the nonunion Metaplant in Georgia, with no timeline yet for Korea. At an estimated $130k per unit, Atlas pays for itself in about two years, and the union is demanding job-security guarantees around AI adoption, a shift from hourly pay to fixed salaries to protect against reduced hours, and a retirement age of 65, up from 60.

The wage gap is also real. Hyundai offered a $67 increase in basic monthly pay, annual bonuses worth up to 350% of monthly salary, a one-time payment of about $7.1k, and 15 shares per worker. The union rejected it, seeking a $100 monthly increase and bonuses worth 800% of salary. The two-hour-per-shift stoppages through Wednesday could cost about 5k vehicles and $134M in lost production. The union has threatened stronger action if there is no deal by Thursday, while workers at GM Korea, also affiliated with the Korean Metal Workers' Union, ran a two-day partial strike of their own. It will be interesting to see how any contractual automation language settles; this will likely serve as the template that other unions cite in negotiations.

Labor is moving in North America, too. Ford reached a tentative three-year national agreement with Unifor covering more than 5k Canadian workers, subject to ratification. The union opened with Ford first among the Detroit 3, citing the automaker's commitment to its Canadian operations, and noted that current contracts across Ford, GM, and Stellantis expire on September 20. Some 6k workers have been laid off across the three companies' Canadian operations as production has shifted or paused. A Ford pattern settled two months early would set the target for GM and Stellantis talks, where the footprint questions are harder to answer.

The UAW is running the same playbook down the supply chain. The union has won two rich supplier contracts in metro Detroit by leveraging just-in-time truck programs: about 1.1k workers at Bridgewater Interiors' Warren, Michigan seat plant, which feeds Ram 1500 and F-150 assembly, won a top rate of $35 per hour by the end of 2029, a 36% raise, after a strike threat that would have stopped both truck lines within an hour. It follows the Dauch Corporation settlement in Three Rivers, Michigan, where a 10-day strike that threatened GM truck output in Flint and Wentzville produced a 36% increase to $30 per hour by 2030. Neither contract contains automation language, and the union sought but did not win plant-closure or work-relocation protections at Dauch. Dana, Nexteer, and Magna are next in line for renewals. Supplier labor is being repriced across the Detroit base at the same moment OEMs are pushing suppliers to automate, which points toward a smaller, higher-paid independent parts supplier workforce.

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Opening

Hyundai and SK On's $5B joint-venture battery plant in Bartow County, Georgia, has begun early-stage production, marking Hyundai's second battery plant in the state. At full capacity, the 3.3M ft² facility will produce 35 GWh annually, enough for about 300k EVs, employ around 3.5k people, and feed the Metaplant near Savannah, which builds the Ioniq 5 and Ioniq 9. The ramp timeline is open, given the US EV slowdown since the federal tax credit ended. Hyundai runs a separate $4.3B, 30 GWh joint venture with LG Energy Solution in the same county.

Production Decrease

Honda is heading the other direction. It will end production of the Prologue, its only US-market EV, with the 2026 model year, winding down sales through early 2027. The SUV is built by General Motors in Coahuila, Mexico, on GM's EV platform, and sold about 40k units last year, roughly a tenth of the CR-V's volume. Earlier this year, Honda scrapped a three-model EV program for Ohio and Canada at a cost of $10B and is pivoting its US lineup to hybrids. The exit removes contract volume from GM's Ramos Arizpe complex, which also builds GM's own Equinox EV and Blazer EV.

Production Increase

Mercedes-Benz has started production of the electric C-Class at Kecskemét, Hungary, following a roughly $1.2B expansion that more than doubled the site to about 47M ft², making it the largest automotive manufacturing footprint in Hungary. Batteries, body parts, and other key components for the electric C-Class and GLB are now made on-site, shortening supply lines, and lines can flex between combustion and electric models, with load shared with Rastatt, Germany. The smaller G-Class will be built exclusively at Kecskemét, which now employs more than 5k people.

Stellantis reported Q2-2026 global shipments up an estimated 10% to about 1.6M vehicles, led by a 38% jump in North America, driven by new and refreshed Ram, Jeep, Chrysler, and Dodge products. European shipments rose 5%, with Leapmotor-branded vehicles contributing 25k units of the increase.

Bosch has begun sample production at its first US semiconductor plant in Roseville, California, following the finalization of a $225M CHIPS Act award, with commercial output of silicon carbide chips expected later this year. The company bought the fab from TSI Semiconductors in 2023 and is spending $2B in total on the conversion, part of up to $7.5B in planned US investment through 2031. Silicon carbide chips manage high-voltage power in EVs and hybrids, with data center and defense demand as a hedge. A domestic silicon carbide source lands well with OEMs still carrying scars from the COVID chip shortage and now watching the memory squeeze covered above.

Gotion High-Tech says its four overseas plants, in Germany, Vietnam, Indonesia, and Thailand, are now online, with the Vietnam site producing LFP cells and the other three assembling packs. Its G-Yuan semi-solid-state battery has cleared extreme-condition testing. It is headed for mass production, with a 197 Ah cell delivering above 300 Wh/kg, 12 GWh of planned capacity, and a 0.2 GWh all-solid-state pilot line now complete. The overseas footprint aligns with customers, including Volkswagen, a Gotion shareholder, and China's export push. All-solid-state remains distant, by the company's own admission, so that near-term deliveries will be LFP and hybrid chemistries.

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Regulation

Top US and Mexican officials meet the week of July 20 in Mexico City to negotiate automotive rules of origin and tariffs, after the US declined to renew the USMCA at the July 1 joint review, putting the deal on annual reviews ahead of a 2036 expiration. The US wants North American content requirements raised from 75% to 82% of a vehicle, with 50% of value originating in the US, while Mexico and Canada push to cut auto and metals tariffs that run as high as 27.5% on their vehicles versus 15% for the EU, Japan, and South Korea. Mexico says unresolved bilateral issues have fallen from 54 to 14. Industry groups warn that a year-to-year USMCA will suppress capital-intensive regional investment until a durable deal is in place.

Risk Analytics

The IEA warns that the full implementation of China's rare earth export restrictions, currently delayed by a year, would put $6.5T in downstream production outside China at risk across automotive, high-tech, defense, and energy sectors, with the US and Europe absorbing nearly half the impact. Parallel graphite controls would expose another $300B, and China holds more than 90% of processed graphite output. Diversification is moving: public financing for new projects quadrupled to $65B between 2023 and 2025, and new refining in the US and Malaysia cut China's rare earth processing share to 85% last year, with 70% possible by 2035 if planned projects deliver.

Supply Chain

Samsung has taped out its version of Tesla's AI5 self-driving chip and will build it on its latest 2nm process at the Taylor, Texas fab, a node previously expected to debut with the follow-on AI6. The choice suggests Samsung’s 2nm yields have crossed the roughly 60% threshold viable for a high-volume customer, with volume production of Tesla AI chips at Taylor expected in the second half of 2027. Tesla is dual-sourcing AI5 from Samsung and TSMC, with each foundry producing slightly different versions. A credible second source at the leading edge matters beyond Tesla, since every OEM planning in-house silicon has been negotiating against a one-foundry market.

The Gordie Howe International Bridge connecting Windsor, Ontario, and Detroit opens on July 27, after a delay while Washington and Ottawa renegotiated toll governance, including a 15-year economic development fund tied to a portion of the bridge's profits. The crossing adds redundancy to a corridor where the Ambassador Bridge alone carries more than $300M in goods daily and handled 1.8M trucks in 2025, many moving parts and finished vehicles on just-in-time schedules. The 2022 blockade showed what a single-crossing chokepoint costs. A second span is the rare piece of transportation risk that actually got fixed.

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Contents

EARNING DIP

• Aston Martin creditors coordinate amid distress

EXPANDING

• Marquardt expands Tunisian manufacturing capacity

HUMAN CAPITAL

• Volkswagen weighs closures and job cuts

MERGERS, VENTURES, ACQUISITIONS

• Continental sells ContiTech to Lone Star PE

OPENING

• Infineon opens expanded Dresden chip fab

• Chery inaugurates ex-Nissan South African assembly plant

• KTH plans Texas structural-parts plant

PRODUCTION INCREASE

• AESC begins BMW battery cell production

REGULATION

• USMCA enters uncertain annual review cycle

• Ford seeks production-weighted trade rules

• Policy uncertainty stalls Mexican assembly investment

• Senate advances Chinese vehicle restrictions

RELOCATING

• Toyota shifts Tacoma production to Texas

• Mexico faces widening production migration risks

SUPPLY CHAIN

• Morocco sustains Renault export competitiveness

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Earning Dip

A group of Aston Martin creditors holding more than half of the company's secured notes has signed a cooperation pact as earnings pressure pushes its debt into distressed territory. The $1.05B of secured notes due in 2029 traded at about 72 cents on the dollar on July 8. CEO Adrian Hallmark is cutting jobs, putting new models under review, and raising cash through unconventional routes, including a deal selling future Formula One naming rights to Lawrence Stroll's team. Creditor coordination of this kind often precedes restructuring talks, and suppliers with exposure to Aston Martin will likely be monitoring payment terms closely.

Expanding

The International Finance Corporation plans to invest up to $59.4M in the manufacturing expansion of German supplier Marquardt in Tunisia, with board approval scheduled for August 7. The financing covers factory upgrades, equipment, and working capital for Marquardt's local subsidiary, which employs about 2k people across three Tunis-area plants making mechatronic systems, vehicle access and ignition technologies, and electronic switching components for global OEMs. Tunisia has built its automotive position on advanced components rather than vehicle assembly, exporting mainly to European OEMs, and already hosts Leoni, Valeo, Draxlmaier, Yazaki, and Coficab. The IFC frames the deal as a confidence signal to other multinationals weighing Tunisia as a nearshoring base.

Human Capital

Volkswagen's supervisory board met on July 9 in Wolfsburg to review CEO Oliver Blume's restructuring plan, which is reported to include closing four German plants, Hanover, Emden, Zwickau, and Audi's Neckarsulm site, plus roughly 50k job cuts on top of the 50k already planned across the group. IG Metall organized protests at 18 German sites, and months of union talks would follow, even if the board accepts the proposals. The board arithmetic is unforgiving. Labor holds 10 of 19 seats after a shareholder representative's unexpected departure, and closures at plants covered by the Volkswagen law require a two-thirds majority, making approval in the face of union opposition virtually impossible. Zwickau and Neckarsulm sit outside the law's protection, though shutting them would still invite strikes and political resistance. Analysts put Blume's odds at 50-50, with a compromise closing two of the four plants the likeliest landing zone. Suppliers to the four named plants should treat program volumes as at risk either way.

Mergers, Ventures, Acquisitions

Continental has agreed to sell its ContiTech plastics and rubber business to private equity firm Lone Star Funds for $4.57B, plus up to $286M in performance-based payments in later years. Continental expects about $3.5B in cash proceeds, plans to distribute roughly $2.9B to shareholders, and says the divestment will allow it to focus on its core tires business. ContiTech has been under pressure and cut 3k jobs in May, including 1.6k in Germany. The sale could close by the end of 2026.

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Opening

Infineon has opened its $5.8B Smart Power Fab in Dresden several months ahead of schedule, doubling the site's production capacity for power semiconductors and analog/mixed-signal technologies and adding about 1k jobs. The chips will feed battery-electric and software-defined vehicles, charging infrastructure, renewables, and AI data centers, built on a flexible 300mm line that can switch technologies without extensive retooling. The project received EU approval for up to $1.07B in German state aid under the European Chips Act, part of the push to reduce dependence on non-European semiconductor production.

Chery has inaugurated its Rosslyn plant in Pretoria, acquired from Nissan in January, along with a nearby stamping facility, marking its shift from importer to local manufacturer in South Africa. Production begins mid-2027 with an annual capacity of 50k units on a single shift, all 692 existing employees retained, and nearly 3k supply chain jobs expected. Chery is targeting a 40% localization rate by 2028 and ranked second in South African sales behind only Toyota through May. Under Nissan, the plant's output had fallen below 25k units a year, less than half its 2012 peak.

KTH Texas, part of Ohio-based KTH Parts Industries and its Japanese parent, H-One, plans to build a $127M plant in Seguin, Texas, producing underbody structural parts, with at least 125 full-time jobs by the end of 2030. Construction starts by March 2027 and operations by the end of 2028, backed by $3.6M in local tax abatements. The plant joins a Seguin supplier cluster that already includes Continental Automotive Systems and Vitesco Technologies.

Production Increase

AESC has started mass production of its 46120 large-format cylindrical cells for the all-electric BMW iX5, which BMW will build at its Spartanburg plant and will feature a 141 kWh battery and an 800-volt architecture. The nickel-rich, silicon-doped cells deliver up to 310 Wh/kg and nearly 30% more usable energy per cell than previous formats, cutting the number of cells and components per pack. AESC has not said which plant is making them. The South Carolina facility, announced in 2022 to supply BMW, was paused in mid-2025, leaving open the question of whether the iX5's cells come from a US line or arrive as tariff-exposed imports.

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Regulation

The US declined on July 1 to renew the USMCA for a 16-year term, leaving the pact in force until 2036 but subject to annual reviews unless all three countries agree to extend it. Canadian industry groups warn the arrangement leaves automakers making decade-horizon investments in an unpredictable policy environment, with APMA president Flavio Volpe describing the fallback as keep building what you have and hope. Tariffs remain the unresolved core, with US duties on Canadian-built vehicles and Canadian counter-tariffs still in place after more than a year.

Ford is using the review to push for rules that reward automakers with larger North American production footprints and penalize import-heavy competitors. Ford assembled more than 2M vehicles in the US last year and imported 378k, about 17% of its US sales, while GM imported roughly 1.17M vehicles (41% of its US sales) and Toyota more than 1.19M (47%). CEO Jim Farley says any new agreement should make it easier to compete with manufacturers importing from Japan and South Korea, even as Ford's own Mexican production fell 6.6% through May.

Mexico, meanwhile, is approaching a decade without a new light-vehicle assembly plant announcement, and the annual-review structure is expected to extend the drought. The last investment wave ran from 2011 to 2016, when Nissan, Mazda, Honda, Toyota, Kia, BMW, and Audi committed more than $8B and added over 2M units of capacity. Capital is still flowing, more than $3.5B in Q3 2024 alone, but toward parts production, logistics, and industrial parks rather than assembly. S&P Global Mobility warns that projects on 10-to-20-year planning cycles need policy certainty first, a dynamic last seen when NAFTA renegotiation uncertainty helped kill Ford's $1.6B San Luis Potosi plant.

The US Senate Commerce Committee votes July 15 on bipartisan legislation to codify the 2025 regulation that effectively bans Chinese automakers from selling passenger vehicles in the US, covering vehicles designed in China with advanced connectivity and vehicle software. Polestar has already been forced to stop US sales from the 2027 model year, and House lawmakers have introduced a similar bill. Trade groups representing nearly all major automakers, including the Detroit Three, Volkswagen, Hyundai, and Toyota, have urged the government to keep Chinese carmakers out.

Relocating

Toyota will spend $3.6B to add a second assembly line at its San Antonio plant and move Tacoma production from Baja California to Texas by 2030, adding 2k jobs and about 150k trucks of annual output. Tariffs drove the decision. Toyota's North American division swung to a loss last fiscal year after an $8.5B operating-income hit from US duties, and the Tacoma pays tariffs on its non-US content as a Mexican-built vehicle. Tacoma production at Guanajuato continues unaffected, while Toyota declined to comment on the Baja plant's future after the truck leaves.

The move is feeding fears of a domino effect in Mexico, where automakers are reviewing backup production plans, trimming output, and reassessing plant-expansion deals as hopes fade for lower US tariffs. Toyota joins a lengthening list of Mexico-to-US shifts: GM has announced US capacity for the Blazer and Equinox, Hyundai moved some Tucson production, and Nissan halted Versa exports and discontinued two Infiniti models built mainly for the US market. Even USMCA-compliant Mexican vehicles face an average tariff of almost 19%, above the 15% on some imports from Japan and South Korea. Carmaking is 4.5% of Mexican GDP, so each line-by-line move lands harder on the supplier base than the headline suggests.

Supply Chain

Mexico's squeeze makes Renault's Morocco operation a useful contrast in how a low-cost export hub holds together. More than 100 suppliers cluster in free-trade zones around the Dacia factory in Tangier, with a direct rail line to the Tanger Med port and delivery to most European markets in three days or less. Labor cost per vehicle runs at $106, compared with $273 in Romania, $955 in Spain, and $3.3k in Germany. Morocco built nearly 400k Renault Group vehicles in 2025, with more than 80% exported. The cloud is regulatory: the EU's proposed Made-in-Europe rule would require 70% of an EV's value to originate in Europe to be eligible for incentives, and it is not yet clear whether Morocco counts as in or out. ACEA backs a proposal that would cover Morocco's installed capacity, which would protect the existing footprint but could make further expansion less attractive, just as Tangier prepares for the battery-electric Sandero around 2028.

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Contents

CHANGE IN MANAGEMENT

• Lucid misses deliveries, names CFO

• Christian Fischer as Bosch CEO unexpected

CLOSING

• Shiloh closes Valley City plant

EXPANDING

• BorgWarner expands Mexico EV production

HUMAN CAPITAL

• Volkswagen weighs massive German cuts

MERGERS, VENTURES, ACQUISITIONS

• Volkswagen may end Bosch AV partnership

• Stellantis, Nissan eye Marelli assets

OPENING

• Ford CATL-licensed plant starts production

PRODUCTION DECREASE

• Mercedes electric GLC ramp

PRODUCTION INCREASE

• CATL restarts Jianxiawo lithium mine

RAW MATERIAL COSTS

• Battery metals recovery faces risks

• Automakers shift copper to aluminum wiring

REGULATION

• USMCA enters sunset review process

• US demands stricter USMCA content

• UK EV makers face tariffs

RELOCATING

• Porsche may shift Cayenne production

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Change In Management

Lucid missed second-quarter delivery estimates with 3.95k vehicles delivered and 4.77k produced, against expectations of 4.61k and 5.28k. The EV maker also named TI Automotive finance veteran Alexander De Bock as CFO, the latest move in an executive shakeup that has brought in a new CEO and CTO and led to the COO's departure since April. Lucid suspended its 2026 production forecast in May, has cut its workforce twice this year, and is streamlining its supply chain to conserve cash. Supplier disruptions and aluminum and chip shortages continue to slow its production ramp.

Bosch replaced CEO Stefan Hartung with deputy chief executive Christian Fischer on July 1, an unexpected change at the top of the world's largest parts supplier just months after Hartung's contract was renewed through 2031. Hartung, who has been the chairman since 2022, steered Bosch through last year's profit slump and, in April, outlined margin plans built on tighter cost control and technology investment. Fischer helped shape that strategy, so the handover signals continuity as suppliers contend with high costs, weak demand, and geopolitical strain.

Closing

Shiloh Industries will permanently close its manufacturing operation in Valley City, Ohio, cutting 43 jobs. Shiloh supplies lightweight metal stampings and laser-welded assemblies to North American OEMs and Tier 1 suppliers.

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Expanding

BorgWarner will invest $49M to expand manufacturing in San Luis Potosí, Mexico, adding local production of electronic components and EV technologies through 2028. The expansion is projected to create 663 engineering and technical jobs by 2030, with 421 of those front-loaded into 2026 to meet immediate technical requirements.

Human Capital

Volkswagen is reportedly weighing closing four German plants, Hanover, Zwickau, Emden, and Audi’s Neckarsulm site, and raising total job cuts to as many as 100k, according to people familiar with plans headed to a July 9 supervisory board meeting. The closures would put more than 45k jobs at risk on top of 50k cuts already planned, and the group would trim investment by about 15% to roughly $148B over five years, with a possible spinoff of the core VW brand and parts operations into separate entities. The works council, IG Metall, and the state of Lower Saxony have all vowed resistance, the same coalition that forced CEO Oliver Blume’s retreat from closures in 2024. The pressures have only worsened since then. Non-Chinese automakers’ share of the Chinese market fell from 57% in 2020 to 32% in 2025, and BYD, Chery, SAIC, and Leapmotor doubled their combined European share through May. A restructuring of this scale would take years to work through the German supply base. Suppliers with heavy exposure to the four named plants should be reassessing program volumes now, not after the July 9 meeting.

Mergers, Ventures, Acquisitions

The cost drive extends to software. Volkswagen reportedly plans to end its automated-driving partnership with Bosch, launched in 2022 through its software unit Cariad, after roughly $1.7B in investment produced technology that internal assessments judged not yet competitive, per a Bild report. VW intends to source driver-assistance hardware and software from a new partner instead, with a contract targeted for September.

Stellantis and Nissan are in talks to take over some Marelli assets as the supplier works through Chapter 11, one year after filing. Stellantis is discussing Marelli's suspension business in Italy, Poland, Brazil, and Mexico, while Nissan is looking at cockpit assets in Japan. The two automakers are Marelli's largest unsecured creditors, and their future order commitments will be key to the reorganization, which is expected to conclude this year under the ownership of senior lenders including Strategic Value Partners, MBK Partners, Fortress, and Polus Capital. Carve-outs for the two customers most dependent on Marelli parts would keep critical lines running while reducing the value realized from bankruptcy. Anyone sourcing from the remaining 150-plus-facility portfolio should watch which assets stay.

Opening

The LFP battery plant Ford built in Michigan under CATL technology licensing was completed and began production in June, according to a CATL vice president. The project survived a rocky three years: congressional scrutiny, a 2023 suspension and restart at reduced scale ($2B and 20 GWh, down from $3.5B and 35 GWh), and Ford's December 2025 EV retrenchment, which wrote down $19.5B in EV assets and shifted part of the plant's capacity to energy storage products. First automotive battery deliveries remain on schedule for 2026, destined for Ford's economy and mid-size electric pickups.

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Production Decrease

CATL also sits at the center of a Mercedes-Benz production problem. Mercedes paused the ramp of the electric GLC at Bremen after battery deliveries from CATL's new Debrecen, Hungary plant were delayed by environmental certification issues, forcing slower sea shipments from China, and after spring flooding damaged wiring harness production at Kromberg & Schubert's Morocco plant. Mercedes says both issues are resolved, but customers face waits of around six months, and it is unclear whether lost output can be recovered by year-end.

Production Increase

CATL's Jianxiawo lithium mine in Yichun, Jiangxi, resumed production on June 29 after securing its safety permit, ending a suspension that began in August 2025 when its mining license expired. The lepidolite mine has an annual capacity of about 100k tons of lithium carbonate and accounted for 8% to 10% of China's output before the halt, with analysts expecting more than 45k tons of incremental supply in the second half. Lithium carbonate futures still jumped 8.4% on the news to about $24.1k per ton, though high inventories and the fresh supply are expected to hold prices in a range of roughly $22k to $29k per ton.

Raw Material Costs

• Resource: Reuters columnist Andy Home on why the battery metals bust has run its course. Useful context for the Jianxiawo restart above. Cobalt and nickel recoveries rest on export controls in the DRC and Indonesia, lithium's on price-driven supply destruction, and grid storage is now 15% of battery demand. The column flags demand-destruction risk if prices keep climbing, with some storage projects already at break-even.

  

Automakers, including Ferrari, BMW, and Stellantis, are expanding the use of aluminum wiring in place of copper as copper prices approach record levels near $15k per ton, more than four times aluminum's price. JPMorgan estimates the substitution will affect about 2% of global copper demand this year and could displace up to 6% by 2030, with Chinese policy guidance actively encouraging the switch. Aluminum's lower conductivity requires larger cables, and US tariffs on aluminum products complicate the economics. For harness and cable suppliers, the transition is becoming a real requalification workload, and copper exposure in long-term contracts deserves a fresh look.

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Regulation

The Trump administration will not extend USMCA, starting the pact’s sunset process: annual reviews for up to 10 years, with expiration on July 1, 2036, unless the three countries agree to a 16-year extension. Mexico has signed a letter seeking extension, and Canada says it is ready to negotiate improvements, but Washington has scheduled its next formal round with Mexico only for the week of July 20, leaving Canada sidelined amid a list of bilateral irritants. The declaration changes little on the ground, since US tariffs of 25% on Canadian and Mexican autos and parts and 50% on steel and aluminum already override the pact’s duty-free terms.

The substance of the review is content rules. The US is demanding 50% US-specific content in North American vehicles, which would push required regional content to about 82% from today's 75%, and wants higher thresholds on parts, including batteries and ADAS, where a capable local supply base largely does not exist. Automakers are united in wanting the pact preserved as a trilateral deal, with Ford calling it a bedrock for investment and GM seeking lead time on any origin changes, while the UAW wants import quotas, a wage floor, and stricter labor enforcement, or US withdrawal. A Mexican official said both governments agree on the problems and floated a universal 15% auto tariff with a lower rate for Mexico and Canada under tighter rules of origin.

Rules of origin are also the flashpoint across the Atlantic. The SMMT estimates that British EV makers face $1.85B in tariffs if the UK and EU do not resolve battery content requirements before they take effect in January, triggering a 10% tariff on 70% of battery-electric and plug-in hybrid vehicles traded between the two. The trade at risk is worth about $21.7B, and the rules were already delayed once in 2023 after carmakers threatened to close British plants.

Relocating

Porsche plans to move Cayenne production from Slovakia to its Leipzig plant to shore up capacity utilization in Germany, conditional on workers accepting pay cuts, per an FAZ report. The move represents part of the wider Volkswagen Group cost drive and follows Porsche's decision not to renew several hundred temporary contracts, as well as a plan to cut 200 jobs by August through voluntary agreements. Volumes leaving Bratislava would dent utilization at the Slovak plant and pull demand from its local supply base.

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Contents

CLOSING

• Nissan ends CIVAC production

CYBER SECURITY

• Tata Electronics breach exposes designs

EXPANDING

• GM expands Brazil investment

• BYD accelerates European manufacturing

• Henglong builds Saltillo steering plant

• EcoCable plans Durango copper plant

HUMAN CAPITAL

• Lucid cuts jobs and shifts

• Renault reduces French engineering roles

• Porsche weighs deeper workforce cuts

• Tesla expands Giga Berlin staffing

INDUSTRY DIRECTIONS

• Subaru adds flexible powertrain production

• Nissan pauses electric Qashqai plans

LABOR DISPUTE

• Hyundai union authorizes strike action

• Audi Mexico reaches union deal

PRODUCTION DECREASE

• Oshawa Silverado output faces cuts

PRODUCTION INCREASE

• Toyota ramps hybrid RAV4 output

• Mexico auto parts production hits record

• Volkswagen starts MEBeco drive production

RAW MATERIAL COSTS

• LFP cathode prices double

REGULATION

• Polestar barred by Chinese software rule

• US Section 232 relief demands traceability

• China targets US rare-earth firms

• EU prepares China PHEV tariffs

SUPPLY CHAIN

• Hormuz recovery slips to September 2026

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Closing

Nissan has closed its CIVAC plant in Jiutepec, Morelos, ending nearly 60 years of production at the site that became its first manufacturing base outside Japan in 1966. Output shifts to Aguascalientes, where Nissan is consolidating Mexican production for export, with the US accounting for close to 45% of its combined Mexico and Japan export sales. The closure is just one piece of a global restructuring that cuts capacity from 3.5M to 2.5M vehicles, shutters 7 of 17 plants, eliminates about 20k jobs, and trims platforms from 13 to 7. For Tier 1 and Tier 2 suppliers tied to CIVAC, the move concentrates Nissan's Mexican demand in a single complex and pulls a decades-old anchor out of the Morelos supplier base.

Cyber Security

Tata Electronics, a contract manufacturer that builds parts for several automakers, confirmed a cybersecurity breach after the ransomware group World Leaks posted more than 200k stolen files totaling over 630GB. The dump included design and specification documents for Tesla components, among them a Model Y charge-port controller and trade-secret drawings for the Model 3, which surfaced as the clearest evidence of the intrusion. The wider Tata group’s Jaguar Land Rover unit was hit by a separate cyberattack last year that halted output for six weeks. As vehicle and electronics production concentrates in a handful of large contract manufacturers, a single breach can expose proprietary engineering across an entire customer roster and idle downstream plants.

Expanding

General Motors will add $675M to its Brazil investment plan, lifting the total committed through 2028 to $2B. The money will mainly fund operations in São Paulo state and support the renewal of the Chevrolet portfolio, hybrid vehicles, and factory modernization. The hybrid tilt mirrors GM’s broader retreat from EV-only plans and points its Brazilian supply base toward combustion and hybrid content rather than battery-electric.

BYD is pressing a long-term European build-out, striving to be seen as a European manufacturer within five years through local production, an expanding dealer network, and region-specific products. It will start building cars at its new Szeged, Hungary plant in Q4-2026, has paused its Turkey project to concentrate on Europe, and is hunting for a second assembly plant it would rather buy than build, with Spain among the options. The push leans on plug-in hybrids such as the new Dolphin G, BYD’s first model developed for Europe, as it hedges against uneven BEV demand. Volkswagen and Stellantis have signaled they could sell plants or partner with Chinese makers to shed overcapacity, which would hand BYD a faster route into European production and rewire the supplier base around those sites.

CHL/Henglong Mexico Automotive, a Chinese firm, is investing $42M in Saltillo, Coahuila, to build steering systems, including power steering, for automotive and commercial vehicle customers. The two-phase project is expected to employ 162 people.

EcoCable is investing more than $31M in a new plant in Gomez Palacio, Durango, to produce oxygen-free copper wire for automotive electrical and electronic systems. The two-phase, 200-worker plant development is expected to begin hiring in early 2027.

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Human Capital

Lucid is cutting 18% of its workforce, roughly 1.5k employees, 4 months after a 12% reduction, and has eliminated the 2nd production shift at its Casa Grande, Arizona, plant. The cuts are the first major move by new CEO Silvio Napoli and hit full-time staff, contractors, and hourly production workers, yielding about $158M in annual savings against roughly $32M in severance costs. Lucid produced 5.5k vehicles in Q1 but delivered just 3,093, and the shift cut aligns capacity with demand it is not generating. The Saudi Public Investment Fund remains the backstop, but a second mass layoff in one year and a killed shift signal a reset to a smaller production reality, with volume risk for the supplier base built around Casa Grande.

Renault will cut 800 engineering jobs in France by the end of 2027 as part of a planned 15% to 20% reduction in its engineering workforce, with France accounting for half of the global total of 5.5k. The goal is a leaner, faster R&D operation to match Chinese rivals, which now develop vehicles in 2 years compared to the industry’s traditional 4 to 5 years. The plan, due for union approval in July, also funds retraining for 2.5k workers and 150 to 200 new hires focused on electrification, software, and AI.

Porsche is in talks with employee representatives to cut jobs within a streamlining push, with CEO Michael Leiters warning that the cuts planned so far will not be enough to secure competitiveness. The company is shedding non-core assets, including stakes in Bugatti Rimac and the Rimac Group, and is shutting its Cellforce battery-tech unit, an e-bike drive developer, and a data-communications software maker. It is delaying all-electric rollouts in favor of new gas and hybrid vehicles under a value-over-volume strategy, with restructuring costs expected to range from $915M to $1.03B and tariff costs around $800M this year.

Tesla will hire another 1k workers at its Grunheide plant near Berlin, its second 1k-person wave in three months, as it targets 7.5k vehicles per week from October. That pace, a 25% jump on the roughly 6k weekly run rate that the April hires were meant to deliver, would put the plant near 390k vehicles a year, still short of its 500k design capacity but its highest sustained output. Giga Berlin builds only the Model Y for Europe, so the demand swing feeds straight to the line, and Tesla is separately staffing up local battery cell production. The recovery rides largely on higher European fuel prices steering buyers toward EVs rather than on new products, which leaves the ramp-up exposed if energy markets ease.

Industry Directions

Subaru will start mixed production of hybrid, gasoline, and electric vehicles on a single line at its Yajima plant north of Tokyo in August, its first three-powertrain line, building the Forester hybrid and gas models alongside the electric Trailseeker and Toyota bZ4X Touring. The "ultraefficient production" approach lets Subaru shift volume between powertrains and between its Japanese and Indiana plants as tariffs, exchange rates, and demand move. It plans to extend the method to its US plant and to the new Oizumi plant opening as early as 2028, which will start with combustion vehicles and add EVs later. For suppliers, flexible lines mean less predictable per-powertrain volumes and a premium on components that fit multiple drivetrains.

Sticking with Nissan's restructuring, the automaker has halted development of an electric Qashqai, its top-selling model in Europe, where gas- and hybrid-powered versions accounted for about 45% of its 330k European sales in 2025. The EV was committed to Sunderland in 2023 but was halted early last year, and even a restart would not reach the market until the early 2030s, leaving Nissan trailing in a key segment. A planned three-in-one electric powertrain at the Sunderland JATCO plant has also been scrapped, and Nissan is now seeking UK funding tied to new models and job protection at the 6k-worker site, while studying building Chery vehicles on one of its two lines.

Labor

Hyundai’s South Korean union has voted to authorize a strike after wage talks stalled, raising the prospect of production disruption at Korea’s top automaker. The union wants a $97 monthly base-pay increase, a bonus equal to 30% of last year’s net profit, and guarantees on how AI affects jobs, pressing harder after Samsung agreed to share 10.5% of operating profit with its chip workers.

Labor talks landed more smoothly in Mexico, where Audi reached a pre-agreement with its union for a 19.5% total compensation increase, a 4.6% wage rise plus a 14.9% benefits boost. The agreement is headed to a worker vote on June 23 - 24 at the San Jose Chiapa plant in Puebla. The contract deal comes as Audi’s Mexican output fell 14% year over year through May and exports dropped 23.8%. The plant has already idled twice in 2026 for maintenance and upgrades. A ratified contract clears near-term strike risk at a plant already running below capacity, though the cost step-up adds margin pressure as volumes soften.

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Production Decrease

General Motors is on course to end light-duty Chevrolet Silverado 1500 production at its Oshawa Assembly plant before the end of 2026, leaving only the heavy-duty variant, according to AutoForecast Solutions, though GM Canada disputes any scaleback. The plant already dropped from three shifts to two in January, cutting about 700 jobs and roughly 50k units of output. Losing the Silverado could push it to a single shift and about 50k vehicles a year, since the redesigned HD models are not due until 2029. Tariffs on Canada-built vehicles are the throughline, and the contrast is stark: GM is adding light-duty pickup capacity in Indiana and working six-day weeks in Flint, while Oshawa is eroding ahead of summer Unifor contract talks.

Production Increase

Toyota is ramping up production of the redesigned, hybrid-only RAV4 across the three plants that build it after a changeover left US inventory thin, with deliveries down 40% through May to about 122k. Georgetown, Kentucky, began US production in June, adding an expected 40k vehicles this year and scheduled to lift that by about 50% next year, while the bulk of US supply still comes from Canada and the Takaoka plant in Japan that started in December. At Georgetown, the RAV4 shares Line 2 with the hybrid Camry, whose sales are climbing, tightening capacity on a single line. Even with Kentucky online, Toyota expects to finish the year down nearly 55k US RAV4 sales purely on inventory, about $1.8B in lost revenue at roughly $33k wholesale, a steep figure while tariffs push its North American operations into the red.

Mexico’s auto parts production hit a record $31.2B in the first quarter, up 9.6% year over year, driven by stable US assembly demand, which accounts for 87.3% of the country’s component exports. Electrical parts, nearly a 1/5 of output, rose 11.6% to $6.1B, while gasoline engine production jumped 42% to $1.87B, coinciding with Hyundai’s new hybrid-powertrain operations in Nuevo Leon. Coahuila, Guanajuato, and Nuevo Leon led by state, and the sector held a $9.97B trade surplus. Mexican parts now account for 45% of all US automotive parts imports, making the sector’s health and tariff exposure a direct input into US assembly continuity.

Volkswagen Group has started series production of its new MEBeco electric drive at Györ, Hungary, backed by $400M, including about $26M in Hungarian state funding, and is adding 260 workers as output scales from one shift to three. The plant now builds complete powertrain units, including components and assemblies such as the rotor, laminated core, and power electronics, a step up in vertical integration for VW. The MEBeco, part of the MEB+ platform, will power the Cupra Raval and the coming VW ID. Polo, ID. Cross, and the Skoda Epiq small-car family.

Raw Material Costs

Prices for lithium iron phosphate, the most dominant cathode chemistry for EV and storage batteries, have roughly doubled over the past year. A 400-kg pack is now above $3,650, up from about $1,460 a year ago. Demand has held steady through the climb, pulled by accelerating Chinese EV exports and fast-growing energy storage. The capacity that existed during the recent downturn cannot return quickly, so the squeeze will continue to persist. For cell makers and automakers, the price increase feeds straight into battery costs and will force renegotiation of long-term contract pricing, with the likely hedge being upstream deals to lock in mineral supply.

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Regulation

Polestar will exit the US market after the Commerce Department denied its request to continue selling, making it the first major casualty of the US rule barring vehicles with Chinese-developed software over national security concerns. The Geely-controlled brand will sell its remaining US stock and keep service centers open, then concentrate on Europe, which accounts for about 80% of its sales. Volvo, also Geely-owned, won authorization in May on a case-by-case review, so the line is being drawn on data and software provenance rather than ownership alone, and lawmakers are now floating a ban on Chinese-owned carmakers building in the US as well.

• Supply Chain Dive: Steel, aluminum makers face records gauntlet for new US tariff exemptions
  Worth a read for purchasing and trade-compliance teams: Canada and Mexico producers feeding the US auto supply chain can halve the 50% tariff to 25%, but only by committing to specific US capacity-expansion projects and proving it through end-to-end traceability, milestone reporting, and accounting records customs can follow, with the reduced rate revocable if they fall short.

  

China added MP Materials and USA Rare Earth, both in the US mine-to-magnet rare earth chain, plus motor maker Aveox and other US entities to its export control list, halting Chinese dual-use exports to them in retaliation for recent US restrictions. Analysts read the move as largely symbolic since the named firms are mostly defense-linked and do little business in China, but it lands amid a wider tit-for-tat that added BYD and NIO to a US list of companies seen as aiding China's military. The item to note for automakers remains the ongoing weaponization of rare-earth and magnet supply, where China's leverage over inputs to motors and actuators remains an open risk regardless of these specific designations.

The same Chinese PHEV push driving BYD’s European strategy is now drawing a tariff response. The European Commission has prepared duties on plug-in hybrids built in China and could impose them once a majority of member states agree, extending the countervailing duties already on China-built BEVs and range-extenders that add up to 35% on top of the standard 10%. Chinese brands pivoted to PHEVs to sidestep BEV tariffs, and it worked: the BYD Seal U is the EU’s best-selling PHEV, and Chinese-brand PHEV sales were up 236% in April. Closing the PHEV lane would push the same makers harder toward local European assembly, accelerating the plant purchases and factory-sharing deals already in motion and pulling Chinese supplier content onto the continent.

Supply Chain

The US and Iran have agreed to reopen the Strait of Hormuz; however, ocean networks are not expected to recover until mid-September 2026, with a 60-day window to complete the deal and minesweeping still ahead. Far East to US West and East Coast spot rates have jumped 192% and 158%, respectively, since the conflict began in February. Those rates are expected to keep climbing for about 4 weeks before peaking around the formal reopening of the Strait. Bunker fuel and oil prices fell roughly 20% in mid-June, which should ease fuel surcharges, but automotive importers and parts shippers face elevated freight and full vessels into July, a cost that is layered on top of the tariff pressure already in the chain.

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Most teams can name their direct suppliers. Far fewer can say who sits two, three, or four tiers down, and that gap is where this week’s risk lives. What counts as “your chain” is also widening fast. It is no longer just parts and the firms that make them.

It is now local-content thresholds that determine whether a vehicle qualifies for tariff relief, as with BYD’s push for 50% local content in Brazil and the EU’s proposed content rules reshaping where Chinese brands can build.

It is the lines of code in a connected vehicle, where Ford must seek federal authorization to keep selling a Lincoln whose software is written in the US but installed in China. Your exposure now runs to ownership structures, software origin, and the financial health of firms you may never have heard of.

Knowing all of this by spreadsheet is no longer realistic, and you cannot manage a risk you cannot see. Mapping the chain beyond your direct suppliers, surfacing the ownership links and dependencies that create hidden exposure, is what turns a surprise into something you saw coming. It is the problem we built supplyAware™ to help with, and it has rarely mattered more.

Best,

Nick Gaydos
Editor

Contents

BANKRUPTCY

• First Brands advances liquidation plan

EXPANDING

• Hyundai weighs new Mexico plant

• Volvo offers Geely European capacity

• BYD expands Brazil battery output

HUMAN CAPITAL

• Volkswagen accelerates German restructuring

INDUSTRY DIRECTIONS

• Stellantis commits minicars to EVs

LABOR DISPUTE

• Dauch strike ends with contract

• Unifor enters difficult Canada talks

• Ford Canada begins pattern bargaining

LITIGATION

• OPmobility sues Marelli over secrets

MERGERS, VENTURES, ACQUISITIONS

• Honda partners with QuantumScape

• Geely continues asset consolidation

• Principal Mineral acquires Isola

OPENING

• Vulcaflex plans Auburn materials plant

• Sungwoo chooses Monterrey battery plant

• ALMAC converts Alabama factory

PRODUCTION INCREASE

• Foxconn plans Polish EV production

• Renault starts Brazilian Geely production

REGULATION

• China revokes automaker licenses

• Battery standards tighten in China

• European capacity attracts Chinese automakers

• UK weighs Nissan Sunderland support

• EU approves US tariff deal

• Connected-car rules pressure automakers

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Bankruptcy

A US bankruptcy judge in Houston cleared First Brands to solicit creditor votes on a wind-down plan that funds lawsuits against its indicted founder, with approval set for July. The parts maker collapsed in September after lenders alleged it double-pledged assets as collateral, and once its $1.1B bankruptcy loan ran out in January, it leaned on prepayments from Ford and GM to keep parts flowing. It now sits $223M behind on administrative expenses, including to its unpaid suppliers who shipped parts after the filing.

Expanding

Hyundai is weighing a Mexican plant of more than $2B and 250k to 300k units a year, with any decision hinging on the USMCA review and a possible Mexico-South Korea trade deal. It already runs over $2.5B in Mexican operations, and a new plant would pull additional supplier capital expenditure to the site. Mexico's January jump in tariffs from 20% to 50% on imports from non-FTA countries already hits roughly 8 out of 10 vehicles Hyundai brings in, with the local CEO saying that more than half of last year's profit will go toward absorbing the impact. The plant reads as a hedge against that tariff wall, and the conditional framing signals Hyundai will not commit greenfield capital until USMCA terms are clear.

Volvo CEO Hakan Samuelsson has offered the automaker's European plants to build for its Geely siblings, Zeekr and Lynk & Co, calling existing capacity a faster, cheaper route than a greenfield site. Volvo runs factories in Torslanda, Sweden, and Ghent, Belgium, with a third opening in Kosice, Slovakia next year, and any could host sibling production. Local builds would let Geely sidestep the EU's 18.8% tariff on its China-built EVs, which adds to the standard 10% duty, though Ghent qualifies only if Volvo cuts its labor and energy costs. This is the brand-specific facet of the wider Chinese capacity scramble covered below.

BYD is scaling up battery production in Brazil to raise local content in its Brazil-built cars to 50% by the start of 2027. It will invest about $1.08B in its Camacari plant in Bahia and up to $98M in a new battery energy storage line, and will decide within 90 days whether to site that line in Manaus or build a new one. Brazil is the clearest test outside China of BYD's vertical-integration model, building batteries, vehicles, and now grid storage in one footprint, which compresses the market for any Tier 1 hoping to supply the same content locally.

Human Capital

Volkswagen is pushing ahead with a restructuring targeting $6.9B in annual net savings by 2030, having already cut about $1.15B through bargaining and downsizing, and planning to eliminate roughly 50k German jobs by 2030. Factory costs at its German sites fell more than 20% on average in 2025 as it right-sizes for stable rather than growing volumes. The move follows BMW's outlook cut due to a weakening China, feeding concerns that profit warnings are building across the sector. A structurally smaller VW means fewer programs and lower volumes to bid on, with the pain falling on Tier 1s and Tier 2s tied to legacy combustion platforms.

Industry Directions

Stellantis is dropping multi-powertrain versions of its next-generation minicars, committing to electric-only E-Car models priced at $17.4k, which would undercut nearly every EV in Europe. The two models, a Fiat and a Citroen 2CV remake, will use a dedicated platform built with partners, possibly including Leapmotor, with which Stellantis already shares production sites in Spain. Locking the entry segment to a single powertrain sharply narrows the supplier set, favoring partners capable of meeting aggressive EV cost targets and sidelining the mild-hybrid and ICE suppliers that currently share these platforms.

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Labor

UAW Local 2093 has ratified a four-year contract with Dauch Corporation, ending a 10-day strike at the driveline supplier's Three Rivers, Michigan, plant with 80% approval. The deal delivers a 36% wage increase to $30 per hour by 2030 with no new health care concessions. It clears a near-term production risk for General Motors, which relies on Dauch driveline parts, and extends the run of UAW wins, resetting Tier 1 labor cost assumptions.

Unifor enters summer talks with the Detroit Three in Canada under conditions its leaders say could rival the 2008-09 collapse. Local 444 President James Stewart cited trade instability, tariffs, and USMCA uncertainty as forces the union cannot bargain away, even as workers expect gains after years of inflation. He signaled the talks will focus less on wages than on securing sufficient production to justify long-term investment in Canadian plants, including the idled Brampton Assembly Plant, and on floating partnerships to build offshore automakers' vehicles in Canada under different nameplates.

Ford Canada opens bargaining on June 22 as Unifor's pattern target, chosen because it maintained its Canadian investment through 18 months of trade upheaval. It has about 5,000 unionized workers and recently invested nearly $3.65B to retool Oakville for Super Duty, including an Essex Engine Plant expansion in Windsor, and now wants added operational flexibility in return. The Ford pattern cascades to GM and Stellantis before the September 20 expiry, so whatever production-security language Unifor wins here becomes the template for the whole Canadian footprint.

Litigation

OPmobility, formerly Plastic Omnium, has sued bankrupt rival Marelli for trade secret misappropriation, alleging it poached former OPmobility CEO Laurent Favre despite warnings the hire could expose confidential information. Supplier distress reshuffles talent as well as assets, and a bankrupt competitor pulling in a rival's recent CEO raises real questions about where proprietary cost and program knowledge lands.

Mergers, Ventures, Acquisitions

Honda has signed a multi-year joint research agreement with QuantumScape to develop and manufacture solid-state batteries, making it the developer's second major OEM partner after Volkswagen. It follows a hands-on benchmark against competitors and builds on Honda's own pilot solid-state line at Sakura, Japan, which began in early 2025, with QuantumScape's Cobra separator process intended to enable gigawatt-hour-scale output. The value lies more in the manufacturing method than in the chemistry, since scaling separator production has been the unsolved problem, and a second OEM signing points toward industrial viability even as Honda trims its broader EV plans.

Geely chairman Eric Li says the group will continue to close, merge, and restructure redundant entities to concentrate resources under its core listed platform, Geely Auto, extending the consolidation that has already absorbed Zeekr and Lynk & Co. Zeekr completed its merger and delisted from the New York Stock Exchange in December. A tighter Geely means fewer but larger platform programs and consolidated purchasing leverage, favoring scale suppliers and squeezing those serving niche sub-brand volumes.

Principal Mineral, a Dallas firm building a US printed circuit board supply chain, is acquiring Cerberus-backed Isola Group, a maker of PCB components for vehicles, aircraft, and AI servers, and has raised about $280M to expand. PCBs sit deep in the automotive electronics stack, and a domestic source matters as OEMs work to decouple from Chinese-origin components, a pressure that the connected-vehicle software rules are now sharpening.

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Opening

Italian synthetic leather maker Vulcaflex will build its first US plant in Auburn, Alabama, a nearly $70M site with 130 jobs supplying interior materials for vehicles built across the US, Canada, and Mexico. It joins recent Auburn supplier investments, including Kamtec Auto USA and DUCK IL USA. The clustering of foreign interior and component suppliers around Alabama's OEM base reflects the localize-to-serve logic, putting Tier 1 and Tier 2 capacity closer to assembly to limit tariff and logistics exposure.

South Korea’s Sungwoo Corp will invest $18M in a Monterrey, Nuevo Leon plant to produce safety components for rechargeable batteries, as well as automotive electronics and storage parts, with completion targeted for the first half of 2027. It had weighed a US site but chose Mexico on labor cost, skilled workers, and infrastructure, serving both US and Mexican markets from there. Sungwoo's choosing Mexico over the US, even for battery-safety content, runs counter to the US-reshoring trend elsewhere in this issue, a reminder that cost still wins when the tariff math allows.

ALMAC, a supplier of aluminum EV components, has acquired a 300k ft² former building-products plant in Eufaula, Alabama, with work starting late 2027 and about 100 jobs across two shifts. It cited proximity to Hyundai and Kia assembly, taking over a site Nucor Buildings Group vacated last year for Texas. The reuse of an idled building for EV aluminum production is the brownfield version of the same nearshoring pull that is drawing suppliers to Alabama’s OEM cluster.

Production Increase

Foxconn and state-backed ElectroMobility Poland have confirmed a venture to build three mid-range electric SUVs in Jaworzno from 2029, at a plant designed to produce 400k vehicles a year, with Poland lending roughly $1.23B from EU recovery funds, and a paired semiconductor factory also planned. Foxconn's move from contract electronics into European vehicle and chipmaking is a credible new entrant, and a 400k-unit platform built on reference designs could become an open manufacturing base that reshapes where mid-market EV suppliers invest.

Renault Geely do Brasil has started local production of the Geely EX2 EV at the Ayrton Senna plant in Parana, its second Geely model after the EX5 plug-in hybrid. Geely shifted from importing after taking a 26.4% stake in Renault do Brasil in November 2025, thereby gaining access to its manufacturing and dealer network. This mirrors Geely's European playbook of buying into an established automaker's capacity rather than building greenfield, thereby deepening localization and sidestepping import friction in priority markets.

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Regulation

China's MIIT has permanently revoked the production licenses of eight automakers, including FAW Xiali, Brilliance Auto, Zotye, and Lifan, and ordered their lines sealed. Most leaned on rebadging with minimal R&D and could not meet tightening emissions and intelligent-driving rules as passenger car retail sales fell 19.5% year on year from January through May. GAC AION and Geely absorbed some freed plants and teams, turning a slow shakeout into reallocated capacity.

The same consolidation pressure runs through China's two mandatory safety standards, which take effect July 1. The battery rule replaces the five-minute pre-fire alarm with a no-fire-or-explosion requirement, adds a bottom-impact test, and requires cells to survive a short-circuit test after 300 fast-charge cycles, which analysts expect will lift battery costs and favor compliant makers like CATL and BYD. It is a regulatory filter on the supply base: cell makers that cannot certify lose program eligibility, accelerating the shakeout that the delicensing just formalized.

Chinese-owned automakers are racing to lock in European factory space before the EU's proposed Industrial Accelerator Act, which would impose foreign-ownership caps, local-content rules, and approval requirements on large investments by countries that hold over 40% of global capacity in key sectors. With the act unlikely before mid-2027, executives say there is no time for greenfield, leaving brownfield takeovers of idle European capacity as the only fast route, and there is plenty:

• Jefferies puts Stellantis at about 1.6M unused units against 2019 levels and Volkswagen at another 800k, amid closures at Audi Brussels, Nissan Barcelona, and Ford Saarlouis.

• BYD has opened a 300k-capacity plant in Szeged, Hungary, and is scouting Spain and Italy,

• Stellantis is lining up Leapmotor in Zaragoza and Dongfeng's Voyah in Rennes

• Chery is building at Nissan's former Barcelona plant with Ebro

• SAIC's MG will open a 120k plant in Galicia

• Geely is in talks to buy part of Ford's Valencia site

Chinese brands have gone from 0.5% of European market share in 2021 to nearly 10% in spring 2026, and Jefferies estimates the deals could eventually put more than 2M cars a year on European production lines. For European Tier 1s, this is a rare demand-side bright spot, but the IAA's local sourcing and IP licensing conditions will determine who actually wins the content.

That scramble reaches Britain, where the government is in advanced talks to give Nissan financial support in return for a long-term commitment to its Sunderland plant. Any aid, via grants, tax breaks, or subsidies, would be tied to new models and to protecting the roughly 6k jobs at a plant that built over 35% of UK-made cars last year, even as Nissan cuts 15% of its global workforce. The commitment is expected this summer, timed to Britain easing its EV mandate, and Nissan has also signed a pact with Chery to study the production of Chinese vehicles on one of Sunderland's two lines. Both moves point in the same direction: Sunderland's survival now depends on filling the lines with someone's volume, whether through a softer mandate or a Chinese partner.

The European Parliament has approved the implementation of last summer's framework trade deal with the US, locking in a 15% US tariff cap on EU imports in exchange for the EU dropping tariffs on all industrial goods. A sunset clause expires at the end of 2029, and the EU can suspend its concessions if the US keeps steel and aluminum derivative tariffs above 15% past the end of 2026 or breaches the cap. Two Section 301 probes still hang over the pact, one on forced-labor enforcement that could add a 10% EU tariff and one on excess capacity. The 15% ceiling is the planning baseline industry wanted, but the steel and aluminum carve-out keeps real exposure on high-metal-content parts, and the Section 301 probes mean the number is not settled.

On a second trade front, Ford and others are scrambling for US authorization to keep selling models caught by the ban on Chinese software in connected vehicles. Ford has asked Commerce to keep importing its China-built Lincoln Nautilus, whose software is written in the US but installed in China, with software rules biting for model year 2027 and hardware rules for 2030, and the rules also cover Chinese-owned automakers like Volvo, which already has an authorization. The harder phase is hardware: GM has told some suppliers to purge China-sourced parts by 2027, and Pirelli has started US production after warning that a product risked a ban over a Chinese shareholder. The scramble shows how deeply US auto supply chains are wired into China, and the 2030 hardware deadline is the one that forces real resourcing, giving domestic plays like the PCB reshoring above a clearer runway.

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Contents

DISASTER

• Novelis Oswego hot mill restarts

• Hyundai Chennai resumes after fire

INDUSTRY DIRECTIONS

• Mexico advances Olinia micro-EV plan

LABOR DISPUTE

• Dauch strike ends with agreement

• Plasman strike idles Volvo Gent

• OPmobility dispute threatens JLR supply

• Unifor enters Detroit Three talks

MERGERS, VENTURES, ACQUISITIONS

• Dana buying Eaton mobility business

• Nio partners with GigaDevice chips

• Changan exits Ford EV venture

• BYD pauses Turkish plant plan

• BYD eyes European brownfield factory

REGULATION

• OEM partnerships become a platform necessity

• Trump uncertainty clouds USMCA renewal

• Mexico challenges higher US tariffs

• Japan automakers absorb policy costs

• China meets to curb automaker price war

• China's indium controls tighten supply

SUPPLY CHAIN

• BASF warns of upstream shortages

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Disaster

Novelis has restarted the hot mill at its Oswego, New York, plant, the largest domestic source of aluminum sheet for the US auto industry. This comes nine months after fires in September and November forced it offline. The shutdown pushed Ford to project $1.5B to $2B in one-time costs to secure alternative aluminum until the plant reaches full throughput later this year. GM and Stellantis are also dependent on the Oswego sheet for body panels. The restart eases a major sourcing crunch, though Novelis is still ramping, and the relief is only partial. Aluminum has climbed roughly 30% in 2026 due to the 50% US import tariff and supply risks in the Middle East tied to the Strait of Hormuz. Novelis, a unit of India's Hindalco, is separately adding capacity in Alabama. This would deepen the domestic supply once online.

Hyundai Motor India is restoring output at its Chennai Plant 1 after a June 1 fire at supplier Mobis India's Sriperumbudur facility disrupted the supply of chassis, cockpit, and front-end modules. Full normalization is expected by June 22. The blaze started in the scrap yard and spread to two units. This left Hyundai sourcing the affected parts from alternate locations, while its Pune and second Chennai plants ran without major interruption. Hyundai expects to recover most of the lost production next quarter. The episode is a reminder of how concentrated module sourcing magnifies single-site risk. These integrated assemblies have no quick second source, so one fire idled a line for weeks.

Industry Directions

Mexico’s government-backed Project Olinia has entered negotiations with more than 10 business groups to form a public-private partnership for a low-speed electric microvehicle. The project targets 50k units by 2029, with commercial deliveries expected from summer 2027 at roughly $8,400. The program is pursuing a 75% domestic content rate and plans to build a dedicated battery assembly plant in Mexico. This plant would import LFP cells, build a proprietary battery management system, and integrate packs locally. A cargo variant is slated for July 2026. Because Mexico lacks the scale of competitive cell manufacturing, the near-term build remains import-dependent for cells. Olinia is localizing pack assembly and trying to seed a domestic micro-mobility supplier base. The vehicle does not meet Mexico’s NOM-194 safety standard, so the government is drafting a new low-speed category. That change would also open the segment to other manufacturers.

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Labor

UAW Local 2093 reached a tentative four-year agreement with Dauch Corporation on June 10, ending the Three Rivers, Michigan, strike that began June 1. This resolves the near-term risk to General Motors' pickup output posed by last month's authorization votes. The deal lifts top production wages to $30 per hour by 2030, a 36% increase over four years from the current $22 top rate. The agreement now goes to the plant's 1k members for ratification. The walkout never reached GM's lines. Dauch had stockpiled axles since January, leaving a roughly two-week buffer. It kept output going with about 250 nonunion staff and temporary contractors. The Three Rivers plant feeds axles to GM's profitable heavy-duty pickups in Flint and midsize trucks in Missouri, and also makes Chrysler Pacifica parts and Nexteer linkage components. Dauch is investing $133M at Three Rivers as tariffs push production onshore. Its footprint expanded with the recent $1.4B Dowlais takeover, giving it more flexibility in future disputes even as labor costs rise.

The same supplier-labor dynamic played out in Belgium, where automotive supplier Plasman reached a draft agreement to end a strike at its Ghent plant after walkouts halted production earlier in June. The dispute flared when an expected new order was not assigned to the Ghent site. The stoppage starved Volvo Car Gent of parts, forcing it to suspend final assembly and lay off roughly 4k workers. The cascade is what matters here. A single supplier’s work stoppage idled an entire OEM assembly plant within days. There was little buffer between a parts strike and an assembly shutdown.

In the UK, the pay dispute at French supplier OPmobility is escalating toward a strike ballot at its Warrington plant. The site produces exterior body panels, bumpers, spoilers, and tailgates for Jaguar Land Rover's nearby Halewood factory. Roughly 80% of Unite members rejected the company's final offer. After that, OPmobility cut shift allowances and moved to four-day workweeks. These changes dropped take-home pay by about $670 a month. Unite is now preparing a formal strike ballot. If a walkout lands, Halewood faces the same single-source exposure that idled Volvo Gent. OPmobility's molded exterior modules are not quickly resourced.

Canada’s Unifor heads into Detroit Three bargaining on June 22, refusing any concessions. Two Ontario assembly plants are idle, and US tariffs erode the competitiveness of Canadian production. The union picked Ford to set the pattern, citing its commitment to Canadian operations. Ford includes engine output at Windsor and Essex, and a near-complete retooling of Oakville for heavy-duty pickups. The backdrop is grim for the other two. Stellantis halted its Brampton retooling in February 2025 and moved the planned product to the United States, leaving the plant idle. GM cut a third shift at Oshawa and idled its CAMI plant in Ingersoll after pulling the BrightDrop program. With contracts expiring on September 20, the collision between tariff-driven production migration and a no-givebacks stance puts the Canadian assembly footprint and the Tier suppliers around it under real pressure.

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Mergers, Ventures, Acquisitions

Dana will acquire Eaton's mobility business in a deal valued at about $5.1B. The combined supplier will have an enterprise value of over $10B and will operate as Dana Inc. The merger pairs Eaton's commercial-vehicle transmissions, engine, and emissions lines with Dana's powertrain, thermal, and sealing technologies. They target $250M in run-rate cost synergies within 24 months of the expected Q1 2027 close. The deal lets Eaton shed an underperforming automotive arm to concentrate on electrical and aerospace markets.

Nio signed a co-development partnership with Chinese chipmaker GigaDevice, a supplier of NOR Flash memory and microcontrollers. They will jointly design automotive-grade chips and next-generation electrical architectures for smart cockpit and driving systems. The deal advances CEO William Li’s campaign to slash semiconductor variety. Li flagged that Nio’s ES9 SUV carries more than 1k chip types and over 4k chips. Nio aims to cut the number to 400. The move fits the broader margin squeeze in China’s EV sector. Vertical chip co-design and standardization are becoming cost-survival tools. Li has pegged the potential industry-wide savings from standardizing cells and chips at roughly $14.8B.

Changan Automobile is listing its 40% stake in Changan Ford New Energy for sale at a reserve of about $22.8M. This would end its direct equity in the EV joint venture barely two years after launch. The venture, formed in 2023 to electrify the Changan Ford brand, has seen operations grind to a halt. It sold just 35 Mach-E units in 2025 and ceased Ford-brand sales and service last October. The retreat tracks Ford's broader pullback, which included canceling large EVs and dissolving its EV division by the end of 2025. Ford is also taking direct control of China distribution. The unwinding is another marker of foreign-Chinese EV joint ventures, stranding capital as Western OEMs scale back electrification and Chinese domestic brands take the volume.

BYD has put its planned Turkish plant on hold and is now hunting for a second European production site. Deputy CEO Stella Li named Hungary the top priority and a second facility the next in line. The roughly $1B Manisa project near Izmir was announced in mid-2024 and slated to open by late 2026, but it has not broken ground and has no timeline. The driver is not tariffs, since Turkey’s customs union with the EU already exempts it. Instead, the EU’s proposed ‘Made in EU’ local-content rules for publicly procured and subsidized vehicles are shaping plans. Germany has signaled it will fold these rules into its EV subsidies. BYD’s first European plant, in Szeged, Hungary, has itself slipped to Q4 2026, about a year late, with equipment still being installed.

For the second site, BYD wants a brownfield rather than new construction, with Spain on the shortlist. Advisor Alfredo Altavilla framed the logic plainly: the Made in Europe rules would bite before any greenfield plant could come online. Taking over and refurbishing an existing factory is the only fast route. That demand meets ready supply, as Stellantis has openly pitched leasing its underused European plants to Chinese automakers, including Leapmotor and Dongfeng. BYD's European sales passed 100k units in May, up 270% from last year. The brownfield-takeover pattern points to Chinese OEMs absorbing Europe's surplus assembly capacity rather than adding to it, reshaping who runs the continent's idle plants.

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Regulation

A Boston Consulting Group report argues that partnerships in platforms, software, and electrification have become essential as OEMs face flat sales and rising technology costs. Excess capacity in China and Europe forces OEMs to launch more variants on fewer platforms at lower per-model volume. The newer wrinkle is the direction of travel. Rather than absorbing Western expertise, Chinese automakers now offer leading-edge technology and rapid development. Partners co-innovate in China before globalizing. Stellantis is localizing European output with Leapmotor and Dongfeng to build cheaper EVs. Volkswagen turned to Rivian and Xpeng after its Cariad software arm failed to deliver. For suppliers, the through-line is consolidation. Fewer, larger shared platforms mean higher stakes for each platform win. More Chinese-origin architecture and software are entering Western vehicle programs.

President Trump said on June 10 that he was unsure he would renew the USMCA, unsettling the renegotiation just as talks with Mexico got underway. The pact matters to automakers chiefly because last year's exemption of USMCA-compliant goods from most US tariffs has been the main shield for the North American auto trade. In the first round of negotiations, US officials floated raising the share of a vehicle that must be American-made to qualify for those benefits. The risk for suppliers is twofold. A failure to renew would expose cross-border auto flows to the broader tariff regime, while a tougher rules-of-origin standard would raise compliance costs and could strand content sourced outside an expanded domestic threshold.

Beneath those renewal politics sits a concrete grievance Mexico brought to the table. Its vehicles face a higher effective US tariff than imports from Japan or South Korea. An internal document put the average effective rate on Mexican-built vehicles near 19%, compared with the flat 15% that Japan and Korea secured last year without any regional-content strings, so a $50k vehicle from Mexico carries about $9,375 in duties versus $7,500 from those countries. USMCA’s duty-free path requires 75% North American content, plus labor and value rules, and verifying origin across as many as 18k components per vehicle adds an estimated 3% cost penalty. Nissan has already announced it will end production at its COMPAS plant in Aguascalientes. The asymmetry inverts the logic of preferential access. The supposedly favored regional bloc now faces stricter rules and higher effective duties than those negotiated with outsiders, creating structural pressure to reassess Mexico's manufacturing footprint.

US policy swings have cost Japan's six major automakers up to $27.58B in the just-ended fiscal year across tariffs, EV write-downs, and emissions-rule reversals, a tally that could exceed $40B by March 2027. Tariffs are the largest piece, with Toyota projecting $17.22B and Honda $15.23B over the two fiscal years ending March 2027, hitting their US, Mexican, and Canadian production alike. The EV retreat drove Honda to book $9.05B in write-downs and post its first annual loss in roughly 70 years, while Nissan retooled its Canton, Mississippi, plant to build trucks rather than EVs. The relaxed US emissions rules cut both ways, letting Nissan and Mazda recoup set-aside penalty funds while forcing Subaru and Mitsubishi to write off now-unneeded emissions credits. For the supply base, the takeaway is volatility in volumes and program plans. Each portfolio reset and footprint shuffle reorders supplier allocations, and the costs are large enough to squeeze supplier support and pricing flexibility.

Two Chinese regulators summoned automakers to rein in a price war driven by below-cost pricing, demanding compliance with pricing and anti-dumping rules amid softening domestic demand. May passenger-vehicle retail fell 22.1% year on year to 1.51M units, with NEV sales down 7.5% in their fifth straight monthly decline, and dealers are cutting orders to avoid inventory buildup. The pressure is flowing offshore. NEV exports jumped 112.6% in May to 424k units, a record 54% of China’s passenger-vehicle exports. The combination of a regulated price-war truce and surging exports points to overcapacity, intensifying volume and pricing pressure on Western OEMs and the supplier bases tied to them.

China's export licensing controls on indium phosphide, in place since February 2025, are tightening the global supply of the compound semiconductor, whose lasers and photodetectors are used in automotive lidar and other optical sensing systems. The auto sector's volumes are modest, but the chokepoint is real. China produces 70% of the world's indium, and AXT, which makes most of its InP substrates in China, is caught in a permit backlog, with new non-Chinese capacity two to three years out. The exposure that matters is the playbook, not the volume. This is the same materials-chokepoint approach Beijing used on rare earths, which already disrupted auto, semiconductor, and aviation chains, and the sector's reliance on Chinese magnets and battery materials.

Supply Chain

On the same upstream-risk theme, BASF CEO Markus Kamieth warned that the US-Israel conflict with Iran is raising the odds of material shortages that could halt tightly run supply chains, including car production. He pointed to the emerging scarcity of inputs such as sulfur and helium, while BASF supplies coatings, plastics, catalysts, and battery materials across the auto industry. Purchasing teams at Volkswagen and Mercedes-Benz are working to mitigate exposure, but Kamieth noted that disruptions that start far upstream in chemicals or basic materials are hard to detect until they bite. The warning frames a second-half-2026 downside risk that is structurally hard to hedge, since a single missing basic input can idle assembly lines that depend on thousands of components arriving on time.

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Contents

CLOSING

• Autoliv exits Turkish airbag production

DISASTER

• Hyundai Mobis Chennai building destroyed

• Minda Noida fire damage under review

EXPANDING

• OPMobility plans Ohio exterior-parts plant

• Charleston expands automotive port capacity

HUMAN CAPITAL

• Michelin, Renault cut French costs

INDUSTRY DIRECTIONS

• Chinese OEM terms strain suppliers

LABOR DISPUTE

• Dauch strike threatens GM axle supply

MERGERS, VENTURES, ACQUISITIONS

• Tata licenses Chery EV platform

• JTEKT sells Moroccan steering plant

• Rheinmetall divests Power Systems unit

• SAIC reduces Indian venture control

OPENING

• SAIC plans MG factory in Spain

PRODUCTION INCREASE

• Berlin builds Canada-bound Model Y

REGULATION

• US eases metals-content tariff threshold

• Section 301 proposal spares covered autos

• Forced-labor duties threaten uncovered parts

• Connected-car rules force China sourcing exits

• US seeks stricter North American content

• Mexico supplier gaps complicate compliance

• Mexican auto exports fall sharply

RELOCATING

• Nexperia adds US semiconductor production

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Closing

Autoliv will close its only Turkish plant in Gebze and move production of seat belts, airbags, and steering wheels to undisclosed sites by mid-2028. This responds to weak demand in Europe, the Middle East, and Africa. The relocation will cost about $140M. The 2.2k jobs at Gebze are unlikely to be replaced elsewhere, given the outlook for demand. The site sits in the auto cluster east of Istanbul and supplies Ford, Hyundai, Mercedes-Benz, Renault, and Toyota. All assemble in Turkey, drawing on polyurethane foam for steering wheels and polyamide 6.6 for airbag fabric. The move continues cost-cutting under European operations head Magnus Jarlegren, who cut about 1.1k jobs across Germany, the UK, the US, and Italy in 2024. This is part of the 104k supplier job losses CLEPA has tallied over two years.

Disaster

A fire at Hyundai Mobis's Chennai plant destroyed a building that produced audio, navigation, chassis, and airbag components. Most of these parts are supplied to local Hyundai and Kia assembly plants. About 500 workers were evacuated with no casualties. Hyundai has disclosed a temporary production interruption while it assesses losses and secures alternative suppliers. Hyundai builds roughly 1M vehicles a year in India, including the Creta, Venue, and i20. Kia builds about 300k, including the Seltos and Sonet. With no second source named for the destroyed parts, the squeeze falls on in-line electronics and safety components. Requalifying a supplier takes longer than the dealer inventory cushion Hyundai is leaning on.

Auto components maker Minda Corporation disclosed a fire on May 30 at its plant in Sector 59, Noida, India, with no casualties, and the affected stock and machinery were insured. The company has not quantified the damage or the operational impact, which remains under assessment.

Expanding

OPMobility will build its 12th US plant in Rossford, Ohio, near Toledo, to produce exterior components, including bumpers, grilles, and tailgates, with output starting in the second half of 2027 and creating more than 500 jobs. The facility will run advanced injection molding, a double-sided paint line, and digital manufacturing, placing the supplier in a region the company says accounts for more than 40% of US vehicle production. The investment follows the opening of a North American headquarters in Troy, Michigan, and a stated goal to double US sales by 2030.

The South Carolina Ports Authority will expand roll-on/roll-off operations at its North Charleston Terminal by upgrading rail infrastructure and vessel parking, with work scheduled for completion in 2028. The Columbus Street Terminal already moves more than 250k vehicles a year, and motor vehicles and parts were the state's top export in 2025. The port handles just-in-time import and export flows for BMW, Mercedes-Benz, and Volvo, all of which are built in the state. Georgia's ports are investing alongside, having moved 779k units in 2025 and committed $100M to a new ro/ro berth. The added Southeast capacity backstops the BMW Spartanburg and Volvo Ridgeville export programs as volumes and vessel sizes climb.

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Human Capital

Michelin and Renault are deepening cost cuts in France, days after President Macron promoted the country's ability to attract auto investment. Michelin plans to eliminate 1.5k positions, about 9% of its French workforce, over three years without forced terminations, citing an unstable economy and the burden of French taxes. Renault is in talks with unions to close its Villiers-Saint-Frederic light commercial vehicle engineering site, transferring most of its 400 employees to the Technocentre near Paris with no layoffs planned. Both face muted European demand and rising competition from lower-cost Asian rivals led by BYD.

Industry Directions

Chinese automakers are funding operations on suppliers' capital. They stretch payment cycles to 125-150 days, sometimes beyond 6 months. This contrasts with 36-60 days at Toyota, Volkswagen, and Mercedes-Benz. Combined with rigid annual price cuts averaging around 10%, these terms freeze supplier working capital. Pressure cascades down to Tier 2 and Tier 3 firms, which have the least bargaining power and the thinnest access to financing. Industry net margins have fallen from 7.8% in 2017 to 3.2% in early 2026. Even leaders' profits rely on NEV purchase tax breaks, which have now been cut to 5%. They also rely on the interest-free float from deferred payments rather than product strength. The structural risks for global buyers and joint venture partners are quality and continuity. Suppliers forced to front tooling and R&D costs while absorbing price cuts have little room for new investment. Some are cutting material standards and testing to survive, raising the odds that defects will propagate through a supply base on which much of the world now depends.

Labor

The strike authorization at Dauch Corporation has become a walkout. Hundreds of UAW workers left the line Monday at the Three Rivers, Michigan, plant, halting the supply of axles and axle tubes for GM's midsize and full-size pickups. GM has roughly two weeks of axle stock and no alternative supplier for the GM-specific parts, which comprise dozens of components and cannot be quickly substituted. As a result, its truck plants are running normally for now but face rising risk. The 970 hourly workers are seeking $30.50 an hour, up from $22, after a roughly 50% cut in 2008, while Dauch tries to keep the plant going with a skeleton crew of non-union contractors.

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Mergers, Ventures, Acquisitions

Tata Motors will build its premium Avinya electric cars on Chery’s Freelander platform, which Chery developed with Jaguar Land Rover. Tata will build these cars in its new factory in Tamil Nadu, India. The first model is set to launch in 2027 as a kit from China for local assembly, with more parts sourced locally over time, and a second EV planned for 2029. This move replaced Tata’s dropped plan to use JLR’s own EMA platform, after JLR decided not to build EMA EVs in India. It also shows how Indian automakers are using licensed Chinese EV technology without buying stakes under India’s investment rules, meaning Tata will depend on a rival’s platform until it makes its own.

JTEKT will sell its Tangier subsidiary as part of a transfer of seven European-facing operations to Germany’s DUBAG Group, pending regulatory approval. The Moroccan plant is JTEKT’s first in Africa and the Middle East. It makes electric power steering systems and steering columns, targeting a capacity of 230k units. The plant was built for about $24M across roughly 122k ft² in Tanger Automotive City to supply Renault and the former PSA in Morocco. The divestment, alongside sites in France, the Czech Republic, Belgium, and the US, is part of JTEKT’s plan to restructure its European business back to profitability. For Renault’s Moroccan assembly, the change hands a steering-component source to a financial buyer. This introduces the continuity questions that accompany a private-equity carve-out.

Rheinmetall will sell its automotive Power Systems unit to investment firm Aequita for about $406M, completing its shift to a pure-defense company. The deal is expected to close in the fourth quarter, subject to approvals. Aequita will retain all of the unit's roughly 6.3k employees worldwide, and Rheinmetall has agreed to keep German workers and sites for three years after closing. The sale fits a broader European pattern of industrials rotating from automotive to defense amid the post-2022 military spending surge, and consolidates Power Systems' base under a buyer that also acquired Bosch's brake-components business in 2024.

SAIC will sell a further 10% of its Indian venture JSW MG Motor to partner JSW, cutting its own stake to 39% and making JSW the largest shareholder at 45%, after New Delhi’s investment curbs blocked SAIC from funding expansion. SAIC plans to reinvest about $63M of the proceeds to launch extended-range EVs and hybrids without changing its holdings. JSW MG is India’s second-largest EV maker and has committed up to $418M to more than double capacity to 300k units a year, though widening losses and gains by Mahindra are eroding its EV lead. The retreat mirrors BYD’s stalled $1B India plan and shows how the investment curbs are steadily transferring control of Chinese-built ventures to local partners.

Opening

While retreating in India, SAIC is planning its first European factory: a roughly $230M plant in Galicia, split between Ferrol and As Pontes, to build 120k MG-brand EVs a year. Construction starts in 2027, with first output in 2028, creating about 2.3k regional jobs, including 1k in direct manufacturing, and the company pledging to prioritize local component suppliers to meet EU content rules. Building inside the bloc lets SAIC sidestep the EU's tariffs on Chinese-made EVs. The Galicia build is one more Chinese OEM establishing EU production to convert a tariff disadvantage into a local supply base, with knock-on demand for regional Tier 1 and Tier 2 suppliers.

Production Increase

Tesla's Berlin plant has begun building the Model Y for the Canadian market. A US-Canada customs dispute triggered this shift. The plant promptly adapted its supply chains and homologation processes, thanks to high vertical integration. The site is scaling battery cell production from 8 to 18 GWh a year, enough for about 250k Model Ys. This will reduce its reliance on cells shipped from Texas and on complete batteries from Shanghai. Tesla reports Tier 1 localization in Europe at about 90%. The company holds a permit to expand the site to 1M vehicles per year. The cell build-out and regional sourcing are a kind of resilience play against the cross-continental battery logistics exposed in recent years. It is also a hedge against the same tariff friction now reshaping where vehicles get assembled.

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Regulation

The US is trimming Section 232 tariffs on certain steel, aluminum, and copper goods effective June 8. From January 2028, imports qualify for a 10% rate if 85% of their content is US-made steel, aluminum, or copper, down from the current 95% threshold. Steel and aluminum otherwise remain at 50%. The lower domestic-content threshold eases qualification for derivative parts makers, while the equipment cuts mainly affect off-highway and HVAC applications rather than passenger-vehicle inputs.

Vehicles and auto parts already covered by the Section 232 auto tariffs would be exempt from new Section 301 duties that the administration proposed on June 2 on 60 trading partners over alleged failure to block forced-labor goods. Parts that comply with USMCA rules of origin are also carved out, but automotive products outside the auto parts tariff, including many electronics, interior materials, and sub-assemblies, would be hit. The duties could take effect in July, with comments due July 6 and a hearing July 7, and they follow the Supreme Court’s invalidation of the IEEPA tariffs, against which automakers and suppliers are already seeking about $19.9B in refunds.

The proposed rate is 10% for partners that restrict forced-labor imports, including Canada, Mexico, the EU, the UK, and Taiwan, and 12.5% for the rest, including China, India, Brazil, Japan, South Korea, and Vietnam. USTR frames the action as leveling the playing field for US producers undercut by cheaper goods produced with forced labor. For purchasing teams, exposure lies in uncovered automotive categories, where sub-assemblies and electronics could face a new 10% to 12.5% layer on top of existing tariffs, and the whole package is likely to face the same legal obstacles that felled the IEEPA duties.

Automakers are reworking supply chains ahead of the US ban on Chinese hardware and software in connected cars, which applies to software from the 2027 model year and hardware from 2030. GM has directed several thousand suppliers to source raw materials and parts outside China by 2027 and is moving the Chinese-built Buick Envision’s successor to Kansas in 2028, while Ford’s Lincoln Nautilus is still assembled in China through a Chinese joint venture. Volvo, majority-owned by Geely, secured special government authorization to keep selling connected cars, a pathway other exposed makers may need. The rule, finalized in January 2025, also applies to components from firms such as Tesla supplier Quectel and a Pirelli sensor-enabled tire flagged for its Chinese ownership. The burden falls on proving that connectivity hardware and embedded software are China-free across multi-tier supply chains, a documentation problem rather than a sourcing one for most Western automakers.

The US has demanded that Mexico raise regional content in North American vehicles to 82% from the current 75% to keep preferential tariff access, with half of that value required to come specifically from the US and no credit for Canadian parts. Presented during bilateral talks in Mexico City that excluded Canada, the proposal also raises the high-wage core parts calculation and would likely be handed to Canada as a take-it-or-leave-it term. USMCA’s current rules underpin nearly $1.6T in annual trilateral trade, and US negotiators signaled they intend to keep some tariffs on Mexican and Canadian goods even in a revised pact. A 50% US-value floor would force automakers and Tier 1 suppliers to re-source content away from Mexico and Canada toward US plants, a costly reshuffle of established North American sourcing.

The content push is exposing how thin Mexico’s lower-tier supplier base is. Industry groups count more than 1.1k procurement requirements worth $8.8B that local sources cannot meet in early 2026, with high-precision metallurgy the sharpest gap: only 7 domestic suppliers for aluminum high-pressure die casting, against demand from 24 OEM and Tier 1 projects. Roughly 70% of automotive steel and nearly all aluminum used in Mexico is imported, and high domestic financing costs keep Tier 2 and Tier 3 firms from scaling to qualify for major contracts. A federal development bank expects to open credit lines covering technical upgrades for up to 30% of small- and medium-sized suppliers by mid-2026, in line with a national goal to displace $14B in annual imports by 2030. Tighter USMCA content rules raise the stakes on these gaps: without deeper local capacity, the 82% proposal would be unmeetable from Mexican sourcing alone, pushing content toward the US as Washington intends.

US imports of Mexican vehicles and parts fell 11.3% in the first quarter, to $38.05B from $42.92B a year earlier, as Section 232 auto and metals tariffs reshaped North American trade flows. Passenger vehicles took the hardest hit, down 22% or $2.52B, and trucks fell 18.7%, while auto parts proved resilient at a 1.1% decline, evidence that integrated component flows are holding even as finished-vehicle trade contracts. The pattern was regionwide: total US auto imports from major suppliers dropped 15.1%, with Canada down 22.8%, Germany down 25.3%, and Japan and South Korea off by double digits. Sweden was the lone gainer, up 13.7% on Volvo’s US strength and its connectivity-rules authorization. Mexico is using the decline to argue that North America should be treated as one manufacturing ecosystem, but the resilient parts trade alongside collapsing vehicle imports shows that tariffs are biting hardest where assembly, not componentry, crosses the border.

Relocating

Nexperia will produce automotive power semiconductors in the US for the first time, partnering with Polar Semiconductor to make next-generation MOSFETs at Polar's wafer plant in Bloomington, Minnesota. The move comes as Nexperia risks losing its China operations: after the Dutch government seized control of the chipmaker in late 2025, its Chinese arm declared independence, and Nexperia Europe halted wafer shipments to China, disrupting the supply of the cheap basic chips that control brakes and windows. That standoff has already forced Nissan and Honda to cut production and pushed Bosch to curtail some output, while the owner, Wingtech, seeks $1.2B in damages and threatens to take over Nexperia's China business. Adding US wafer capacity hedges a supply line that runs through contested Chinese testing and packaging, but it does not resolve the near-term shortage now rippling through automakers and Tier 1 suppliers.

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Contents

EXPANDING

• Tata expands Gujarat capacity

• Stellantis expands Mulhouse EV production

INDUSTRY DIRECTIONS

• Chinese exports require compliance readiness

• Mexico exports strain supplier cash

LABOR DISPUTE

• UAW pressures USMCA labor rules

MERGERS, VENTURES, ACQUISITIONS

• Chinese investment deepens Serbia supply

• Webasto forms China roof venture

• Nissan rethinks Sunderland e-axles

• Stellantis eyes Leapmotor Mexico production

OPENING

• Tuskegee supports CPT stamping plant

PRODUCTION INCREASE

• BYD launches in-house driving chip

• Stellantis pipeline may aid Brampton

RAW MATERIAL DISRUPTION

• China restricts Japan magnet materials

REGULATION

• Washington targets Mexico content rules

• US-Mexico begin USMCA talks

• Automakers face transactional tariff policy

• Volvo wins connected-car approval

• Section 232 tariffs expand

• UK export quota creates risk

• USTR delays chip tariffs

• EU delays Chinese chip sanctions

• Mexico-EU remove EV tariffs

RELOCATING

• GM shifts small cars to Mexico

SHUTDOWN

• Honda pauses Ridgeline production

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Expanding

Tata Motors plans to add 300k units of annual capacity in Gujarat over three years to meet rising demand in India. This expansion will push total passenger vehicle capacity over 1M units. Fuel costs are driving record interest in electric models. However, supplier bottlenecks are capping production.

Stellantis will invest $1.17B to build electric vehicles at its Mulhouse plant in France starting in 2029. This project is part of a broader $70B strategy to launch 60 new products and simplify platforms. The investment aims to use European capacity as Stellantis shifts to electrification. While consolidating platforms reduces complexity, it demands high capital for new assembly tooling.

Industry Directions

This Gasgoo analysis provides insight into the compliance considerations behind Chinese automakers’ export activities. Intelligent connected vehicles now require attention to software, data, cybersecurity, intellectual property, and regulatory systems, all of which must meet specific market standards prior to launch. For suppliers supporting Chinese OEMs in international markets, compliance has become an integral part of launch readiness rather than a post-engineering legal requirement.

Mexican light vehicle exports reached record levels in the first quarter of 2026, yet the surge masks a liquidity crisis for specialized suppliers. Payment cycles have stretched to 180 days, putting cash flow under pressure and limiting suppliers’ ability to purchase materials. Meanwhile, the heavy-vehicle segment saw production drop by 22%, exacerbating revenue challenges. USMCA tariff benefits are being ignored by many firms, with utilization falling to just 1.09% as companies absorb new duties rather than pass them on. Tier 2 and Tier 3 providers are currently trapped between high production demand, delayed payments, and compressed margins, making it increasingly difficult to cover day-to-day costs. Without better access to trade finance, the 75% regional content requirement remains a high hurdle for smaller Mexican shops, which lack the working capital to secure the necessary inputs.

Labor

The UAW is pushing for higher wages in Mexico and tougher labor rules during the USMCA review. Union leaders suggest the US should leave the pact if demands for stronger production quotas are not met. Automakers warn that tighter rules will increase consumer prices and costs. There is a risk that the USMCA review may raise content and wage rules faster than suppliers can adapt.

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Mergers, Ventures, Acquisitions

Chinese companies plan to invest another $1.09B in Serbia across projects, including auto parts, tires, lighting, powertrain, energy, AI, and robotics. Named companies include Minth Group, Shandong Linglong Tire, Changzhou Xingyu Automotive Lighting System, Weichai Power, Zhejiang EV-Tech, and others. Serbia already hosts Stellantis assembly at Kragujevac, where Fiat and Citroen models are built. The investment deepens Serbia’s role as a lower-cost European supply base, backed by Chinese capital and a free trade pact with China.

Webasto is forming a joint venture with China’s Zhejiang Fujia Technology to develop glass roof systems for the local market. The partnership will focus on smart shading and solar technology to meet the high demand for features in China.

Nissan may drop JATCO’s planned e-axle plant in Sunderland, England, which was supposed to supply 3-in-1 e-axles for Nissan’s nearby EV production from 2026. The project was planned at about $56M, with 340k units of annual capacity and 183 jobs, but sluggish EV demand and Nissan’s broader restructuring have prompted the company to rethink component investments. For now, e-axles are expected to keep moving from Japan to the U.K. The decision would reduce local EV content at Sunderland just as Nissan prepares to produce the electric Leaf, Qashqai, and Juke there.

Stellantis CEO Antonio Filosa sees a chance to build Leapmotor vehicles in Mexico and Canada. This would boost factory use. He ruled out similar plans for the US due to trade tensions. The partnership allows Stellantis to share development costs and access advanced Chinese battery technology.

Opening

The city of Tuskegee received a $400k grant to build infrastructure for a new $163M CPT America stamping plant. This facility will produce metal assemblies for Southern auto manufacturers.

Production Increase

BYD has launched China's first in-house 4nm smart driving chip for Level 3 and Level 4 autonomous systems. The Xuanji A3 chip enables BYD to double its computing power while maintaining full control over its ADAS supply chain. BYD now builds nearly all its vehicle parts, including chips from its five wafer fabs. This level of vertical integration is unique among global automakers, giving BYD a major cost advantage. Skipping outside chip suppliers lets BYD update software features faster than rivals tied to third-party roadmaps.

Stellantis says it could introduce 11 new Chrysler, Dodge, Jeep, and Ram models by 2030. This may benefit Brampton Assembly in Ontario, which ceased vehicle production in 2023. The Jeep Compass program, once bound for Brampton, shifted to Belvidere, Illinois. Unifor still seeks a replacement mandate and rejected a proposal to build Leapmotor EVs from knockdown kits at the plant. Timing matters for suppliers: a future vehicle pipeline helps Brampton’s odds but does not solve the current volume gap.

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Raw Material Disruption

China has restricted exports of heavy rare earths and gallium to Japan for four months due to a diplomatic dispute. Japan is the largest magnet maker outside China but relies on Beijing for key materials like dysprosium and terbium. Shin-Etsu and others have stopped taking new magnet orders due to the supply crunch. This move mirrors past Chinese trade actions using mineral controls as leverage. Stockpiles and Australian mining projects help, but replacing the Chinese supply will take years.

Regulation

Washington is demanding stricter rules of origin requiring a minimum level of US content for cars built in Mexico. Proposed changes would also require all steel receiving low tariffs to be melted and poured in North America to block Chinese material. The current deal only requires 40% of a vehicle to be made in high-wage factories. Closing these loopholes is a priority for US steelmakers who see a flood of Chinese parts entering Mexico. A US-specific content floor could disrupt established regional supply chains and force Tier 1s to relocate more work.

The US and Mexico will begin formal talks this week to revamp the USMCA, focusing on economic security and rules of origin. Canada is currently excluded from these bilateral rounds as Washington highlights significant trade differences with Ottawa. The negotiations aim to ensure the pact benefits US small businesses and manufacturers. Mexican officials view the 50% steel tariff as unsustainable and want a more systemic approach to the industry. The exclusion of Canada suggests that the US is using a divide-and-conquer strategy to pressure each partner into accepting better terms.

US automakers are using the current 15% tariff on EU and Japanese imports as a baseline for upcoming USMCA talks. Trade experts warn that policy has become more variable and transactional, adding immeasurable risk to capital planning. New Section 301 investigations could soon lead to additional tariffs on sectors with significant trade imbalances. The shift from stable generational rules to fluid trade policy is forcing suppliers to adopt more flexible sourcing models. Uncertainty regarding the duration of these deals makes it difficult for OEMs to commit to long-term import strategies.

Volvo Cars received US approval to continue selling its connected vehicles despite being owned by Geely, a Chinese company. The authorization follows discussions regarding the company's data security and technology governance. Volvo plans to start producing the XC60 SUV in South Carolina in late 2026 to boost its local capacity. The brand is also reversing its plan to go fully electric by 2030 and will keep hybrids in its lineup. This approval provides a clear pathway for other Western brands with Chinese investors to navigate new software security rules.

• Foley: What Every Multinational Should Know About … The New Rules for Section 232 Tariffs on Steel, Aluminum, and Copper Derivatives

  

Toyota's decision to build the GR Corolla in Britain could trigger higher 27.5% tariffs for all UK-made cars if export quotas are exceeded. A trade deal currently allows 100k vehicles per year to enter the US at a 10% rate, but the cap is reset every January. The high demand for Range Rovers and Minis is already pushing the industry toward this limit. There is no formal mechanism in the UK to manage the flow of vehicles and prevent a low-cost Mini from being hit with the higher tax. Automakers may be forced to rush shipments at the start of each quarter to secure the lower tariff rate.

US Trade Representative Jamieson Greer stated that no imminent tariffs on semiconductors are expected, though protection is needed for reshoring efforts. The focus is on ensuring the timing and amount of duties support companies like Micron as they expand domestic plants. The government wants to allow firms to import some chips during the transition phase to avoid production stops. Micron is currently investing $30B in a Virginia project to build advanced memory chips. Sequencing these tariffs is critical for an industry where 90% of chips are still made abroad.

The EU has proposed a nine-month delay in sanctions against a Chinese chipmaker to prevent a severe disruption to automakers. Yangzhou Yangjie Electronic will remain on the list for aiding the Russian military, but the reprieve allows car firms to find new suppliers. European car makers became heavily reliant on the firm after previous sanctions hit other Chinese rivals. The move highlights the automotive sector's vulnerability to rapid shifts in trade sanctions. Unanimous agreement from EU countries is required to finalize the temporary reprieve for the supply chain.

Mexico and the EU will scrap mutual tariffs on electric vehicles and batteries this week as part of a modernized trade deal. The move aims to insulate both regions from US trade policy and reduce dependence on Chinese supply chains. Current Mexican exports of parts to Europe are subject to a 10% tax, which will be eliminated under the new framework. The deal positions Mexico as a strategic bridge between the EU and North American markets. For suppliers, the updated rules of origin will require new audits to ensure materials meet the duty-free standards.

Relocating

General Motors will move production of the Chevy Groove and Aveo from China to its Ramos Arizpe plant in Mexico in 2027. The project is part of a $1B investment and aims for a capacity of 80k units by 2030. The move offsets the loss of the Blazer, which is relocating to Tennessee. Relocalizing these high-volume models helps GM meet the local government's domestic production goals. The strategy aligns with a broader $4B plan to increase North American truck and SUV output to reduce reliance on offshore sites.

Shutdown

Honda will halt Ridgeline production in Alabama for 18 months, starting in late 2026, to update the truck to meet emissions rules. The pickup cannot meet current efficiency standards and requires a revised V6 engine and new components. During the break, the plant will increase production of the Odyssey and Passport crossovers by up to 20% to fill the gap. Supplier-related constraints prevented a continuous transition to the updated 2028 model. Retailers expect crossover sales to offset volume losses, but specific Ridgeline part suppliers face a prolonged period of idle capacity.

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“Never, ever in 26 years have all six OEMs shown an increase.”

That line opens the latest Automotive Leaders Podcast. After a year of tariffs, EV write-offs, and disruption from every direction, the 2026 Plante Moran Working Relations Index still climbed across the board. Ford, Toyota, Stellantis, Honda, GM, and Nissan all moved up.

Elm Analytics’ own Sig Huber joined host Jan Griffiths and Dr. Angela Johnson of Plante Moran to dig into why. Sig raises the question underneath the scores: was this year’s collaboration a real shift, or a survival response that reverts once the pressure eases? He also names a reckoning this newsletter tracks weekly. Decades of low-cost sourcing came at the expense of resilience, and the bill is now coming due.

The WRI says relationships are improving. The harder question is whether they hold.

Give it a listen, then read on.

Warmly,

Nick Gaydos
Editor

Contents

EARNING DIP

• JLR targets deep cost cuts

• Subaru delays independent EV

• Eberspacher revenue and EBIT fall

HUMAN CAPITAL

• Inalfa lays off 127 Georgia workers

• ZF warns of more cuts

INDUSTRY DIRECTIONS

• Ford plans seven European models

• SDV readiness separates automakers

LABOR DISPUTE

• VW labor blocks closures

MERGERS, VENTURES, ACQUISITIONS

• Stellantis plans Voyah Europe JV

• Nidec dissolves GAC, Stellantis JVs

• Xpeng acquires Indonesian assembly entity

OPENING

• Vertex opens Alabama molding plant

PRODUCTION DECREASE

• VW reduces German overcapacity

• Tesla abandons India factory

PRODUCTION INCREASE

• Stellantis plans affordable Italian EVs

RAW MATERIAL COSTS

• Lithium nears $28,500 per ton

REGULATION

• EU reconsiders Chinese chip sanctions

SUPPLY CHAIN

• Tariff uncertainty drives localization

• BYD delays Great Tang launch

• Blade Battery transition delays BYD

• Xiaomi brings EV components in-house

• Svolt targets hybrid battery production

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Earning Dip

Jaguar Land Rover is targeting $2.3B in spending cuts over two years after posting an annual after-tax loss of about $330M, driven by US tariffs, currency headwinds, and persistent warranty costs. The late-August cyberattack that paralyzed global production for weeks cost an estimated $1.35B in revenue and helped push wholesales down 23% to 308k vehicles, below the company's break-even point. A Q4-2025 tariff bill of about $154M on vehicles exported to the US from the UK and its Slovakia plant has made some model derivatives and sales channels unviable. CEO PB Balaji said JLR plants are now at full capacity with no excess to share, directly rejecting a report that China JV partner Chery could assemble cars at a UK plant.

Subaru is taking a $362M charge and delaying its independently developed EV in Japan as slowing demand forces a tilt back to hybrids and combustion. The Oizumi plant, nearing completion for a 2028 opening, will launch with internal combustion and hybrid vehicles, adding EVs later depending on demand. US tariffs erased $1.42B from earnings and drove a 90% collapse in operating profit, a heavy blow for a company that draws more than 70% of global sales from the US and imports about half that volume from Japan. The company said it will keep developing core EV components but significantly cut the resources allocated to the effort. Subaru has limited its EV exposure by sharing development and assembly with Toyota, so the writedown is smaller than peers, but the tariff damage is the larger structural threat given its U.S. import dependence.

German supplier Eberspacher, which makes exhaust technology, air-conditioning systems, and vehicle electronics, reported 2025 revenue down 6.6% to $5.7B amid weak global car markets, US tariff policy, and Middle East tension. The family-owned company has cut costs by ending production at its plant in Thuringia and halting operations at its site in Rhineland-Palatinate. Headcount fell to 10,374 from 10,680, though Eberspacher said it currently has no plans for further job cuts.

Human Capital

Roof systems supplier Inalfa filed a WARN notice to permanently lay off 127 workers across two manufacturing facilities in Acworth, Georgia, with separations between July 17 and 31. The two Cherokee County sites will lose 83 and 44 jobs, respectively. Inalfa supplies panoramic roofs, sunroofs, and convertible roof systems to more than 40 vehicle brands across 16 global manufacturing sites. The company did not state a reason for the cuts in the filing.

German supplier ZF will keep production of electric motors and inverters in-house rather than buying the components externally, but warned that hundreds more job cuts are needed at its Schweinfurt and Auerbach sites in southern Germany. The decision sits within a broader overhaul that already includes 7.6k job cuts agreed last October. ZF said it would avoid forced redundancies wherever possible. Keeping e-motor production in-house is a notable counterpoint to peers like Nidec exiting the e-axle space, suggesting ZF still sees the powertrain as core rather than a commoditized buy.

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Industry Directions

Ford will launch seven new models in Europe by 2029 to revive passenger car sales that have slid from over 1M a decade ago to just 426k last year, dropping it to eighth place. Five will be passenger cars, including a small electric car and a small electric SUV built at a Renault plant in northern France using Renault technology, plus three SUVs offered as hybrids and full EVs. Ford criticized Europe’s EV push, arguing that CO2 targets should reflect actual demand and support plug-in hybrids and range-extenders rather than full EVs only. The Renault-built EVs continue a pattern of legacy automakers borrowing platforms to cut costs and shorten time-to-market, the same logic driving the Stellantis-Leapmotor and Ford-Geely arrangements.

An analysis by Accenture and the Center of Automotive Management warns that platform decisions made years ago will determine which automakers survive the shift to software- and AI-defined vehicles. SDV-related revenue could reach $46B by 2030 and $133B by 2035, with average revenue per vehicle climbing from about $85 today to $460. Leaders will capture the gains through subscriptions and autonomous features, while laggards become commodity hardware suppliers. The report studied VW, Mercedes, BMW, Stellantis, Toyota, Tesla, Nio, BYD, Geely, and Xpeng, and concluded that automakers without SDV readiness by 2026-27 risk being locked out of the AI-defined vehicle market entirely. For suppliers, the divide matters because SDV leaders will pull more software and electronics value in-house, squeezing the addressable market for traditional component makers.

Labor

Volkswagen’s top labor representatives said they will not allow any German plant closures, while remaining open to proposals to secure underused sites. The position upholds a 2024 restructuring deal that ruled out closures in exchange for 35k job cuts by 2030. CEO Oliver Blume has floated the idea of plant-sharing with Chinese partners and is negotiating a possible sale of the Osnabrück plant to a defense company to address overcapacity. Works council head Daniela Cavallo and IG Metall leaders said they would fight anything that breaches the 2024 job security commitments.

Mergers, Ventures, Acquisitions

Stellantis and Chinese partner Dongfeng plan a joint venture to manufacture and sell Dongfeng's Voyah-branded EVs and plug-in hybrids in selected European markets, with potential production at the Stellantis plant in Rennes, France. Stellantis will lead the venture with a 51% stake, aligning with proposed Made-in-Europe local-content rules. This is Stellantis's second deal in two weeks to produce Chinese cars in Europe, following the Leapmotor agreement for Spain. Stellantis separately signed a non-binding deal with Jaguar Land Rover to explore product and technology collaboration in the U.S. The Rennes link is notable because Stellantis previously flagged it as one of four European plants with surplus capacity, so the Voyah deal reads as a way to backfill a site that might otherwise face closure.

Nidec is withdrawing from the e-axle business, calling it a red ocean of fierce competition, and will dissolve both of its joint ventures: one with GAC in China and one with Stellantis in Europe. The Chinese JV, founded in 2019, is already in exit negotiations, while talks with Stellantis over the Tremery, France, operation appear to be only a matter of time. Nidec reported a loss of about $510M in its e-axle business in the first half of the current fiscal year, including provisions for contract losses and facility impairments. The exit removes a major independent e-axle supplier from the market and leaves Stellantis to find an alternative for the Tremery plant, which was converted from diesel engine production and targeted an annual capacity of over 1M units.

Chinese EV maker Xpeng has acquired a 90.1% stake in Indonesian assembly entity EIDO from Erajaya Group, accelerating localized production in Southeast Asia's largest auto market. Xpeng entered Indonesia in March 2025 and delivered its first locally produced X9 MPV from an Indonesian plant in July, using a completely-knocked-down assembly model. Distribution, sales, and after-sales will continue under Erajaya entities while EIDO focuses on manufacturing. The deal fits a broader Xpeng localization push that also includes contract production with Magna Steyr in Austria and talks with Volkswagen about acquiring a European factory.

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Opening

Korean supplier Vertex Innovations is investing $13.5M to convert a 120k ft² facility in Auburn, Alabama, into a plastic injection molding plant that will serve Korean automakers and Tier 1 suppliers across North America. The investment is one more node in the cluster of Korean supplier activity around Alabama, which hosts Hyundai and Kia assembly and a growing base of their component suppliers building closer to the customer.

Production Decrease

Volkswagen says it has nearly completed its plan to cut more than 700k vehicles of German production capacity without closing plants, achieving the reduction by scaling back production lines at sites including Zwickau, Emden, and Wolfsburg. The freed-up space in Wolfsburg will house the Gamechanger project, a faster, more efficient production method built around megacasting, the large-scale casting approach Tesla pioneered. The Osnabrück plant remains the unresolved piece, with VW negotiating a possible sale to a defense company, and Chinese partner Xpeng now mentioned as a potential user consistent with the labor position that closures stay off the table while alternative uses are explored. Xpeng separately confirmed it is weighing a new European plant as its Magna Steyr contract line in Austria nears capacity.

Tesla has confirmed it will not build a manufacturing facility in India, ending nearly a decade of on-and-off negotiations. The standoff was structural: Tesla wanted lower import tariffs before committing capital, and India wanted a factory commitment before cutting its 110% duty. The deeper issue is that Tesla’s existing factories run at roughly 60% capacity, with Giga Berlin at about 65% in Q1 2026, making a new plant hard to justify in a market where Tesla has sold fewer than 400 vehicles total. Tesla’s India retreat and its halted Mexico project both point to a demand problem rather than a capacity problem, a signal worth weighing for suppliers planning around Tesla volume.

Production Increase

Stellantis will produce a new range of affordable small EVs for Europe starting in 2028 at its Pomigliano d’Arco plant near Naples, under multiple brands and with partners to speed development and cut costs. The E-Car project aligns with a European Commission push, championed by President Ursula von der Leyen, to build a homegrown, affordable small car and prevent the Chinese conquest of the segment. Chairman John Elkann has argued that EU regulations have made compact cars expensive to build by adding weight and cost. Producing affordable small EVs in a high-cost European plant is the central tension here, which is why the project leans on shared platforms and partners, the same cost logic behind the Leapmotor and Dongfeng tie-ups.

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Raw Material Costs

More than 15 major Chinese automakers, including BYD, Xiaomi, and several joint ventures, have raised vehicle or option prices as lithium and chip costs surge, marking a shift from years of price wars to cost-driven inflation. Battery-grade lithium carbonate has nearly tripled in under a year to about $28.5k per ton, while AI demand has diverted chip production and pushed automotive memory prices up roughly 180% in three months, adding $400 to $1k per intelligent vehicle by UBS estimates. Aluminum and copper at multi-year highs added roughly $300 to the raw material cost of a mid-size EV. China’s auto industry profit margin fell to 3.2% in Q1 2026, with high-end NEV makers better able to absorb the shocks than mid- and low-end manufacturers near break-even. This is the upstream cost wave that connects directly to the battery capacity and pricing stories below, and it signals margin pressure flowing toward suppliers across the chain.

Regulation

The European Union will propose temporarily lifting sanctions on a Chinese semiconductor supplier after automakers warned of supply chain chaos within weeks if the sanctions remain in place. The company was listed in the EU’s 20th sanctions package for supplying dual-use goods to Russia, but automakers said they have not had time to diversify and that their stocks would deplete quickly. The episode echoes last year’s Nexperia disruption, when a corporate-and-government feud over the Chinese-owned chipmaker triggered automotive chip shortages. The pattern is becoming familiar: legacy low-tech chips concentrated in Chinese-controlled supply remain a single point of failure that can halt production, and diversification is proving slower than the geopolitical risk is moving.

Supply Chain

Industry experts advise automakers and suppliers to bet on supply chain localization, robotics, and factory automation to weather prolonged tariff uncertainty. Nearly two-thirds of suppliers are considering reshoring, per MEMA, though tariffs have also raised cost volatility for US parts and complicated investment decisions. The Supreme Court’s strike-down of more than $170B in tariffs collected from April 2025 through February, plus the July USMCA review, has deepened the uncertainty that makes committing capital difficult. Roland Berger noted that localization is constrained by US labor shortages, putting automation at the center of any reshoring push. The recurring advice across these trade pieces is flexibility… build it into supply chains and contracts, because the rules are still moving.

BYD has delayed the launch of its Great Tang full-size electric SUV to June 8 after cumulative pre-sale orders topped 100k units, with several dealers not yet receiving their first vehicles. The delay traces to a broader production squeeze: Chairman Wang Chuanfu acknowledged that demand for models using BYD’s second-generation Blade Battery and flash-charging platform has outrun battery manufacturing capacity. The constraint is hitting deliveries across BYD’s Dynasty, Ocean, Denza, and Yangwang lines, not just the Great Tang.

The same capacity squeeze is delaying BYD’s Fang Cheng Bao sub-brand, where the Tai 3 flash-charging SUV slipped from mid-April to May, and executives were stationed at production bases in Shaanxi, Anhui, and Zhengzhou to ramp output. Wang said the core issue is the comprehensive transition from first- to second-generation Blade Battery, which requires halting and retrofitting older production lines. BYD expects the line upgrades to wind down through May and capacity to recover after June. The episode is a useful reminder that even the most vertically integrated player in the industry can be throttled by a single component transition. BYD’s April sales fell 15.5% year over year for an eighth straight monthly decline despite the order backlog.

Xiaomi has established a wholly owned subsidiary, Beijing Xiaomi Jingxu Technology, to produce core EV components, including batteries, electric motors, and electronic control systems. The move pushes Xiaomi toward greater supply chain independence after it has relied on suppliers like CATL and BYD Fudi for batteries. A separate 15 GWh battery plant, a joint venture involving CATL, BAIC, and Xiaomi, is expected to start production later this year near Xiaomi's Yizhuang plant. Xiaomi's vertical integration mirrors the broader Chinese pattern of automakers bringing battery and motor production in-house to control costs and supply, as seen in BYD's fully integrated model.

Svolt Energy plans to mass-produce hybrid solid-liquid batteries by September at costs on par with traditional liquid lithium-ion cells, positioning the technology as the mainstream route until all-solid-state batteries mature. Hybrid solid-liquid cells, previously called semi-solid-state, use both liquid and solid electrolytes and offer improved safety. Svolt expects a 100kWh version to reach large-scale production by the end of September. CATL and BYD are targeting 2027 for small-batch all-solid-state production, leaving a multi-year window during which hybrid cells will fill the gap. Cost parity is the key claim, as semi-solid chemistry has historically commanded a price premium, limiting it to flagship models.

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Contents

BANKRUPTCY

• Michigan manufacturer enters Chapter 11

• Toledo Molding sale preserves jobs

CYBER SECURITY

• Auto cyberattacks increasingly target suppliers

EARNING DIP

• Honda retreats from EV strategy

• Toyota forecasts war-related profit drop

EXPANDING

• DUCK IL opens Alabama plant

• Tesla expands Berlin battery production

HUMAN CAPITAL

• Automakers cut global workforce

• VDA warns of EU job losses

LABOR DISPUTE

• Samsung strike threatens chip supply

• Unifor targets Ford labor talks

MERGERS, VENTURES, ACQUISITIONS

• Huawei, JAC pursue Maserati EVs

• Stellantis, Leapmotor expand Spanish production

OPENING

• Toyota plans third India plant

PRODUCTION DECREASE

• Honda Canada halts Ontario EV complex

• Mazda delays dedicated EV launch

PRODUCTION INCREASE

• GWM starts Ora 5 production

RAW MATERIAL DISRUPTION

• Hormuz closure squeezes sulfur supply

REGULATION

• Canada seeks Section 232 removal

• USMCA review raises trade uncertainty

• Chinese suppliers face decoupling pressure

SUPPLY CHAIN

• Ford tightens supplier performance rules

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Bankruptcy

Precision Manufacturing Group filed for Chapter 11 in Muskegon, Michigan, after reporting $3.5M in liabilities against $817k in assets. The company produces steel and aluminum components for automotive clients. Losses stem from major customers shifting to offshore sources and technical failures with a newly financed fiber laser. This insolvency highlights the fragile liquidity of smaller Tier n shops, facing rising capital costs, customer consolidation, and global competition.

The proposed $80M sale of Toledo Molding & Die to a JVIS USA affiliate would preserve 600 jobs at facilities in Bowling Green and Tiffin. Automakers, including Ford and Stellantis, provided interim funding to maintain production of critical interior and HVAC systems during the bankruptcy. The deal excludes customer-owned tooling to ensure production programs can continue without disruption. The use of week-to-week funding by OEMs underscores the high risk of line stoppages.

Cyber Security

Cybersecurity damages in the automotive sector reached $20B in 2025 as software-defined vehicles expand the digital attack surface. Reports indicate that 57% of cyberattacks now target suppliers rather than OEMs. A single vulnerability in a Tier 2 component can potentially impact millions of vehicles via remote exploits. For risk managers, this shift necessitates deeper visibility into the software security protocols of sub-tier electronic vendors.

Earning Dip

Honda reported a $2.7B net loss for the fiscal year after taking $9B in charges to scale back its electric vehicle strategy. The automaker is abandoning its 2040 target for a fully electric lineup in favor of next-generation hybrids. Cooling demand and the loss of federal subsidies in the US forced this retrenchment. This pivot mirrors broader industry moves to preserve margins by extending the life of internal combustion platforms.

Toyota warned that the ongoing war in Iran will cost the company $4.3B this fiscal year due to soaring material and energy prices. The automaker reported a 50% drop in quarterly profit as transportation expenses and paint costs climb. Despite record hybrid sales, the company expects full-year earnings to fall by 20%. Toyota's decision to absorb cost increases for its suppliers provides a liquidity cushion for its Japanese production base.

Expanding

South Korean supplier DUCK IL USA will invest $21M to establish its first US manufacturing facility in Auburn, Alabama. The plant will feature a clean room for producing electronic seat switches and dashboard controls. Initial operations will create 20 jobs with plans to supply GM, Hyundai, and Kia.

Tesla will invest $250M into its Berlin-Brandenburg factory to expand battery cell production. The site recently reached a production milestone of 750k vehicles and aims to reach 1M units per year eventually. This expansion comes as Tesla sales in Europe show signs of recovery following a year of stagnation.

Human Capital

Global automakers, including Nissan, Stellantis, and Renault, are cutting thousands of engineering and production jobs in 2026. These reductions aim to lower overhead as the industry shifts toward simpler software-defined vehicle architectures. Experts suggest legacy firms are struggling to dismantle organizational structures built for hardware complexity. This labor contraction reflects a permanent shift in the skills required for modern vehicle development.

Germany's VDA warned that 125k automotive jobs could vanish by 2035 under current European Union emissions regulations. The association argues that a strictly battery electric mandate threatens 50k positions in the domestic supply chain. They are advocating for a technology-open approach that includes hybrids and hydrogen. This projection signals a long-term capacity risk for traditional powertrain suppliers in Europe.

Labor

A potential strike by 40k Samsung Electronics workers in South Korea threatens to disrupt the global semiconductor supply chain. An 18-day stoppage could result in $22.4B in losses ($29M per hour!) and reduce global DRAM output by up to 0.9%. If the process halts briefly, all wafers are discarded. One wafer yields about 1.8k DRAM chips worth $3.3k–$3.5k each. A line stoppage wastes 3–4 months of regular DRAM wafers or 7 months of HBM wafers. Unlike vehicle assembly, semiconductor fabs require weeks of recalibration if lines are halted. Automotive purchasing teams should consider the implications of potential allocation constraints on HBM and standard memory chips.

Unifor will begin contract negotiations with Ford on June 22 to set the labor pattern for the Detroit Three in Canada. The talks precede a critical review of the USMCA trade agreement scheduled for July 1. Ford recently began preproduction of Super Duty trucks at its Oakville plant to meet heavy-duty demand. These negotiations will test labor stability as the Canadian industry navigates shifting EV policies and tariff pressures.

Mergers, Ventures, Acquisitions

Huawei and JAC are in talks with Stellantis to co-develop new energy vehicles for the Maserati brand. The project would utilize Huawei's technology stack and JAC's manufacturing footprint for production starting in late 2027. Maserati sales have fallen from 27k units in 2023 to under 8k in 2025. Partnering with a Chinese manufacturer could provide Maserati with the software capabilities needed to regain relevance in the Asian market.

Stellantis and Leapmotor will begin joint production of electric SUVs at the Zaragoza plant in Spain. The partnership allows Leapmotor to bypass European Union tariffs while filling underutilized capacity at Stellantis facilities. The two companies will also cooperate on parts purchasing to leverage Chinese battery technology and European supply chains. This model of technology-for-capacity swaps is becoming a primary survival strategy for European OEMs.

Opening

Toyota will build a third manufacturing plant in India with an initial annual capacity of 100k vehicles. Located in Maharashtra, the facility will produce a new SUV model starting in 2029 and create 2.8k jobs. The plant will handle the entire manufacturing process, from stamping to final assembly. This expansion targets the world's third-largest vehicle market and serves as an export hub for neighboring regions.

Production Decrease

Honda Canada has indefinitely suspended its plans for a $15B electric-vehicle and battery complex in Ontario. The decision does not impact current production at the Alliston facility, where 4.2k people are employed. Shifting customer demand and revised strategic objectives prompted the halt of the project. This suspension adds to a growing list of canceled North American battery projects following the repeal of federal EV incentives.

Mazda will delay its first dedicated electric vehicle launch until 2029 while cutting related investment by nearly half. The automaker is shifting R&D resources back to internal combustion and hybrid systems, including the new Skyactiv-Z engine. By acting as an intentional follower, Mazda avoided the multi-billion-dollar write-downs experienced by its peers. {Mazda’s strategy of exporting China-built EVs to Europe minimizes capital risk during a period of high regulatory uncertainty.}

Production Increase

Great Wall Motor started production of the Ora 5 compact SUV at its plant in Rayong, Thailand. The facility has an annual capacity of 80k units and utilizes 50% locally sourced parts. GWM plans to export 40% of its Thai production to other Southeast Asian markets. The plant is capable of running internal combustion and electric models on a single line to maximize capacity flexibility.

Raw Material Disruption

The closure of the Strait of Hormuz is creating a critical shortage of sulfur used to produce battery-grade nickel and lithium. Sulfur prices in Asia have jumped 50% to $880 a ton as seaborne volumes from the Middle East collapsed. Refineries in Indonesia and Australia are struggling to secure the sulphuric acid needed for high-pressure acid leach processing. A prolonged blockage threatens to halt the primary supply of battery materials for Chinese and Korean cell makers.

Regulation

Canadian industry leaders are calling for the removal of US Section 232 auto tariffs ahead of the upcoming USMCA review. The 25% duties currently apply to the non-US content of vehicles exported from Canada to the United States. This trade friction has led brands like Nissan and Subaru to stop selling certain US-made models in Canada. Stakeholders argue that North American integration is essential to competing with the growing influence of Chinese automakers.

US automotive trade costs are rising as 25% tariffs on parts and vehicles create tens of billions of dollars in annual costs. While some production has moved to the US, most manufacturers find it difficult to upend complex global supply chains. A mandatory review of the USMCA on July 1 could lead to even stricter regional-content requirements. The resulting uncertainty is stalling long-term investment decisions for both domestic and foreign OEMs.

Over 60 Chinese-owned suppliers are now deeply integrated into the US automotive parts network. These companies control roughly 5% of the country's 10k suppliers and provide critical systems such as steering, glass, and airbags. Recent legislative proposals aim to ban China-made safety components and vehicles from American roads. Decoupling from these entrenched Tier 1 and Tier 2 entities would require massive capital reinvestment and years of re-sourcing.

Supply Chain

Ford is implementing a no-bid list for suppliers that fail to meet strict quality and cost reduction targets. Parts makers are being required to enter into three-year plans that demand annual savings of 3% or risk losing future business. The automaker aims to save $1B in material and warranty costs this year following a record number of recalls. These aggressive procurement tactics may further strain Ford’s supplier relations, which already rank among the lowest in the industry.

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Contents

EXPANDING

• Hirschvogel expands Queretaro aluminum forging

INDUSTRY DIRECTIONS

• Honda delays next generations past 2030

LABOR DISPUTE

• Michigan UAW locals weigh strikes

• Stellantis Sterling Heights strike vote

MERGERS, VENTURES, ACQUISITIONS

• Foxconn backs Polish EV hub

• Ford reportedly explores Valencia sale to Geely

OPENING

• GM reopens Orion for trucks

• Mangrove opens Canadian lithium refinery

PRODUCTION DECREASE

• Nissan consolidates Sunderland production lines

• Canton shifts back to gasoline

PRODUCTION INCREASE

• Mercedes ramps electric GLC production

RAW MATERIAL DISRUPTION

• Aluminum squeeze hits truck inventories

REGULATION

• Trump raises EU auto tariffs

RISK ANALYTICS

• Shipping chokepoints threaten automakers

SHUTDOWN

• Honda freezes Alliston EV complex

SUPPLY CHAIN

• Lucid seat issue disrupts Gravity

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Expanding

German manufacturer Hirschvogel is expanding its plant in San Juan del Rio, Queretaro, Mexico, with a new aluminum forging division. The site will roughly double its operational footprint to 452k ft² and add 200 new workers. The company said it is also working to bring more suppliers closer to the Queretaro operation to improve logistics efficiency, reinforcing Mexico's role in the North American supply chain even as tariff and USMCA uncertainty pressures the region.

Industry Directions

Honda is extending production runs for core models like Odyssey, Accord, HR-V, Acura MDX, and Integra, with some life cycles stretching past a decade as the automaker absorbs a $15.8B charge tied to its EV pullback. Most next-generation versions will be delayed to 2030 or later. Honda will focus on hybrids, with 13 new models planned for 2027 and beyond. For suppliers, the extensions mean operational inefficiency and delayed capital and R&D, especially problematic for those already facing financial pressure from inflation, tariffs, and rising competition. The bottom 20% of the supplier base is especially vulnerable, with little margin left to absorb shocks.

Labor

Two major Michigan UAW locals are moving toward strike authorization votes in May, raising near-term production risk for two of the most profitable vehicle programs in North America. UAW Local 2093 members at Dauch Corporation, a Tier 1 driveline supplier to General Motors, will vote on May 11 at the Three Rivers, Michigan, plant, with a possible walkout on May 31. The dispute centers on restoring wages and benefits that were not restored since the 2008 crisis, despite the company's profitability. A walkout could quickly affect GM truck production.

UAW Local 1700, representing roughly 6,000 hourly workers at Stellantis' Sterling Heights Assembly Plant, will hold its strike authorization vote May 7 and 8. The plant builds the Ram 1500, a key Stellantis model. The main issue is the union's opposition to outside contractors performing work claimed under 2023 contracts. A walkout would require international UAW approval and could disrupt Ram inventory, as Stellantis relies on truck sales for its turnaround.

Mergers, Ventures, Acquisitions

Polish state-backed ElectroMobility Poland is partnering with Taiwan's Foxconn and its EV subsidiary Foxtron to develop an EV production and research hub in Jaworzno, southern Poland, with binding agreements targeted for the second half of 2026. Initial production capacity will be around 100k vehicles per year, scalable to 380k-400k with future expansion, and the first car is set to roll off the line in 2029. EMP cited Foxconn's commitments to technology transfer, in-house Polish design capability, and the use of local suppliers as decisive factors. The project is funded through Poland's National Recovery Plan and Reprivatization Fund, and it adds another EV manufacturing footprint to Central Europe at a moment when Spain is drawing most Chinese-led investment.

Ford is reportedly in advanced talks to sell a portion of its Valencia, Spain, plant to Geely, with the Chinese automaker considering producing a new EV at the facility based on its Global Intelligent Electric Architecture. Sources cited in Spanish media say the deal could also involve Geely producing a vehicle for Ford using the same platform, and Reuters has previously reported broader technology-sharing discussions, including ADAS. The arrangement would let Geely sidestep the EU's 18.8% tariff on Chinese-built EVs while giving Ford cash and access to Chinese platform technology as it restructures in Europe. Ford has already partnered with Renault on two affordable EVs based on the Ampere platform, and CEO Jim Farley has called Chinese automakers an existential threat to Western brands.

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Opening

General Motors has told suppliers it will launch production at Orion Assembly in the second quarter of 2027, with an annual volume of 190k units, just shy of two-thirds of the plant's capacity. The site will build the gas-powered Chevrolet Silverado and GMC Sierra pickups, along with the Cadillac Escalade and Escalade ESV, after GM reversed course from its original all-electric plan and committed roughly $6B to retool for combustion. Headcount has already passed 600 and is expected to grow rapidly toward year-end, with priority placement going to workers on indefinite layoff from Factory Zero and other GM plants. Tier 1 suppliers, including Lear, Piston Automotive, Flex-N-Gate, and GFX, are tooling up around the plant, and GM is reactivating the rail spur to move metal frames in from Pontiac on a just-in-time basis.

Mangrove Lithium has opened North America's first commercial-scale electrochemical lithium refinery in Delta, British Columbia, with a capacity of 1k metric tons of battery-grade lithium per year, enough to supply roughly 25k EVs. The facility will source spodumene feedstock from North American Lithium's mine in Quebec, establishing an all-Canadian lithium supply chain for the first time. Mangrove is already planning a much larger eastern Canadian facility designed to supply enough lithium annually for 500k EVs, signaling continued investment in domestic battery materials despite slowing North American EV demand.

Production Decrease

Nissan is consolidating Sunderland production in the UK from two underutilized lines onto one high-utilization line in the second half of this year, converting it to a three-shift operation while adding battery-electric Juke production in 2027 and a battery-electric Qashqai shortly after. The plant produced 273k vehicles in 2025, well below its 2019 peak of 500k. Nissan said no production jobs will be cut at Sunderland, but separately confirmed plans to reduce its European workforce by about 900 positions, or 10%, including warehouse closures in Barcelona. The freed-up Sunderland line is now in talks with Chinese automaker Chery as a potential European manufacturing footprint, building on Chery's existing operations at Nissan's former Barcelona plant.

Nissan has fully abandoned plans to produce electric vehicles at its Canton, Mississippi, plant, ending a project that originally targeted five US-built EV models, including two crossovers planned for 2028. The decision follows the collapse of US EV sales after the end of federal incentives, and Nissan will now serve the US EV market entirely through imported models, such as the new Leaf. The Canton plant will instead expand production of conventional gasoline-powered vehicles. The reversal adds to a growing list of canceled North American EV projects from Ford, GM, Honda, and others, and underscores how rapidly US policy changes are forcing automakers to redirect capital and supplier programs back toward combustion.

Production Increase

Mercedes is ramping up production of the all-electric GLC at its Bremen, Germany, plant, where the new model is being assembled alongside the gasoline, hybrid, and plug-in-hybrid GLC variants and the electric EQE. Mercedes said the new GLC has generated more orders in its first three months than any other electric model in company history, giving suppliers a useful signal that the program is tracking ahead of expectations. The multi-site, multi-powertrain production model illustrates how German OEMs are using existing flexible plants rather than dedicated EV facilities to manage the uncertainty around electrification timelines.

Raw Material Disruption

Building on last week's reporting on the aluminum crunch in Japan, the supply squeeze is now hitting US truck inventories. Texas Ford dealer Sam Pack told the Wall Street Journal that his F-150 inventory has dropped to about 42 days from a normal 60, with the next 90 days the critical period heading into the summer selling season. North American auto industry aluminum consumption reached 3.7M metric tons last year, nearly 30% above 2020 levels, as automakers leaned harder on the metal to meet fuel economy and weight targets. Aluminum-intensive vehicles like the F-150 and Super Duty are particularly exposed, and dealers are watching the squeeze tighten just as automakers face other tariff and demand pressures.

Regulation

US President Trump announced he will raise tariffs on EU-made cars and trucks to 25%, up from the 15% rate negotiated under last year's Turnberry agreement, accusing the EU of failing to comply with the deal without specifying how. The European Commission said it remains committed to the agreement and will keep options open to protect EU interests, while a senior MEP called the move evidence that the US is an unreliable trading partner. Trump's post said EU automakers producing in US plants would face no tariff, framing the increase as further pressure to localize production. The hike adds another layer of cost uncertainty for European OEMs already managing Section 232 auto tariffs and the recent overhaul of steel and aluminum derivative tariffs.

Risk Analytics

Industry analysts are warning that geopolitical and climate risks are turning major shipping waterways into recurring sources of supply chain disruption, with one Roland Berger director describing it as a black swan event every six months. The Strait of Hormuz closure tied to the Iran conflict is the immediate concern, but analysts flagged three other chokepoints automakers should be mapping.

• The Taiwan Strait carries 90% of advanced semiconductor production, and any blockade would echo the 2021-23 chip shortage.

• The Strait of Malacca handles 40% of global trade through a passage less than two miles wide at its narrowest.

• The Panama Canal has already been disrupted by drought-driven water levels and U.S.-China tensions.

AlixPartners said most automakers have not yet mapped their supply chains to Tier 4 or 5 because of trust gaps with suppliers, leaving them exposed to cascading regional shocks, such as Qatar's role in helium supply for semiconductor production.

Shutdown

Honda is reportedly halting development of its $15B EV complex in Alliston, Ontario, moving from a one-year-old pause to a more definitive freeze as the automaker pivots its North American strategy toward hybrids. The project, announced in 2024, would have included vehicle assembly and battery production with up to $5B in federal and provincial funding contingent on the project proceeding. The reversal adds to a growing list of canceled or delayed Canadian EV investments, including GM's BrightDrop electric van production at CAMI and Ford's pivot at Oakville. Honda produced just over 400k vehicles in Canada last year, making it the second-largest producer behind Toyota, and the freeze leaves the existing Alliston operation focused on conventional gas and hybrid Civic and CR-V production.

Supply Chain

Lucid has suspended its full-year production guidance of 25k to 27k vehicles as incoming CEO Silvio Napoli reviews the business. CFO Taoufiq Boussaid characterized the suspension as a governance decision. A seat supplier issue significantly disrupted Gravity SUV deliveries in February and contributed to Q1 revenue of $282.5M, well below analyst estimates of $389.2M. Lucid is also reevaluating the production start for vehicles based on its new midsize platform, which had previously been targeted for late 2026. The combination of suspended guidance, midsize-platform timing under review, and recent supplier quality issues creates uncertainty for suppliers tracking Lucid's volume commitments and program timing.

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Contents

CLOSING

• American Fine Sinter closing Ohio plant

EARNING DIP

• Aston Martin losses narrow, debt grows

• BYD profit drops amid China weakness

EXPANDING

• GM boosts North American combustion capacity

HUMAN CAPITAL

• Yanfeng layoffs follow Volkswagen changes

INDUSTRY DIRECTIONS

• BYD discounts deepen China price war

MERGERS, VENTURES, ACQUISITIONS

• Apollo buys Forvia interiors business

• Aumovio sells Rheinbollen brake site

• Adient acquires Romulus foam plant

• Denso may abandon Rohm bid

• Volkswagen may share European capacity

• Hongqi eyes Stellantis Zaragoza plant

• SAIC plans Spanish MG factory over Hungary

PRODUCTION INCREASE

• Rivian Georgia capacity to reach 300k

• Nexteer begins steer-by-wire production

REGULATION

• Automakers book $2.3B tariff refund estimates

• Canadian moldmakers squeezed by tariffs

• USMCA may remove affordable cars from market

• Atlantic Council outlines USMCA scenarios

SUPPLY CHAIN

• Toyota suppliers face Iran disruptions

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Closing

American Fine Sinter, the Tiffin, Ohio, subsidiary of Japan’s Fine Sinter Co., will gradually close its plant by March 2028, eliminating roughly 175 jobs. This move follows the parent company’s review of North American demand, which led to the decision to source future production from other group facilities. AFS makes sintered components for internal engines, transmissions, and vehicle suspensions, and the closure will roll out in steps starting later this year.

Earning Dip

Aston Martin reported a narrower Q1 pretax loss of $88.5M. Net debt climbed to $1.98B, driven by ongoing struggles, including US tariffs, a slowdown in China, and repeated product delays. Billionaire chairman Lawrence Stroll is providing a further $67.9M facility through his consortium to ease balance sheet pressure. CEO Adrian Hallmark also flagged that the Middle East conflict adds risk to full-year guidance.

BYD reported its sharpest quarterly profit drop since 2020. Q1 net profit fell 55.4% year over year to $599M, while revenue declined 11.8% to $22B. The drop was driven by a seventh straight month of domestic sales decline in March; however, overseas shipments grew, making BYD increasingly dependent on international expansion to offset weakness at home. The company has set a 2026 overseas sales target of 1.5M vehicles, which implies growth of more than 40% from 2025.

Expanding

In contrast to cutbacks elsewhere, General Motors is investing roughly $1.4B across three US plants and one Canadian plant that produce gas engines, transmissions, and metal castings, reinforcing its combustion-engine capacity as EV demand softens. The investment includes $300M at Romulus, Michigan, for transmission production; $150M at a Saginaw, Michigan, casting plant for engine parts; $40M at a Toledo, Ohio, transmission plant; and $505M at an Ontario facility for the next-generation V-8 engine.

Human Capital

Chinese supplier Yanfeng Automotive Interiors will lay off 153 workers at its Chattanooga, Tennessee, plant on June 29, ending a relationship dating to 2017 when it began supplying dashboards and door panels for VW’s Atlas SUV. Although the plant was expected to employ about 325 people at full production after a $55M investment, volume never reached that level. VW spokesperson Michael Lowder noted that the automaker periodically changes suppliers for specific components. He also confirmed that seating supplier Adient will stop supplying VW around July, resulting in the closure of Adient’s Athens, Tennessee, plant and 210 additional layoffs. VW recently ended ID.4 production in Chattanooga to focus on the gas-powered Atlas family.

Industry Directions

BYD's average discounts hit a record 10% in March as China’s automotive price war continues despite repeated efforts by Beijing regulators to halt it. The pressure is accelerating Chinese automakers’ overseas push into Brazil, the UK, Australia, and Canada, but it is also reshaping supplier payment dynamics. Following regulatory scrutiny, BYD has been forced to pay parts makers faster, shifting away from an IOU-based system that allowed it to delay invoice fulfillment for months. The change has loaded BYD’s balance sheet with interest-bearing debt, pushing its net debt-to-equity ratio to 25% after four years of net cash. The underlying issue is overcapacity: Chinese factories can produce 55.5M vehicles annually, while domestic sales were just 23M in 2025.

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Mergers, Ventures, Acquisitions

Private equity firm Apollo has agreed to acquire Forvia’s Interiors Business Group in a carve-out transaction. This separates one of the world’s leading suppliers of instrument panels, door panels, and center consoles from its parent. The business has a global manufacturing and engineering footprint across Europe, North America, and Asia, and serves a diversified base of OEMs. Apollo’s automotive portfolio currently includes Tenneco, TI Automotive, and Panasonic Automotive. These groups collectively generate $28B in annual revenue across 50 countries. The transaction is expected to close in the second half of 2026, pending regulatory approvals.

Building on themes of strategic refocusing, German supplier Aumovio is selling its Rheinbollen site to RHB-Industries. The site employs about 320 people and produces brake calipers, electric parking brakes, and autonomous mobile robots. The buyer is a subsidiary of transformation consultancy Falkensteg, established specifically for this transaction. Aumovio was formed in September 2025 as a spin-off from Continental Automotive. The company cited consolidation of its European footprint and a sharper focus on its core business as reasons for the sale.

Adient has acquired a seating foam production plant in Romulus, Michigan, from Woodbridge, adding to its network of 10 foam plants in the Americas region and 30 globally. The deal includes the building, land, production equipment, inventory, and the existing workforce, with the UAW collective bargaining agreement remaining in place.

Denso said it has not gained agreement from Japanese chipmaker Rohm for its acquisition proposal and is now considering withdrawing the offer. The bid, made last month, would have expanded Denso’s control over power-management chips used in electric vehicles and data centers. The Toyota supplier has been investing heavily in semiconductor capabilities to secure supply for next-generation vehicles.

Amid these changes, a wave of Chinese automakers is moving to establish production in Europe, with Spain emerging as the preferred entry point.

For example, China’s SAIC Motor plans to build an EV factory in Spain for its MG brand, sidestepping the EU’s 45.3% tariff on China-built battery-electric cars. The decision effectively rules out Hungary, which had been the alternative despite its growing EV cluster around BYD. MG was Europe’s top-selling Chinese brand in 2025 with 307k registrations, up 37% from 2024, and Europe boss William Wang said the brand’s scale now makes local production a necessity. Investment size and production capacity are still being finalized, with output potentially starting as early as next year.

Another Chinese automaker is taking a different path. Hongqi, the luxury brand owned by state-owned FAW, is in talks to build vehicles at Stellantis’ Zaragoza plant, negotiating through their shared investee Leapmotor. This arrangement would allow Hongqi to avoid the cost of a new European factory while accelerating its plan to launch 15 EV and hybrid models across 25 European markets by 2028. The company is targeting 1M in annual sales by 2030, with at least 10% of sales outside China.

Volkswagen is now considering the inverse. CEO Oliver Blume told analysts that VW is exploring whether to bring its China-developed cars to Europe and to share its underused European factories with its Chinese partners, including SAIC, FAW, JAC, and Xpeng. The shift would mark a sharp break from VW’s traditional model and signal that Chinese-designed vehicles built in European plants are becoming a mainstream strategic option.

For European suppliers, the implications are substantial. Spain’s deep Tier 1 and Tier 2 base is one of the reasons the country is attractive. However, Chinese OEMs have historically brought much of their own supply chain with them, as BYD did in Hungary. Whether MG, Hongqi, and any VW-China hybrid arrangement meaningfully localize or simply transplant Chinese supply chains onto European soil will determine whether the existing supplier base wins new business or is gradually displaced. Either outcome adds pricing pressure to a European supplier market that is already oversupplied and consolidating.

Production Increase

Rivian is increasing initial production capacity at its Georgia manufacturing plant to 300k vehicles annually, a 50% jump from the original 200k estimate, to support its new midsize R2 platform. Vertical construction is expected to begin this spring, with vehicle production starting in late 2028. Rivian also recently announced a partnership with Uber to build up to 50,000 robotaxis at the Georgia plant.

Nexteer Automotive has started series production of its first steer-by-wire system, fitted to a passenger vehicle from an unnamed Chinese NEV manufacturer. The technology is increasingly seen as foundational for higher levels of automated driving, where steering, braking, and throttle all need to accept machine inputs.

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Regulation

Several major automakers booked roughly $2.3B in expected refunds from US tariff payments in Q1. This follows a February Supreme Court ruling that struck down some Trump administration tariffs imposed under the International Emergency Economic Powers Act. Ford recorded $1.3B; GM, $500M; Stellantis, $467M; and Mercedes-Benz, an unspecified amount. These were booked as accounting estimates, not cash received. Up to $166B in reimbursements is due to importers who paid IEEPA tariffs. Companies acknowledged uncertainty over timing. President Trump warned he would “remember” companies that opt for refunds. The IEEPA tariffs were only one part of the broader regime. GM said tariffs will still cut $2.5B to $3.5B from its 2026 profits, while Ford put its net tariff cost at $1B.

Canada’s tool-and-die and moldmaking sector is being squeezed by US sectoral tariffs. Industry leaders warn that, without urgent federal action, capacity could shift south of the border, as tariffs erode profitability. Jon Azzopardi, president of Laval Tool in Windsor, told a parliamentary committee that 90% of his company’s output ultimately depends on US demand. He said the industry has gone “from being profitable to not profitable overnight” due to the recent tariff change. The April 6 change extended the 25% derivative tariff to the full value of imported goods, not just the metal content, directly impacting margins that typically run in single digits. The Canadian moldmaking industry exports about $7B annually to the US, with around 75% of activity concentrated in Ontario. During production, products often cross the border multiple times, and each crossing can trigger tariffs on accumulated value, further reducing profitability.

Foreign automakers have warned the Trump administration that they could pull their cheapest car models from the US market if USMCA is not renewed or is significantly weakened, the Wall Street Journal reported. The companies have told Trump’s economic advisers that they may not be able to build and sell affordable cars for the US market without meaningfully reduced tariffs on cars and parts made in North America. The auto industry has been pressing for an extension of USMCA, calling it crucial to American auto production. Trump’s 25% Section 232 tariff on Mexican and Canadian automotive exports replaced the duty-free trade under the agreement, and the three nations face a July 1 deadline for the trade deal review.

The Atlantic Council laid out three scenarios for USMCA’s July review: clean renewal with targeted modifications, no consensus leading to bilateral deals, or no consensus and no replacement. Each carries distinct supply chain consequences: the bilateral scenario forces manufacturers to operate under dual compliance regimes, while the no-deal scenario reverts trade to pre-NAFTA tariff levels. The analysis recommends supply chain teams treat the period before July as a planning window: rethink production footprints, strengthen US hubs, shift from just-in-time to inventory buffers, invest in dual sourcing, monitor supplier solvency, and run bill-of-materials audits to identify components that could lose preferred status. Companies with integrated North American platforms face the greatest exposure, particularly if Canadian upstream metals and subassemblies lose preferential access.

Supply Chain

Toyota Industries President Koichi Ito said Japanese suppliers are increasingly receiving two weeks’ notice that components will not be available, as the Iran conflict ripples through the auto industry’s supply base. Toyota supplier Denso projected $3.1B in operating profit for the fiscal year through March 2027, well below the $4B analyst estimate, and has factored in roughly $282M in profit hit from supply chain uncertainty. Toyoda Gosei warned that raw material disruptions could emerge as early as June, particularly thinners used in automotive paint, and has assumed 200k fewer vehicles in its production planning. Toyota Boshoku is now seeking short-term supply assurances from individual suppliers, as long-term commitments have become difficult to secure. Executives note that everything from door trims to seat urethane traces back to naphtha-derived resins.

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Contents

CLOSING

• Nemak to close Austria plant

EARNING DIP

• Hyundai profit drops on tariffs

EXPANDING

• Vibracoustic expands Mexico production capacity

• SiEngine opens Qingdao chip facility

• Valeo grows Wuhan R&D operations

INDUSTRY DIRECTIONS

• GM delays next-gen electric trucks

• SDV delays driven by integration complexity

• China JVs pivot to global exports

MERGERS, VENTURES, ACQUISITIONS

• Stellantis explores selling European plants

• Hangsheng Autoliv launch electronics joint venture

• Sony Honda scales back EV venture

PRODUCTION INCREASE

• Serra Verde boosts rare earth output

RAW MATERIAL DISRUPTION

• Japan faces aluminum supply crisis

• Aluminum shortages worsen EV demand pressures

REGULATION

• US says tariffs will remain

• New limits proposed on auto imports

• Changan considers Spain production plant

RISK ANALYTICS

• Automaker confidence declines amid tariffs

• Suppliers expect worsening pricing pressure

SHUTDOWN

• Honda cuts China ICE capacity

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Closing

Nemak, a Mexico-based aluminum components supplier, plans to close its Herzogenburg, Austria, plant by the end of Q1 2027, cutting about 330 jobs. The company, citing deteriorating market conditions and low production volumes, will work with customers to relocate remaining products to other Nemak sites. Nemak only recently acquired the plant from GF Casting Solutions, a subsidiary of Swiss industrial company Georg Fischer. The closure is another signal of tightening conditions for aluminum component suppliers in Europe as automakers rationalize their supply bases.

Earning Dip

Hyundai Motor reported a 31% drop in Q1 operating profit to $1.7B, hit by 15% US tariffs and supply chain disruptions tied to the Middle East conflict. Rising prices for steel, nickel, lithium, platinum, and other raw materials added roughly $134.8M in cost pressure. CEO Jose Munoz said Hyundai will not be able to fully reallocate lost Middle East sales to other regions due to manufacturing constraints, and noted the Middle East had been the company’s highest-margin market. Hybrid vehicle sales provided a bright spot, reaching nearly a quarter of Hyundai’s total US sales as consumers responded to soaring gasoline prices.

Expanding

German anti-vibration systems supplier Vibracoustic is expanding in Querétaro, Mexico, with a second manufacturing plant that will increase production capacity for engine mounts, chassis bushings, and advanced vibration-control systems.

After completing initial construction, Chinese automotive chip designer SiEngine Technology has launched operations at a new subsidiary in Qingdao, further expanding its industrial presence in northern China. The facility includes an R&D center and is focused on its smart cockpit chip and ADAS chip.

Meanwhile, French supplier Valeo is expanding its headlight factory and R&D operations in the Wuhan Economic and Technological Development Zone, where it has operated since establishing a lighting joint venture in 1995. The Wuhan site now ships nearly 4M headlights annually to global markets and houses over 1.5k engineers, roughly one-third of Valeo’s total R&D workforce in China.

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Industry Directions

General Motors has indefinitely delayed its next-generation full-size electric truck program, informing suppliers that refreshed versions of the GMC Sierra EV, Chevrolet Silverado EV, and Hummer had been halted with no new timetable. The current electric trucks will continue production at Factory Zero in Detroit-Hamtramck, but GM is diverting resources to its new T1-2 gas engine platform at Orion Assembly and has engaged suppliers to develop an extended-range EV propulsion system similar to those planned by Ford and Stellantis. GM has taken more than $7B in EV write-downs to date. Supplier executives and analysts do not expect a new generation of GM’s electric truck line until 2030 or beyond.

Elektrobit CEO Maria Anhalt said European automakers are not losing the software-defined vehicle race due to a talent shortage, but rather because of integration complexity and duplicated effort. Poorly defined interfaces between suppliers lead to what Anhalt called “integration hell,” a situation where conflicts between infotainment and telematics code can take months to resolve. In contrast, Chinese automakers gain their edge through faster decision-making, modular development, and parallelized workflows, approving architecture changes in weeks rather than months. Anhalt said the fix is pragmatic: stop reinventing software for every vehicle, apply higher SDV levels only to user-facing systems like cockpits, and reuse code across models, brands, and generations.

A growing number of China-based joint ventures are transforming their factories from domestic-only operations into global export hubs, driven by idle capacity and the cost advantages of China’s supply chain. Yueda Kia has exported more than 500k vehicles from its Yancheng plant, while Beijing Hyundai’s exports surged 49% in 2025 to 82k units. The shift extends beyond simple capacity reallocation: JVs are now exporting Chinese electrification and intelligent driving technologies through partnerships such as Stellantis-Leapmotor and joint ventures such as Smart (Mercedes-Benz/Geely) and Spotlight (Great Wall/BMW). The trend marks a reversal of the traditional JV model, with China moving from importing foreign technology to exporting automotive manufacturing capability, integrated supply chains, and faster product development to global markets.

Mergers, Ventures, Acquisitions

Stellantis has identified four factories in Europe that it may sell or share to address overcapacity. Sites in Rennes (France), Cassino (Italy), Madrid (Spain), and a fourth location are under discussion. Earlier this month, Dongfeng representatives toured the Rennes and Madrid plants. While current talks center on sharing facilities to fill excess capacity in exchange for access to Chinese technology, outright sales could also occur. Next month, CEO Antonio Filosa is expected to outline further strategic steps at a capital markets day.

Hangsheng Electronics, a Chinese automotive electronics supplier, and Autoliv, a Swedish safety technology company, have formally launched their joint venture, Suzhou Hangsheng Autoliv Automotive Electronics. The launch took place at Hangsheng’s manufacturing base in the Changshu Economic and Technological Development Zone. Focused on automotive safety electronics, the JV brings together Hangsheng’s focus on smart cockpits, connected-vehicle systems, and new-energy controls with Autoliv’s safety technology.

Honda and Sony are scaling back operations of their Sony Honda Mobility joint venture, absorbing employees back into the parent companies just a month after canceling the first and second Afeela EVs planned for North America. With about 400 employees, the venture fell victim to the same market forces that led Honda to cancel three EVs in March and book up to $15.8B in restructuring charges. Although production of the Afeela 1 sedan had begun at Honda’s East Liberty, Ohio, plant in fall 2025, the companies said they will continue discussions on future collaboration, focusing on software and advanced driver assistance systems.

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Production Increase

Brazil’s Serra Verde Group is the target of a $2.8B acquisition by USA Rare Earth. While heavy rare-earth elements are currently dominated by China, the group expects about one-third of future production to come from these elements. The company’s Pela Ema operation in Goias currently produces approximately 100 metric tons of rare-earth oxides per year. However, production is being upgraded to reach about 6.4k tons annually by the end of next year. Approximately 32% of output will be terbium and dysprosium. These less common elements are essential for high-performance magnets used in EV motors and other automotive applications.

Raw Material Disruption

Japanese automakers and suppliers are currently facing an aluminum supply crisis due to the Iran conflict, which has disrupted key shipping routes in the Middle East. Domestic carmakers sourcing about 70% of aluminum imports from the region have seen prices jump 13% since hostilities began. Toyota supplier Denso, responding to the shortage, has already cut output by around 20k units per month. Most Japanese manufacturers hold roughly two months of inventory, so disruptions could begin by late April or early May. JPMorgan analysts warn that, even with a peace deal, the industry faces a ‘black hole’ due to refinery damage in Abu Dhabi and Bahrain, as well as ongoing shipping delays.

The underlying vulnerability runs deeper than the immediate conflict. Gulf smelters, which account for roughly 10% of global primary aluminum output, depend on a continuous power supply. Any interruption risks permanent damage to pot lines. Restarting idled facilities typically costs $50M to $100M per 100k tonnes of capacity. Rehabilitation takes 6 to 12 weeks, so even a brief disruption translates into months of reduced supply. Automakers face heightened risk: electric vehicles require 300 to 400 kg of aluminum each, compared to 210 to 250 kg for conventional vehicles. This intensifies demand pressure precisely as supply tightens.

Regulation

US Trade Representative Jamieson Greer told Mexico’s auto and steel industries during meetings in Mexico City that they should not expect USMCA renegotiation to eliminate tariffs, saying “tariffs are here to stay” and the US will never return to a zero-tariff world. The message landed hard in an industry where US buyers purchased 2.8M of the 4M vehicles Mexico produced in 2024, and where 60k auto-industry jobs were lost last year due to the 25% Section 232 duty. The two sides agreed to launch formal bilateral USMCA negotiations in Mexico City the week of May 25.

The Trump administration is also exploring additional measures to raise the cost of importing vehicles from Mexico and Canada, including a potential minimum US parts-content requirement and limits on automakers’ ability to reduce tariff rates under the USMCA. The considerations reflect frustration that tariff policies have yet to produce substantial reshoring of auto manufacturing, with the US still heavily reliant on imports for vehicles priced at $30k or less. One option under discussion could subject USMCA-compliant vehicle imports to an effective tariff of roughly 10%, higher than what Detroit automakers currently pay. Commerce Secretary Howard Lutnick called USMCA “bad industrial policy” and said it needs to be reconsidered, while Mexico’s deputy economy minister said there is no discussion of increasing auto tariffs or rules of origin at the negotiating tables.

Chinese automaker Changan is considering opening a plant in northern Spain, with the Aragon region under consideration, as it joins a growing list of Chinese manufacturers locating production in the country. European production would help Changan avoid EU tariffs of up to 30% on battery-electric cars imported from China, and the company plans to launch 8 new models in Europe over the next 3 years, with $2.3B in regional investment by 2030. Spain has become increasingly attractive to Chinese automakers, with Leapmotor set to produce at Stellantis’s Zaragoza plant, Chery assembling at a former Nissan site in Barcelona, and Santana Motors partnering with Dongfeng and BAIC. Spanish Prime Minister Pedro Sanchez visited Beijing this week as part of his effort to deepen economic ties with China.

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Risk Analytics

Automaker confidence fell 3.6 points in Q1 to 54.6 on the Automotive News Auto Industry Confidence Index, with sentiment about future performance dropping to 49.6, indicating more automakers than not hold a pessimistic outlook. US tariffs, rising input costs, and geopolitical instability were cited as major challenges, and 50% of automaker respondents said they were pessimistic about industry health over the next six months. Average transaction prices and incentive pressure were the greatest areas of concern, with 44% of respondents expecting pricing performance to deteriorate. Nearly two-thirds of automakers said they were concerned about financial distress in their supply chains.

Suppliers scored even lower at 54.5, down from 57.1 in Q4 2025, with 60% of supplier executives pessimistic about industry health over the next six months. While current performance scored a relatively strong 63.9, future sentiment dropped to 45.1 as suppliers expect input costs to rise and pricing power with automakers to weaken further. Nearly half of suppliers expect their pricing leverage to deteriorate over the next six months, while just 4% expect it to improve. One supplier executive called it the most challenging environment in four decades, and 54% of parts makers expect financial distress across the supply chain to worsen.

Shutdown

Honda will shut down one of its joint-venture gasoline car plants with Guangzhou Automobile Group in June and is considering suspending another plant jointly owned with Dongfeng next year, further shrinking its China manufacturing footprint. Closing one ICE plant at each JV would halve Honda’s gasoline production capacity in China to about 480k units per year and cut total capacity from 1.2M to roughly 720k vehicles. Honda’s China sales fell about 24% in 2025 to just under 647k vehicles, nearly half the 1.2M cars it sold in 2023, as it lost ground to Chinese EV makers like BYD. The EV plants in Guangzhou and Wuhan are expected to begin producing EVs and plug-in hybrids developed under the leadership of Honda’s Chinese JV partners from 2028 or later.

Contents

BANKRUPTCY

• Evergrande EV unit collapses bankrupt

CHANGE IN MANAGEMENT

• Lucid appoints Napoli, raises funding, expands Uber

• Ford dissolves EV unit, Doug Field exits

• Chapter 11 Marelli names Henderson interim CEO

CLOSING

• Resrg closes plating plants amid demand shift

EARNING DIP

• Volkswagen books major ID4 writedown charge

HUMAN CAPITAL

• Stellantis cuts Opel engineers, refocuses tech

• BYD faces labor violation allegations Hungary

INDUSTRY DIRECTIONS

• Global OEMs localize EVs, China tech push

• Chinese lead software-defined vehicle development gap

• Nissan shrinks lineup amid EV demand shifts

LITIGATION

• Tesla faces multibillion-dollar litigation across fronts

MERGERS, VENTURES, ACQUISITIONS

• Nissan explores Chery UK manufacturing partnership

• Stellantis considers renewed Dongfeng European partnership

• Renault grants India autonomy, new platforms

PRODUCTION DECREASE

• Stellantis ending Poissy vehicle production 2028

PRODUCTION INCREASE

• Nissan reserves Chennai capacity

RAW MATERIAL COSTS

• Lithium prices surge, supply tightens globally

REGULATION

• US tariffs overhaul increases auto costs

• CBP launches IEEPA tariff refund tool

• Malaysia restricts imported EVs, push localization

RISK ANALYTICS

• German rubber suppliers warn OEM price pressure risks

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Bankruptcy

The three manufacturing bases of China Evergrande New Energy Vehicle Group in Tianjin, Shanghai, and Guangzhou have all entered bankruptcy proceedings, carrying nearly $2.6B in confirmed debt. The EV unit produced just 1.7k vehicles total and delivered 1.4k before halting operations, with its stock suspended since April 2025. Founder Hui Ka Yan has pleaded guilty to eight charges, including fraud and embezzlement, in a Shenzhen trial. The collapse closes the final chapter on what was once pitched as a multi-billion-dollar automotive venture, built on the back of a real estate empire that defaulted on its dollar bonds in December 2021 and was ordered liquidated by a Hong Kong court in January 2024.

Change In Management

While Evergrande's EV ambitions ended in bankruptcy, Lucid Group is making a fresh push to keep its own alive. The company named Schindler Group veteran Silvio Napoli as its new CEO, replacing interim chief Marc Winterhoff, and secured $750M in fresh investment split between Saudi Arabia's Public Investment Fund affiliate Ayar and Uber subsidiary SMB Holding. Alongside the capital raise, Lucid and Uber expanded their autonomous vehicle partnership, increasing the total fleet commitment from 20k to at least 35k EVs covering both the Gravity SUV and Lucid's upcoming midsize model, all outfitted with autonomous driving technology from Nuro. The robotaxi program is expected to launch commercially in San Francisco later in 2026 before expanding to dozens of global markets over the following six years.

Ford is also reshaping its EV strategy, but in the opposite direction. The automaker is folding its standalone electric vehicle division into a new combined unit called Product Creation and Industrialization under COO Kumar Galhotra, and chief EV officer Doug Field will leave the company next month after nearly five years. Field, who joined from Apple in 2021 and previously led Model 3 development at Tesla, oversaw the creation of Ford's Universal EV Platform and a planned $30k midsize electric pickup due out of Louisville Assembly in 2027. That program survives under newly promoted VP Alan Clarke, but the restructuring signals Ford's view that its EV challenge is now about industrialization and cost, not product vision. Ford tied the move to an 8% adjusted EBIT margin target by 2029 and plans to offer electrified powertrains on roughly 90% of global nameplates by 2030.

Troubled Japanese auto supplier Marelli has named Fritz Henderson as interim CEO to guide the company through its Chapter 11 bankruptcy, which began last June. Henderson is best known for his eight-month stint leading GM through its 2009 bankruptcy and government bailout, and he also served briefly as interim CEO of seating supplier Adient in 2018. Marelli, which ranks No. 25 among the world's largest suppliers with $11.6B in 2024 sales, produces everything from under-the-hood functional parts to front-end modules with integrated electronics for major customers including Nissan and Stellantis. His permanent replacement has already been named as Laurent Favre, former CEO of French supplier OPMobility.

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Closing

Automotive supplier Resrg is closing electroplating plants in Evansville, Indiana, and Farmington, Missouri, eliminating 266 jobs at the Indiana site alone as demand for chrome-plated plastic components declines. The company cited a market shift as automakers move from chrome trim to painted exterior finishes. Resrg was formed in 2025 when private equity firm Atlas Holdings combined SRG Global with Rehau Automotive, creating a supplier with about 10k employees across 22 production sites worldwide. The company will continue operating nine other electroplating facilities across six states.

Earning Dip

Volkswagen Group will book a charge equivalent to 60% to 75% of its original $800M investment to retool the Chattanooga plant for ID.4 production, hitting Q1 earnings. Excluding the writedown, VW's operating earnings would have increased year over year. Analysts noted VW will also benefit going forward from no longer selling what had become an unprofitable vehicle in the US market. VW has said a future version of the ID.4 is planned for North America, but has not provided details on where it will be built.

Human Capital

Stellantis is also restructuring its European operations, cutting 650 engineering jobs at Opel’s headquarters in Rüsselsheim, Germany, and reducing the site’s engineering workforce from about 1.65k to 1k. The remaining operation will be refocused as a specialized tech facility for advanced driver-assistance systems, battery development, and artificial intelligence tied to Stellantis’s STLA Brain architecture. Rüsselsheim has steadily shed jobs since PSA Group acquired Opel in 2017, when roughly 7k engineers were employed across Opel's locations. The cuts come as Stellantis pursues advanced talks with its Chinese partner, Leapmotor, to jointly develop an Opel-branded electric SUV at the Zaragoza plant in Spain.

A report from New York-based nonprofit China Labor Watch alleges labor violations at BYD's new plant in Szeged, Hungary, including evidence of debt bondage, illegal visa use, and excessive working hours affecting Chinese migrant workers hired through subcontractors. Workers reportedly described seven-day work weeks and shifts exceeding legal limits, and were allegedly instructed during pre-departure training to lie to inspectors about their hours. BYD said it prioritizes worker rights and that it and its vendors strictly comply with requirements. The plant is BYD's first major car manufacturing facility in the EU, part of the company's push to increase overseas sales by more than 40% to 1.5M units this year.

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Industry Directions

While Chinese automakers work to establish a manufacturing presence in Europe, global OEMs are increasingly turning to Chinese technology to compete in China itself. At the Beijing auto show, Volkswagen, GM, BMW, and Hyundai are showcasing locally developed EVs featuring digital interfaces and AI applications developed in partnership with Huawei, Momenta, and Xpeng. The push reflects the urgency of the competitive gap, with international brands' share of China's light-vehicle market falling to 31% in 2025 from 56% in 2017. German OEMs posted steep Q1 sales declines in China, with Mercedes down 27%, VW down 15%, Porsche down 21%, and BMW down 10%.

The technology gap extends well beyond the Chinese market. An AlixPartners survey of roughly 1k automotive executives found that Western automakers are falling behind Chinese rivals in software-defined vehicle development by outsourcing critical capabilities rather than building them in-house. The data show that 41% of Chinese automakers develop core SDV technology internally, compared with 27% for European and 25% for US manufacturers, and that 36% of Chinese OEMs allocate more than half of their R&D budgets to SDV work, versus 21% for Western peers. On the architecture side, 39% of Chinese automakers have adopted central zonal architectures, while roughly 60% of Western OEMs remain on legacy hybrid approaches. The consulting firm warned that every year the gap persists, the cost of catching up compounds.

As part of its turnaround effort under CEO Ivan Espinosa, Nissan is cutting its global model lineup from 56 to 45, building on previously announced plans to close seven plants and reduce its workforce by 15%. The move reflects a broader pattern across legacy automakers as they lose market share to Chinese rivals and shift focus toward fewer, higher-margin models to preserve profitability. Meanwhile, the Middle East oil shock is driving a 37% year-over-year increase in European EV sales in March, according to Benchmark Mineral Intelligence, with the real demand impact expected to show up in April and May data.

Litigation

Tesla faces more than 20 active litigation fronts, including wrongful death suits over Autopilot, securities fraud, racial discrimination, and consumer fraud, with total potential financial exposure estimated at between $2.7B and $14.5B. Key cases include a landmark $243M jury verdict in the Benavides Autopilot crash case, a certified class action over Full Self-Driving marketing, and more than 900 individual racial discrimination lawsuits related to its Fremont factory. While Tesla's $40B cash position means the liability will not threaten the company's survival, the scale of ongoing litigation represents a growing operational and financial distraction.

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Mergers, Ventures, Acquisitions

Nissan has held talks with China's Chery about building cars at its Sunderland plant in the UK, which is currently operating at about 50% capacity, according to the Financial Times. The discussions reflect a broader trend of Chinese automakers seeking European manufacturing partnerships to avoid import duties and shorten supply chains. Chery already has a joint venture with Spain's Ebro at a former Nissan site in Barcelona and recently acquired Nissan's manufacturing assets in South Africa. Nissan said it is assessing opportunities to secure full plant utilization at Sunderland, where it has announced plans to add production of an all-electric Juke in Q4.

Stellantis is pursuing a similar playbook, talking to China's Dongfeng about giving the state-owned automaker access to underused Stellantis factories in Europe while Dongfeng would, in turn, produce selected Stellantis brands in China. Dongfeng representatives have recently visited sites in Germany and Italy, and discussions have included the possibility of Dongfeng acquiring or investing in one or more European plants. The talks are part of a broader push by Stellantis to improve plant utilization and avoid politically sensitive closures, and the automaker has also met with Xiaomi and Xpeng about overhaul options. CEO Antonio Filosa is expected to outline further strategic steps at a capital markets day on May 21.

Renault is handing greater autonomy to its Indian operations under a new "India-for-India" strategy, giving local management full control across the value chain to match the speed and flexibility the market demands. The plan includes two new platforms: an entry-level architecture for $12k compacts and a CMF-B-based platform for a renewed SUV lineup, including the next-generation Duster and a three-row derivative. Renault is also positioning its Chennai plant as an export hub for vehicles and components, while planning to offer petrol, CNG, hybrid, and electric powertrain options across its lineup to match India's multi-energy market reality.

Production Decrease

Stellantis will end vehicle production at its Poissy plant near Paris by 2028, once current production of the DS 3 and Opel Mokka wraps up. The site will remain operational for component manufacturing, with Stellantis committing 100M euros to transform the facility for activities such as 3D printing of parts, vehicle refurbishment, and recycling. Production at Poissy has fallen sharply from 145k cars in 2023 to a projected 68k this year, and employment has dropped from 27k at peak to about 1.6k today. The closure adds to the growing list of underutilized Stellantis plants in Europe that could become candidates for Chinese manufacturing partnerships.

Production Increase

Nissan has reserved at least 250k units of annual capacity at the Renault-controlled Chennai plant through at least 2029, with an option to renew, thereby securing its Indian manufacturing base after selling its 51% stake as part of a broader alliance restructuring. The arrangement includes a fixed transaction price designed to protect profitability as the relationship shifts from partner to customer-supplier. Nissan is expanding from a single-model lineup around the Magnite to four vehicles within a year, lifting its segment coverage from under 20% to close to 70%. The deal benefits both sides: Renault gains the volumes needed to push plant utilization toward 400k units annually, while Nissan retains access to half the plant's capacity without tying up equity.

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Raw Material Costs

Chile is opening its annual global copper gathering, CESCO Week, with an inaugural World Lithium Conference as the country seeks to capitalize on its position as the world's third-largest lithium resource holder, with 13M tons. Lithium prices have rebounded to more than two-year highs as the Middle East conflict spurs fresh interest in EV battery metals, while supply is tightening from a mine closure in China, an export ban in Zimbabwe, and dwindling lithium carbonate stocks. CRU expects Chinese lithium carbonate prices to average about $22/kg this year, up roughly 135% from 2025, and Macquarie estimates global lithium demand will jump more than 20% annually through the end of the decade. Five mining companies, including Rio Tinto, are angling for development rights in Chile, though the country faces a delicate balancing act between Chinese and US investment interests.

Regulation

The Trump administration overhauled how it assesses duties on imported steel and aluminum derivative products, and auto trade attorneys say the change will likely increase tariff bills for automakers and suppliers. Derivative goods are now subject to a flat 25% tariff on the entire value of the product, replacing the previous 50% duty applied only to the metal content. For a $1k product containing $200 of steel, the tariff bill jumps from $100 to $250 under the new calculation. Some industrial goods, including certain robots and injection molds, will be taxed at a temporarily reduced 15% rate through the end of 2027. Attorneys described the change as simpler to administer but more costly, with one noting that companies should be careful what they wish for when asking for simplification.

On the refund side of the tariff equation, US Customs and Border Protection launched a new tool, CAPE, on April 20 within the ACE trade portal, which allows importers and brokers to file consolidated refund requests for duties imposed under the International Emergency Economic Powers Act. The system processes refunds in bulk rather than entry by entry, with valid refunds generally issued within 60 to 90 days. Phase 1 covers unliquidated entries and entries within 80 days of liquidation, with subsequent phases planned for more complex scenarios. Supply chain teams managing tariff exposure should coordinate with their customs brokers to ensure ACE portal access and ACH refund enrollment are in place.

Malaysia has imposed new restrictions on imported electric vehicles aimed squarely at Chinese automakers, doubling the minimum sale price for imported EVs to $50k after a tax holiday that ended December 31, 2025, had allowed Chinese brands like BYD to dominate the country's growing EV market. The government is pushing Chinese companies to assemble and manufacture vehicles locally, offering tax incentives for assembly plants but requiring that 80% of output be exported and sold at a minimum price of $25k. BYD said it is "still reviewing all possibilities" regarding its planned Perak assembly plant, while Chery is moving forward with a facility near Kuala Lumpur. Malaysia's domestic automaker Proton, which is 49.9% owned by China's Geely, sold 6,701 units of its e.MAS 5 electric car in Q1, far outpacing BYD's 999 units of the Atto 3.

Risk Analytics

Germany's rubber industry association, WDK, issued a sharp rebuke of automakers' demands for supplier price cuts, calling them "reckless" and "existentially threatening" to suppliers already operating at the limits of their flexibility. Managing director Boris Engelhardt said German automotive manufacturers are now acting purely on cost, ending decades of collaborative partnership with their supply base. He pointed to 65B euros in OEM write-downs in 2025 as evidence of strategic missteps driven by a lack of technological openness, arguing that the answer to forced capacity adjustments cannot be to demand massive price reductions from suppliers who have already shrunk. The statement reflects rising tension between OEMs and their European supply base as restructuring pressures intensify across the industry.

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Contents

BANKRUPTCY

• First Brands wipers business shutdown sale

CLOSING

• SKF closes Monterrey plant, shifts production

EARNING DIP

• LG Energy reports loss, weak demand

EXPANDING

• Kia invests in Mexico EV capacity

• Hyundai Mobis expands Nuevo Leon

HUMAN CAPITAL

• Audi faces renewed labor tensions

LABOR DISPUTE

• GM Silao union reaches agreement

LITIGATION

• Stellantis & Kamax settle contract dispute

MERGERS, VENTURES, ACQUISITIONS

• Mutares acquires Magna supplier units

• Stellantis Opel EV with Leapmotor tech

• Electra restarts cobalt refinery project

OPENING

• Shenda launches NEV components plant

• InfiMotion unveils Jiaxing manufacturing base

• GMB USA opens Alabama facility

PRODUCTION DECREASE

• Mazda halts production for Middle East

• Lucid deliveries miss on supply issues

REGULATION

• US maintains ban on Chinese autos

• USMCA review unlikely by deadline

SHUTDOWN

• VW ends ID4 US production

SUPPLY CHAIN

• Hyundai reroutes shipping around Hormuz

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Bankruptcy

Bankrupt auto supplier First Brands Group has shut down its windshield wiper business after OEM customers exited key programs, gutting revenue and making a going-concern sale unfinancable. The company is now seeking court approval to sell the intellectual property behind its Trico, Anco, and ExactFit brands to Premium Guard affiliate PGI Northstar for $25M in cash, plus royalties totaling up to $ 45M. Manufacturing has already ceased, and advisors warned the court that brand value could erode further if products stay off shelves. First Brands continues to market its Toledo Molding & Die and Jasper Rubber Products units, though WARN notices indicate potential layoffs if no buyers emerge. The Cleveland-based company filed Chapter 11 in September 2025, carrying more than $9B in liabilities tied to allegations of fraud by former executives.

Closing

Swedish bearing maker SKF is closing its Monterrey factory and shifting production to existing plants in Puebla and La Silla, cutting roughly 390 jobs while creating about 100 new positions. The Monterrey site opened in October 2023 after a $73M investment, but became oversized after SKF separated its automotive and industrial divisions, and EV demand grew more slowly than expected. The restructuring will carry a one-time charge of about $54M, booked in Q2 2026. SKF said the move is designed to reduce excess capacity while preserving the technical capability to scale back up if demand for electrification accelerates.

Cyber Security

Murata Manufacturing, a major automotive electronic components supplier, disclosed that a cyberattack on one of its internal information-sharing systems resulted in the unauthorized access of customer, business partner, and employee data. The company said it has blocked the access route, tightened external access restrictions, and is working with outside cybersecurity experts to investigate the cause and prevent recurrence. Murata confirmed that core systems supporting purchasing, production, and shipping were not affected, and there has been no disruption to operations. The company plans to notify affected customers and business partners individually.

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Earning Dip

LG Energy Solution reported a Q1 operating loss of $139M, worse than analyst estimates of a $107M won loss, as weaker battery demand from automakers weighed on results. Revenue fell 2.5% year over year to $4.4B, and without the US Inflation Reduction Act production tax credits, the loss would have reached $237M. The company is pivoting toward energy storage systems (ESS) to offset soft EV battery sales and is targeting a tripling of ESS revenue this year. Analysts also flagged a proposed US bill, the CHARGE Act, that would ban imports of certain Chinese-made energy storage systems, potentially opening new opportunities for Korean battery makers.

Expanding

While some suppliers are scaling back EV-related capacity, Kia is pushing ahead with a $600M investment at its Pesqueria plant in Nuevo Leon, Mexico. The spending will fund new production lines aligned with EV manufacturing, as well as sustainability upgrades, including solar panels, energy-efficiency improvements, and water treatment systems.

Not too far from Kia, Hyundai Mobis is investing roughly $59M to expand its operations also in Nuevo Leon, a project expected to create about 250 jobs. The company also plans an additional $50M investment in autonomous vehicle technologies and semiconductor capabilities. Hyundai Mobis has operated in Pesqueria since 2014, employing over 4k workers across operations that include automotive modules, chassis and safety systems, braking, airbags, lighting, electronics, and battery system assembly.

Human Capital

Those investments stand in contrast to conditions in Europe, where Audi is facing renewed labor tensions over the prospect of additional cost cuts beyond what was agreed in March 2025. CEO Gernot Dollner signaled that further efficiency measures may be needed from VW Group's perspective, drawing a sharp response from labor leaders who say employees are already contributing through planned cuts of up to 7.5k jobs by 2029. Tensions are compounded by uncertainty over the future of the A8 flagship sedan, with employee representatives pressing management to commit to building any successor at the Neckarsulm plant.

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Labor

On the labor front in Mexico, the independent union at GM's Silao plant reached a preliminary contract agreement covering 2026 through 2028 that includes a 15% across-the-board wage increase retroactive to March 25. The deal also includes increased grocery vouchers, a higher Sunday premium, paternity leave, and a leveling bonus for workers with 18 years of service. Union leadership called it the best contract negotiation outcome to date in Mexico's automotive industry. The agreement goes to a vote among 7k unionized workers, with a strike deadline of April 15 if the proposal is rejected.

Litigation

Stellantis and fastener supplier Kamax appear to have reached a last-minute settlement in a contract dispute closely watched by the supplier community. The two sides filed a stipulation to dismiss the case just before a Michigan Supreme Court hearing scheduled for April 7, and the court rescheduled oral arguments to its May session. At the heart of the case is a clause in Stellantis contracts committing to purchase "approximately 65% to 100%" of requirements from a given supplier, a range that supplier attorneys argue does not constitute an enforceable requirements contract. While the settlement may end this particular fight, the underlying legal question remains unresolved and could still be taken up by the court, given its significance to North American auto supply contract law.

Mergers, Ventures, Acquisitions

German investment firm Mutares has signed agreements to acquire two automotive supplier businesses from Magna, adding about $320M in combined annual revenue. The first deal brings Magna's European automotive lighting business into the Amaneos Group, creating an integrated exterior and lighting systems platform with roughly $235M in revenue. The second acquires Magna's car-top systems business for the HiLo Group, combining roof architectures with existing hinge and locking system capabilities and generating about $85M in revenue. Both transactions are expected to close in Q2 2026.

Stellantis is in advanced talks with Chinese partner Leapmotor to jointly develop an Opel-branded electric SUV using Leapmotor's architecture, with production targeted at the Zaragoza plant in Spain starting in 2028 at a planned volume of 50k units per year. The deal would let Stellantis cut EV development costs and time while improving utilization at its European plants and competing more effectively against BYD and other Chinese brands. Leapmotor would supply key technologies and electronic components, while Opel would handle exterior design, with much of the development taking place in China. Stellantis has also begun preliminary discussions about using the same architecture for an Alfa Romeo model at Zaragoza.

Electra Battery Materials has restarted full-scale construction on what it calls North America's first cobalt sulfate refinery near Temiskaming Shores, Ontario, after a roughly two-year pause. The facility is designed to produce 6.5k tonnes per year of battery-grade cobalt sulfate, a key precursor for NMC lithium-ion cathodes. Electra has secured $82M in total funding against a $73M construction budget, drawing on a US Defense Department grant, Canadian and Ontario government support, and equity financing. Early commissioning is expected in Q4 2026 with commercial production targeted for Q4 2027. The project addresses a critical supply chain gap, as cobalt sulfate refining is currently concentrated in China, even though most ore originates in the Democratic Republic of Congo.

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Opening

In China, Suzhou Shenda Auto Parts broke ground on a new $23M facility for new-energy vehicle components in the Suxiang Cooperation Zone of Suzhou Industrial Park. The 279k ft² plant will focus on thermal management systems and electronic water pumps for NEVs. Shenda, founded in 1999, specializes in automotive after-treatment systems and supplies automakers such as JAC and Foton. The project adds to a growing cluster of EV-focused suppliers in the zone, alongside firms such as Fuyao Glass and Lisheng Auto.

Staying in China, InfiMotion officially unveiled its newly rebranded Jiaxing manufacturing base, formerly operated as Zhejiang Xuanfu Technology. The 622k ft² facility focuses on electric-drive systems, drones, and range extenders, broadening InfiMotion's portfolio. The addition gives InfiMotion six manufacturing facilities across the Yangtze River Delta.

South Korean supplier GMB USA announced a $9M production facility in Opelika, Alabama, that will create 75 jobs manufacturing hybrid electric vehicle components, including active purge pumps, electric water pumps, electric oil pumps, and integrated thermal management systems. The plant is expected to begin operations in the coming months.

Production Decrease

Mazda has halted domestic production of vehicles destined for the Middle East in April and May due to the effective closure of the Strait of Hormuz, a key shipping route for roughly 30k vehicles per year to Saudi Arabia, Israel, and other regional markets. Growing inventory levels forced the decision, even though the company had initially maintained production while exploring alternative routes. Mazda plans to redirect output toward Europe and other markets where demand is rising. Toyota and Nissan have also cut Middle East-bound production, with Toyota slashing roughly 44k units across March and April.

The disruption in the Strait of Hormuz is just one of several supply chain pressures hitting automakers this quarter. Lucid Group missed Q1 delivery expectations after a 29-day sales halt tied to a supplier quality issue with second-row seats on its Gravity SUV. The company delivered 3k vehicles against analyst expectations of 5.2k, and recalled 4.4k Gravity SUVs due to seatbelt anchor welds that did not meet safety standards following an unauthorized supplier change. Lucid maintained its full-year production forecast of 25k to 27k vehicles but acknowledged ongoing supply challenges, including tariff impacts, chip shortages, uncertain rare-earth supplies, and fallout from the fire at Novelis' aluminum plant.

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Regulation

On the trade policy front, US Trade Representative Jamieson Greer confirmed that the Trump administration has no plans to change rules adopted under Biden that effectively bar Chinese vehicles from the US market due to national security concerns about data collection. Software prohibitions took effect in March, and hardware restrictions will follow in 2029. Greer noted those rules would make it difficult for Chinese automakers to establish US production, even as Trump had previously expressed openness to Chinese-built plants. Bipartisan opposition in Congress remains strong, with Democratic senators urging Trump to block Chinese automakers entirely and Republican Senator Bernie Moreno proposing legislation to permanently seal off the market.

Rounding out the trade picture, Greer also said he does not expect negotiations on the USMCA review to be fully resolved by the July 1 notification deadline, though progress is being made on multiple fronts. The review presents three options for each country: renew for 16 years, withdraw, or signal non-renewal, which would trigger up to a decade of annual reviews. Trump has called the agreement irrelevant, and Greer has floated replacing it with two bilateral deals. Key friction points include rising vehicle imports from Mexico, and steel and aluminum shipment levels that the US says exceeded informal understandings. Formal US-Canada negotiations have not yet launched, though both sides describe recent conversations as productive.

Shutdown

Volkswagen announced it will end US production of the ID.4 electric SUV at its Chattanooga plant within weeks, replacing it with the gas-powered Atlas SUV. The shift reflects weaker EV demand in the US following the expiration of the $7.5k federal tax credit, even though VW's EV sales had been trending upward prior to that policy change. VW will continue selling the remaining ID.4 inventory through the end of the model year and says an updated version is planned, though it has not confirmed where that model will be built.

Supply Chain

Hyundai is also rerouting its global shipping fleet around the Cape of Good Hope to bypass the Strait of Hormuz, adding 10 to 15 days to transit times for components shipped to European plants. CEO Jose Munoz declared that "globalization is over" and outlined a shift toward regionalized production clusters, replacing annual supply chain reviews with weekly assessments. The disruption is significant for Hyundai-Kia, which sourced 82% of its 2025 sales from Korean production. In the US, Hyundai is adapting its Georgia plant to add hybrid and range-extended production alongside BEVs, targeting 1.2M units of annual U.S. capacity by 2030 with 80% local supply chain integration.

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Contents

BANKRUPTCY

• EV startup collapses, workers unpaid

CLOSING

• Astemo plant closes after contract loss

DISASTER

• March Plant Fires:

  • Michigan fire disrupts supplier output

  • Norway supplier fire halts JLR

  • Tennessee fire raises delivery risk

  • Ohio glass fire threatens OEM supply

  • Fatal Korea fire hits engine components

  • Texas chemical fire risks material flow

EARNING DIP

• Ford sales fall due to fire/supply shortage

EXPANDING

• Mercedes invests to expand US production

HUMAN CAPITAL

• BYD 100k job cuts amid EV competition

LABOR DISPUTE

• Webasto Michigan workers unionize

LITIGATION

• ZF pricing dispute halts Stellantis production

MERGERS, VENTURES, ACQUISITIONS

• Stellantis considers Canadian assembly of Chinese EVs

• GM Chinese JV may produce in Mexico

REGULATION

• US auto investments delayed over policy uncertainty

SHUTDOWN

• GM idles Detroit EV plant amid weak demand

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Bankruptcy

BeyonCa, a luxury EV startup founded by former Volkswagen executives in China, has shut down without producing a single vehicle, leaving hundreds of employees unpaid.

Despite backing from Renault, Dongfeng, and a Saudi investor group, the company never reached mass production.

Planned partnerships and a proposed factory never materialized, and management has gone silent on employee wage claims, prompting legal action.

The collapse underscores the competitive risks facing Chinese EV startups, the exposure investors carry in early-stage ventures, and the consequences of weak supply chain execution.

Closing

Customer concentration risk is also playing out domestically.

Astemo Americas will close its Tallapoosa, Georgia, plant after its primary customer terminated a contract covering parts for four vehicle models, resulting in about 60 layoffs.

The facility sits adjacent to Honda’s transmission operations, a proximity that makes the dependence on a single OEM all the more visible.

Disaster

Since March 1, 2026, several plant fires have highlighted how concentrated and interdependent automotive supply chains remain.

The most important incidents are not just the fires themselves, but the degree to which they affected Tier-1 suppliers, upstream chemical inputs, and just-in-time production networks.

The list below prioritizes events based on likely supply-chain impact rather than headline severity alone.

• 🟠 March 31–April 1, 2026 — Walker, Michigan — Challenge Manufacturing

  • Severity: 🔥🔥🔥🔥⚪ High-Medium.

  • What was manufactured: Precision metal stampings, welded assemblies, modular automotive parts.

  • Impact: Direct Tier 1 exposure; potential ripple into body-in-white and assembly operations.

  • Potential customers affected: Major OEM platforms and large automotive customers.

  • Notes: Challenge is deeply embedded in automotive production networks; machine damage or cleanup time may affect near-term availability.

  • Source: Local reporting / Yahoo
    

• 🟠 March 31, 2026 — Solihull, UK — supplier-fire-linked JLR production pause

  • Severity: 🔥🔥🔥🔥⚪ High-Medium.

  • What was manufactured: Supplier-side incident; not the OEM plant itself.

  • Impact: Very high because the fire reportedly forced an OEM production pause.

  • Potential customers affected: Jaguar Land Rover Solihull operations.

  • Notes: JLR said the pause was due to a parts-supply issue, and later reporting linked it to a fire at a supplier in Norway; the supplier name has not been publicly disclosed. This is a clear example of supplier-side fire risk translating into OEM downtime.

  • Source: Reuters / BBC / Wards / Automotive Logistics
    

• 🟠 March 25, 2026 — Chattanooga, Tennessee — Gestamp plant

  • Severity: 🔥🔥🔥⚪⚪ Medium.

  • What was manufactured: Structural stampings, welded assemblies, hot-stamped parts, chassis/body components.

  • Impact: Contained fire, but still meaningful Tier-1 risk due to just-in-time synchronization.

  • Potential customers affected: Volkswagen, BMW, Mercedes-Benz.

  • Notes: Even contained fires can create short-term delivery delays or quality checks at Tier-1 stamping plants.

  • Source: WDEF / Chattanooga Fire Dept.
    

• 🟠 March 22, 2026 — Moraine, Ohio — Fuyao Glass America plant

  • Severity: 🔥🔥🔥🔥⚪ High-Medium.

  • What was manufactured: Automotive glass.

  • Impact: Direct relevance to OEM final assembly and replacement-glass supply.

  • Potential customers affected: Major automakers using Fuyao glass, aftermarket glass channels.

  • Notes: Classic just-in-time risk; glass disruptions can halt assembly if inventory is tight.

  • Source: WCPO / WYSO / Dayton 24/7 Now
    

• 🔴 March 20, 2026 — Daejeon, South Korea — Anjun Industrial auto parts plant

  • Severity: 🔥🔥🔥🔥🔥 High.

  • What was manufactured: Engine valves / auto parts.

  • Impact: Direct supplier disruption with clear exposure to Hyundai and Kia engine programs.

  • Potential customers affected: Hyundai, Kia.

  • Notes: Fatal fire at a critical auto parts supplier; high-confidence risk for engine-component continuity and recovery timing.

  • Source: Reuters
    

• 🟠 March 12, 2026 — Pasadena, Texas — LyondellBasell Bayport Choate chemical plant

  • Severity: 🔥🔥🔥⚪⚪ Medium.

  • What was manufactured: Propylene oxide, propylene glycol, propylene glycol ether, TBA, isobutylene, ETBE.

  • Impact: Indirect but important exposure through coatings, plastics, antifreeze, and other auto inputs.

  • Potential customers affected: Chemical customers supplying OEMs and Tier 1s.

  • Notes: Chemical feedstocks sit far upstream in the automotive supply chain, so visibility is often limited, and impacts can ripple across multiple upstream suppliers before reaching OEMs. That makes this more of a systemic materials-risk event than a simple single-site disruption.

  • Source: Reuters / local reporting
    

Full disclosure: Elm Analytics’ supplyAware™ platform helps teams better understand multi-tier plant risk and mitigation, including fire impact, through our Facility Risk module, developed in partnership with Aon.

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Earning Dip

The financial toll of supplier fires is most visible at Ford. US sales fell 8.7% in Q1, driven mainly by a 16% drop in F-Series volumes as the fire at Novelis’ aluminum plant continues to constrain supply.

The disruption is delaying high-margin fleet deliveries, and full supplier output is not expected until summer, pointing to an uneven recovery through mid-2026.

Ford plans to offset the shortfall by raising truck production and skipping summer shutdowns, though near-term inventory gaps may still affect peak selling periods.

The company is also shifting its mix toward larger SUVs. Separately, EV sales dropped 70%, and hybrid sales fell 19%.

The combined picture underscores Ford’s continued exposure to single-source supplier risk, with effects spanning production, revenue mix, and inventory stability.

Expanding

While Ford manages the fallout from supplier disruption, other OEMs are investing to reduce that exposure.

Mercedes-Benz plans to put $4B into US manufacturing by 2030, signaling a deeper push to localize production and manage trade risk.

The company will expand output at its Tuscaloosa plant, add new ICE and EV models, and bring GLC SUV production to Alabama.

At full capacity, the plant could reach 340k units, raising demand for both local suppliers and skilled labor.

The investment gives Mercedes-Benz more flexibility to navigate uneven EV demand, evolving trade rules, and ongoing supply chain disruptions.

Human Capital

The pressure to localize is not limited to Western OEMs.

BYD cut its workforce by about 100k employees in 2025, a 10% reduction that brought total headcount to 870k as the company shifted from volume growth toward cost control.

Despite the cuts, BYD posted record revenue and delivered 4.6M vehicles, including over 1M exports.

Profit fell 19%, however, weighed down by pricing pressure and continued investment in EV and battery technology.

The company is targeting 1.5M exports in 2026, supported by new fast-charging battery technology and sustained R&D spending.

As EV competition intensifies, the pricing pressure behind these moves will likely drive further supply chain cost optimization, squeezing margins and reshaping supplier demand.

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Labor

Cost pressures are surfacing on the labor side as well. Webasto workers in Michigan voted to unionize, a decision covering 475 employees who support Ford and other Detroit Three programs.

The vote followed earlier labor tensions at the site. The outcome points to rising union activity within the supplier base, with potential implications for labor costs and workforce stability across OEM supply chains.

Litigation

Supplier cost disputes are creating their own production risk.

Stellantis halted production at its Toluca, Mexico, plant on March 14 after ZF Chassis Modules stopped shipping suspension modules from its Windsor, Ontario, facility due to a pricing dispute.

The stoppage immediately paused assembly of the Jeep Cherokee and Compass.

ZF also threatened to cut shipments to Stellantis’s Windsor, Canada, plant, which would have disrupted production of the Chrysler Pacifica and Dodge Charger.

A Michigan court intervened with a temporary restraining order requiring shipments to continue, preventing a second shutdown.

In Mexico, Stellantis expects a separate court order to restore supply and allow operations to resume shortly.

The financial stakes are substantial: Stellantis says it had already paid more than $26M and accepted earlier price increases before the supplier sought an additional $70M, triggering litigation.

The dispute illustrates how pricing conflicts can halt production and create parallel risk across multiple plants, especially under just-in-time inventory conditions.

Mergers, Ventures, Acquisitions

Stellantis is also rethinking its North American footprint beyond supplier disputes.

The company is evaluating a plan to assemble Leapmotor EVs at its idled Brampton, Ontario, plant using knock-down kits from its Chinese partner.

The proposal follows Stellantis’s decision to shift previously planned Jeep production to the US, leaving the Brampton facility without a product.

Government and labor groups have pushed back, arguing the plan would rely heavily on imported components and offer limited engagement with local suppliers.

That opposition is sharpened by the fact that Stellantis received more than $500M in subsidies tied to domestic production and employment commitments, now under dispute.

Trade dynamics add further complexity: reduced Canadian tariffs on Chinese EVs, combined with potential US restrictions, could limit export options and constrain the plant’s scale.

The plan signals a move toward cost-driven sourcing but introduces risks around localization, supplier participation, and exposure to shifting trade policy.

GM is pursuing a different localization path. The company and its SAIC-GM-Wuling joint venture are planning to manufacture vehicles in Mexico, using existing GM facilities to avoid tariffs and strengthen its competitive position in regional export markets.

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Regulation

GM is not alone in reshaping its regional production strategy.

Toyota, Hyundai, Volkswagen, and Nissan are collectively planning tens of billions in US investments to expand production and reduce tariff exposure.

Final commitments, however, remain tied to uncertainty around USMCA renewal and potential vehicle duties.

Toyota’s $10B plan and Hyundai’s $26B commitment both hinge on clearer trade policy.

Localization targets reflect the same urgency: Hyundai is aiming for 80% of US sales to come from domestic production, while Nissan is accelerating US production shifts despite higher costs.

Executives stressed that long lead times across supply chains and manufacturing require stable policy before capital is committed.

The trend points to continued investment in US capacity, but trade policy uncertainty remains a key constraint on supply chain planning and localization timelines.

Shutdown

Even as automakers commit capital to US production, EV demand remains a weak spot.

GM temporarily idled its Factory Zero plant in Detroit starting March 16, laying off about 1.3k workers as demand for the Hummer EV, Silverado EV, and other high-priced models weakened.

The shutdown is the second in three months and follows earlier shift cuts, underscoring ongoing production adjustments to match softer EV demand.

The plant is expected to restart in mid-April, but GM has already scaled back its broader EV plans, including write-downs and the pause of battery investments.

Policy changes, particularly the removal of EV tax credits, have further reduced demand and lowered planned EV volumes.

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Contents

EARNING DIP

• US vehicle sales forecast to fall

• FedEx surcharges signal Iran war volatility

EXPANDING

• Toyota invests $1B in US plants

INDUSTRY DIRECTIONS

• Iran war hits India auto output

• Oil shock boosts Asia EV demand

• Toyota warns tariffs demand restructuring

• Toyota pushes suppliers to raise productivity

• Battery plants pivot from EVs

LABOR DISPUTE

• GM Silao wage vote risks strike

• Japanese wage hikes raise supplier costs

MERGERS, VENTURES, ACQUISITIONS

• GM China venture faces uncertain future

OPENING

• Valeo opens Texas plant for GM