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

PRODUCTION DECREASE

• Honda cancels Afeela EV program

• UK vehicle output posts sharp decline

PRODUCTION INCREASE

• Hyundai targets 80% US-built sales

RAW MATERIAL COSTS

• EU rules accelerate green steel adoption

REGULATION

• European automakers absorb major tariff costs

• USMCA review shapes North America trade

• EU Australia deal boosts mineral sourcing

SUPPLY CHAIN

• Iran conflict threatens Europe supply chains

Earning Dip

US new light-vehicle sales are forecast to fall 6.5% in Q1-2026, with March deliveries expected to drop 15% year over year as high prices and consumer uncertainty tied to the Iran conflict keep buyers out of showrooms.

The loss of federal EV tax credits is adding to the pressure, with EV sales estimated to be down 28% for the quarter and the seasonally adjusted annual rate at 15.5 million units. For supply chain planners, weaker near-term retail demand points to tighter production schedules and lower order volumes across the supplier base.

That softer auto demand is also showing up in freight markets.

FedEx reported higher fuel surcharges and flight re-routing away from the Middle East after the Iran war began. Analysts warn that higher gasoline prices will likely weigh on consumer spending and freight volumes in the months ahead.

Suppliers that depend on air freight for time-sensitive components should closely track surcharge increases and quickly assess alternative routes as Middle East disruptions continue.

Expanding

Even with current demand headwinds, Toyota is signaling a long-term commitment to North American manufacturing with a $1B investment split between its Georgetown, Kentucky, and Princeton, Indiana, assembly plants.

Georgetown will retool to launch three new EVs, including the 2027 Highlander and a Subaru-badged sibling, with batteries supplied from Toyota’s $13.9B complex in Liberty, North Carolina.

Princeton, meanwhile, will expand production of Grand Highlander and Sienna. For suppliers in Toyota’s North American network, the move offers a clear forward-program signal and aligns with Toyota’s broader $10B US commitment through 2030.

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Industry Directions

While Toyota adds capacity in North America, the war in Iran is disrupting production in other key markets. In India, which imports about 50% of its natural gas from the Middle East, suppliers to Maruti Suzuki, Tata Motors, and Mahindra are reporting gas shortages at their factories.

S&P Global Mobility has therefore cut its 2026 India light-vehicle production forecast from 7.4% growth to 6.3%. The conflict is also pushing fuel prices higher worldwide. And although US EV interest is at its annual peak, analysts warn that the jump may not turn into lasting purchases.

The oil shock linked to the Iran conflict is driving a sharper rise in EV demand across Asia-Pacific. Before the route was effectively closed, about 80% of the oil moving through the Strait of Hormuz was headed there.

BYD in the Philippines and VinFast in Vietnam say sales rates are running at double or even quadruple their 2025 averages. In New Zealand, dealers reported electric and hybrid sales at four times the usual Saturday pace in mid-March.

For Asia-Pacific suppliers exposed to EVs, that points to a supply-constrained market that could last as long as the Hormuz disruption continues, especially with BYD’s overseas shipments already more than doubling in the first two months of the year.

That Iran-driven demand surge in Asia stands in sharp contrast to the structural cost burden weighing on North American operations.

Toyota COO Mark Templin has called the US tariff regime the biggest challenge of his career. The industry has identified more than $35B in tariff costs, with Toyota’s share above $9B, and Templin has made clear that pricing changes alone will not close the gap.

Suppliers should expect Toyota to push on all three response levers he identified: pricing, efficiency, and footprint, with more efficiency mandates, manufacturing footprint changes, and cost-reduction measures ahead.

The cost-reduction message reached suppliers directly days later. At the annual Toyota Supply Partners Convention, Toyota CEO Koji Sato told 700 executives from 484 supplier companies that the industry is fighting for survival and that productivity gains are not optional.

He pointed to several concrete actions, including the new Smart Standard Activity protocol, which eases overly strict cosmetic quality requirements, reduces supplier waste, and frees up resources for reinvestment. He also highlighted efforts to consolidate software platforms and powertrain variants.

Toyota’s network of suppliers will likely treat this as a clear action notice: incoming CEO Kenta Kon, who takes over on April 1, has made lowering Toyota’s break-even point a top priority.

Pressure on EV program economics is also reshaping the battery supply chain. Billions of dollars committed to new cell manufacturing capacity are being redirected away from automotive use.

Ford and LG Energy Solution are shifting newly built Michigan plants from EV cell production to battery energy storage systems after GM and Stellantis exited their respective LG joint ventures. LG has also secured new contracts with Tesla and Toyota to use that capacity.

For battery material and cell component suppliers, the pivot suggests that North American EV ramp-up timelines are stretching, and that near-term volumes will increasingly come from grid storage customers rather than automotive OEMs.

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Labor

A more immediate supply chain disruption risk is emerging at GM’s Silao, Mexico, assembly plant. The union representing workers has proposed a 10% salary increase for the 2026-2028 contract period.

Workers will vote on the proposal on April 9 and 10, and the strike deadline is April 15 if no agreement is reached with management. Silao is a critical hub for GM truck and crossover production, so any work stoppage would quickly ripple through North American Tier-1 and Tier-2 supplier schedules.

Labor cost pressure is not limited to Mexico. In Japan, Rengo, the country’s largest union federation, reported an average wage increase agreement of 5.26% for 2026.

That marks the third straight year of hikes above 5%, with Toyota, Hitachi, and NEC all meeting full union demands.

For automotive supply chain professionals sourcing from Japanese Tier-1 and Tier-2 suppliers, wage inflation on this scale is likely to feed directly into component pricing talks and contract negotiations throughout the year.

Mergers, Ventures, Acquisitions

While labor costs climb in Japan, GM’s China joint venture faces a deeper structural challenge. SAIC-GM sales have fallen 75% from a 2017 peak of 2 million units to 562,000 in 2025, and the JV’s core contract expires in June 2027 with renewal terms still unresolved.

GM is investing $1.4B to revive Buick and Cadillac through locally developed EV and software-defined vehicle platforms. It is also exploring exports to new markets after the US and Mexico tariffs cut that business by 40% in 2025. Suppliers tied to SAIC-GM programs should expect ongoing volume uncertainty and watch JV contract developments closely as the June 2027 deadline nears.

Opening

Even as GM’s China-based supply footprint shrinks, the automaker is building new supply infrastructure in the US. French supplier Valeo is investing $225M in a McAllen, Texas, facility to produce central compute units for GM’s next-generation vehicle architecture.

That architecture is set to debut on the Cadillac Escalade IQ in 2028 and then expand quickly to other models. Located near the Mexico border, the plant is meant to serve both US and Mexican assembly operations and is a clear example of the nearshoring and software-defined vehicle investment trend reshaping the North American supply base.

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Production Decrease

Honda’s EV retrenchment reached a major milestone with the cancellation of all Afeela-branded vehicles under its joint venture with Sony. The move follows Honda’s broader decision to cancel three 0 Series EVs and book up to $15.8B in restructuring charges.

The Afeela 1 sedan, already in production at Honda’s East Liberty, Ohio, plant, is being discontinued along with its planned crossover successor. The two partners are also reviewing the venture’s future as a whole.

Suppliers that committed tooling, engineering resources, or capacity to Honda’s 0 Series architecture or the East Liberty program now face direct exposure to those cancellations.

Honda’s pullback is part of a wider output contraction across global markets. In the UK, vehicle production fell 17% year over year in February, while commercial vehicle output dropped 74%. Exports, which make up 80% of total UK vehicle production, fell 11% for passenger cars and 65% for commercial vehicles.

The Society of Motor Manufacturers and Traders said those figures predate the Iran crisis, which suggests March could be weaker still. EU proposals that may discriminate against UK-built vehicles in a trading relationship worth nearly $89B a year add another layer of structural risk for suppliers operating in the UK.

Production Increase

Against that backdrop of weaker output elsewhere, Hyundai is pursuing an aggressive North American localization strategy. CEO Jose Munoz said at the company’s annual shareholder meeting that Hyundai aims to build 80% of US-sold vehicles domestically with about 80% US supply chain content by 2030.

The plan is backed by $26B in US investment and a pipeline of 36 new or significantly enhanced models through 2030.

With Hyundai and Kia reporting combined tariff costs of $5B in 2025, localization has become a financial necessity. US-based suppliers should expect active outreach as Hyundai works to increase US content from roughly 60% today to its 80% target.

Raw Material Costs

The push to localize and decarbonize supply chains is also speeding up the adoption of green steel in Europe.

A new EU automotive emissions framework allows low-carbon steel to offset up to 7% of a vehicle’s tailpipe CO2, giving the market a regulatory demand signal it has long lacked. VW has signed supply agreements with Salzgitter and Thyssenkrupp for green steel deliveries starting in 2026.

Analysts estimate the premium would add only $175 to $220 per vehicle for a model using 800kg of steel. For steel and materials suppliers, the EU framework may finally break the chicken-and-egg deadlock that has kept green steel investment below the level needed to scale supply.

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Regulation

The regulatory and cost burden on European automakers is substantial. VW Group absorbed $3.2B in US tariff costs in 2025 alone, while BMW and Stellantis added about $1.5B and $1.3B, bringing the visible total for major European OEMs to more than $6B for the year.

VW CEO Oliver Blume has said publicly that the build-for-export model no longer works for some vehicles, and Stellantis expects another $1.8B in tariff costs in 2026 under the new US-EU trade framework. Suppliers with production in Mexico or Europe that depend on the US as an export market should now treat tariff exposure as a permanent structural cost rather than a temporary disruption.

In North America, the USMCA review process, which began on March 16, will determine whether cross-border flows of vehicles and parts can resume without the 25% tariffs that have reshaped production economics across the region.

Canada’s proposed tariff-remission overhaul would create tradable credits for the five automakers with Canadian assembly operations, Ford, GM, Honda, Stellantis, and Toyota, allowing brands without local production to buy tariff relief.

Even so, industry representatives are clear that restoring tariff-free USMCA trade remains the main objective. Suppliers with Canadian or Mexican content in US-bound vehicles should closely monitor the review, as its outcome will set the cost baseline for North American supply chains through the end of the decade.

The EU is also reducing supply chain dependence in another direction by finalizing a free trade agreement with Australia after eight years of negotiations.

The deal removes tariffs on Australian critical minerals entering the EU, including lithium, manganese, and aluminium. It is explicitly framed as a response to overreliance on China for battery and EV supply chain inputs, and it bans export restrictions on raw materials.

That gives European battery and EV manufacturers a more secure sourcing alternative. For automotive supply chain professionals seeking to monitor critical mineral exposure, the EU-Australia FTA is a meaningful diversification option that should grow in importance as EV volumes scale through the end of the decade.

Supply Chain

That push to diversify critical mineral supply chains becomes more urgent as the Iran conflict heightens broader supply chain risks.

The Vienna Supply Chain Intelligence Institute in Austria warns that if the conflict lasts more than two months, European automakers could face critical shortages of semiconductors and battery cells.

About one-third of the helium used in chip production comes from Qatar, and strong AI-driven demand for memory chips has left no slack in the system.

Automakers, including VW and BMW, say they have seen no immediate impact.

Even so, the institute argues that Europe’s supply chain resilience has weakened since the pandemic, leaving the industry more exposed to prolonged disruption than during the last major supply crisis.

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Contents

CLOSING

• Aumovio closing Lithuania plant amid restructuring

EARNING DIP

• ZF losses driven by EV exit

HUMAN CAPITAL

• Bentley cuts jobs amid weak demand

MERGERS, VENTURES, ACQUISITIONS

• Mercedes Geely expand EV partnership talks

• Center Rock combines GHSP Stoneridge units

OPENING

• VinFast delays NC plant, cuts workforce

PRODUCTION INCREASE

• Leapmotor Stellantis to start Spain EV production

• VW Anhui starts ID UNYX production

RAW MATERIAL DISRUPTION

• ABS supply risk from Middle East

• TPL halts PO production amid shortage

• Glencore taps cobalt stocks amid crunch

REGULATION

• Tariffs cost automakers billions

• VW rethinks Mexico exports under trade pressure

• New US trade probes cloud outlook

• USMCA review deepens cross-border uncertainty

RISK ANALYTICS

• IEEPA tariff refund guidance and pitfalls

• BCG automotive supplier study 2026

SUPPLY CHAIN

• India gas shortages disrupt auto production

• Iran conflict risks demand and logistics

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Closing

Aumovio plans to close its electronics plant in Kaunas, Lithuania, by mid-2028 as part of a global restructuring program expected to cost about $54M. The decision reflects weaker demand in Europe, underused capacity, and rising logistics complexity.

Earning Dip

ZF posted a $2.3B loss in 2025, driven mainly by $1.7B in write-downs tied to its exit from unprofitable EV programs. Revenue fell about 6%, and the company is cutting up to 14k jobs in Germany as EV demand continues to lag expectations.

Human Capital

Bentley will cut 275 jobs in the UK after its operating profit fell 42%, citing tariffs, weaker demand in China, and lower deliveries.

The company will delay further expansion of its EV programs due to limited customer interest, even as it prepares new launches. These actions underscore that demand remains volatile and that progress in electrification in the luxury market fluctuates.

Mergers, Ventures, Acquisitions

Mercedes and Geely are reportedly in early talks to expand their cooperation on future EVs to accelerate development and reduce costs in China.

The potential partnership would build on their existing Smart joint venture and reflects the industry’s growing reliance on Chinese engineering capability and scale.

Center Rock is combining GHSP with Stoneridge’s control devices unit to form a $550M supplier with broader electronics and systems capabilities.

The integration will span 12 global sites and 2k employees, with no site closures planned. Despite a $17.9M operating loss in 2025, the deal aims to improve scale and efficiency.

Overall, the combination reflects ongoing supplier consolidation and private equity-led restructuring as companies seek more scale and stronger capabilities amid rising technology complexity and margin pressure.

Opening

VinFast plans to restart construction on its delayed North Carolina EV plant in 2026, but it has pushed production back to 2028 and cut its projected workforce from 7.5k to 1.4k.

The $4B project has faced repeated delays, while the company posted a $2.8B net loss in 2025.

If VinFast does not begin production by mid-2026, North Carolina can reclaim the site, adding further pressure to the project’s timing and overall viability.

The situation highlights ongoing uncertainty around EV investment execution and demand, creating added risk for regional sourcing, capacity planning, and supplier commitments.

Production Increase

Leapmotor will begin building EVs in Spain with Stellantis in October, likely starting with the B10 SUV.

The partnership helps the company avoid tariffs, improve access to the local market, and develop lower-cost EVs, adding to competitive pressure across Europe’s supply chain.

Volkswagen Anhui has started production of the ID. UNYX 08 in Hefei, marking the first VW vehicle developed with Xpeng.

The SUV uses Xpeng’s Edward platform and reached production readiness in just 24 months.

The launch highlights the growing reliance on Chinese partnerships and local supply chains as automakers work to stay competitive in EVs.

Raw Material Disruption

LG Chem and Lotte Chemical have warned customers that ABS supply could be disrupted, and that force majeure could be declared if Middle East-related risks continue to affect feedstock availability.

ABS is a resin used in dashboards, door trims, and center consoles.

Supply could tighten by late March. Prices have already risen about 30% over the past two months, reaching about $1,550 per ton.

The companies have not declared force majeure, but they are urging customers to diversify sources and prepare for tighter supply.

This creates near-term risk for parts supply, higher material costs, and production continuity across the automotive supply chain.

TPL has suspended Propylene Oxide production at its Manali facility in India after losing access to propylene due to an Indian government directive prioritizing domestic fuel needs.

Because PO is used to make polyurethane for seats, dashboards, and insulation, the shutdown could tighten material availability for automotive interiors. The move adds fresh cost and continuity risk to an already strained supply chain.

Glencore is using cobalt held on China’s Wuxi exchange to supply EV battery customers after export curbs in Congo tightened global availability.

The restrictions have pushed cobalt prices up 160% since February 2025 and reduced Wuxi inventories by more than half since late January.

This raises ongoing raw material cost and availability risks for EV battery and electrification supply chains that depend on stable cobalt flows.

Regulation

Recent US tariffs have cost automakers $35.4B, with Toyota alone facing $9.1B and the Detroit 3 facing $6.5B in 2025.

Sourcing and production networks are being actively reshaped as companies respond by raising prices, shifting production, such as GM moving Buick to Kansas, and cutting imports, including VW’s ID Buzz.

Volkswagen’s model of building vehicles in Mexico and exporting up to 70% to the US is threatened by tariffs, costing the company $3.1B in the first nine months of 2025.

As a result, CEO Oliver Blume says these tariffs make exports "no longer economically viable."

This challenge is not unique to Volkswagen; Audi is also affected, with exports accounting for up to 90% of its Mexico-built vehicles.

Consequently, US sales for Audi have dropped 12% as tariffs impact pricing and competitiveness.

In response to these difficulties, VW is now considering shifting production to the US and expanding the Scout plant to build capacity. However, this move would be expensive, take years, and require a clearer trade framework.

• Automotive News: How Trump’s new tariff probes work and what they could mean for automakers

  

The US and Mexico began USMCA review talks on March 18, with tariffs, especially a 50% US duty on steel, at the center of the discussion.

Broader talks are also focused on rules of origin, supply chain security, and reducing reliance on non-USMCA imports.

Mexico is pushing to preserve the agreement and eliminate tariffs, while the US is linking renewal to concerns about the presence of Chinese companies, labor standards, and energy policy.

The outcome will determine whether the pact is extended to 2042 or enters an annual renegotiation cycle, creating ongoing uncertainty for cross-border trade.

Risk Analytics

• Foley published the last of their post-IEEPA-tariffs playbook series:
  5. Refund-Related Issues for Companies That Indirectly Paid IEEPA Tariffs
  6. Avoiding Common Pitfalls When Dealing with Refund-Related Issues
  7. Understanding the Future Landing Spot for Tariffs
  8. Setting Up to Receive IEEPA Tariff Refunds

  

• BCG: 2026 Global Automotive Supplier Study (pdf)

Supply Chain

Natural gas shortages tied to the Iran-Israel conflict are disrupting India’s auto supply chain, with suppliers to Maruti Suzuki, Tata Motors, and Mahindra already reporting fuel constraints for production processes such as casting and painting.

India imports about 50% of its natural gas, and supply has tightened after Qatar halted output and shipments through the Strait of Hormuz declined, forcing the government to prioritize household energy over industry.

Smaller suppliers are already cutting output, with Kirloskar Ferrous halting some production and Hindalco declaring force majeure, while some OEM plants are running below capacity.

This creates immediate risk for production continuity and volume growth in a high-demand market, tightening capacity and increasing supply chain fragility.

German automakers, including BMW and Volkswagen Group, are monitoring the Iran conflict as a growing risk to Middle East demand and logistics.

While operations remain stable for now, Audi is already seeing a "temporary dent" in regional sales, and Skoda has flagged rising uncertainty in a market that had recently delivered over 10% growth for the VW Group.

Meanwhile, BMW is watching potential disruptions to aluminum flows routed through Dubai.

On the supply side, suppliers are also assessing logistics exposure: Bosch notes reduced air freight volumes, and Schaeffler warns that disruption to Suez Canal shipping would be critical.

Together, these developments highlight rising geopolitical risk to both demand and key logistics corridors, raising concerns about downstream impacts on materials flow and premium vehicle sales.

Contents

BANKRUPTCY

• First Brands sells Walbro business

CYBER SECURITY

• Hackers claim wiper attack on Stryker

EARNING DIP

• Honda faces loss after EV pullback

EXPANDING

• Renault targets global sales growth

• NIO expansion plans face chip costs

• Newman Technology expands Ohio production

HUMAN CAPITAL

• SK Battery cuts Georgia workforce

MERGERS, VENTURES, ACQUISITIONS

• Denso bids to acquire chipmaker Rohm

• Stellantis explores Chinese investment partnerships

PRODUCTION INCREASE

• Rivian R2 launch to boost deliveries

RAW MATERIAL COSTS

• Diesel price spike pressures supplier margins

• Aluminum supply disruption shifts sourcing

RISK ANALYTICS

• Auto sector faces geopolitical economic shocks

• Middle East war impacts automotive economics

• Strait of Hormuz disruption threatens oil supply

SUPPLY CHAIN

• Hormuz closure strains global LNG supply

• War threatens Japanese auto export supply chains

• Helium shortage worsens chip supply constraints

• Ford introduces three-year supplier planning outlook

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Bankruptcy

First Brands will sell its Walbro business to Active Dynamics Group for $50M as it moves through bankruptcy restructuring. The deal preserves 600 jobs in Michigan, Arizona, and Mexico and transfers a product line that includes fuel systems, carburetors, fuel pumps, and ignition components.

Cyber Security

Meanwhile, in cybersecurity, Iran-linked hacktivist group Handala claims it launched a data-wiping attack against Stryker, disrupting systems at the Michigan-based medical manufacturer and supplier.

Reports of wiped devices, halted operations, and ordering issues show how a cyberattack tied to a geopolitical conflict can spill into commercial supply chains far from the battlefield.

For automotive companies, the message of vigilance is clear: a civilian manufacturer can become collateral damage and lose the digital systems needed to keep production and supply moving.

Earning Dip

Shifting to corporate strategy, Honda expects its first annual loss since 1957, driven by up to $15.7B in EV restructuring charges and the cancellation of three planned US EV models.

The company says the move reflects weak EV demand, the end of US policy support, and rising competition from Chinese manufacturers. This signals a clear shift, as automakers increasingly pull back on EV investment to adapt to changing market realities.

Expanding

In a related move, Renault aims to lift global sales by more than 20% by 2030 and to have half of its vehicle sales come from outside Europe.

Over the next 5 years, it plans to launch 36 new models, several of which are tailored for markets such as India and South America.

The company also plans to cut EV costs and simplify vehicle designs to compete more effectively with lower-cost Chinese brands.

Continuing the trend of global challenges, China’s NIO plans to expand overseas over the next 2 to 3 years, but says the memory chip shortage is raising costs and could disrupt production.

The company expects chip and raw material shortages to increase the cost of each vehicle, but it plans to keep prices unchanged.

Newman Technology plans to invest $74M to expand its Mansfield, Ohio, facility, adding new injection molding production lines. The project is expected to create 70 jobs on top of the site’s existing 627 positions.

Newman, a Tier-1 supplier owned by Japan’s Sankei Giken Kogyo, makes door assemblies, exhaust systems, exterior trim, structural reinforcements, and molded plastic components for the auto industry.

Human Capital

However, the EV slowdown continues to affect other parts of the supply chain. SK Battery America cut 958 jobs, about 37% of its workforce at its Georgia plant, as weaker US EV demand eased pressure on battery output.

The factory had supplied Ford’s canceled electric F-150 Lightning program and also serves Volkswagen and Hyundai.

SK said it remains committed to building a US battery supply chain, but the cuts show how quickly softer EV demand and policy changes can ripple through battery manufacturing capacity and affect employment.

The layoffs are another sign that EV-related production footprints are being reset as automakers and suppliers adjust to slower demand growth.

Mergers, Ventures, Acquisitions

Denso has proposed acquiring Rohm, a Kyoto-based chipmaker with a strong presence in automotive semiconductors, as access to semiconductors becomes more important for EVs and self-driving systems.

The bid follows a strategic partnership announced in May 2025 and reflects a broader industry shift toward securing semiconductor technology and supply through deeper supplier ties or direct ownership.

Stellantis is reportedly considering deals that would let Chinese automakers such as Xiaomi and Xpeng invest in its European operations, including possible stakes in brands such as Maserati and access to manufacturing capacity.

The talks reflect pressure on Stellantis’ European business, including overcapacity, intense competition, and high costs tied to the EV transition.

For Chinese partners, the appeal is faster access to European manufacturing.

For Stellantis, the potential gains include advanced EV and software technology.

The discussions also point to a broader strategic shift, as Stellantis directs more investment to North America and seeks external support to stabilize its European operations.

Production Increase

Meanwhile, Rivian plans to begin R2 deliveries this spring and expects the model to drive a 53% increase in total deliveries this year.

The company also expects the R2 to generate most of its volume growth in 2027. The launch matters because Rivian is relying on the R2 to scale production well beyond its current higher-end lineup.

Raw Materials

Rising diesel prices are quickly squeezing supplier margins across North America.

APMA’s Flavio Volpe said transportation usually makes up 5% to 6% of operating costs, so a 20% increase in fuel prices can add about 1% to total costs.

That is a meaningful hit in a business where margins are often only 6% to 7%.

Smaller suppliers are especially exposed because freight makes up a larger share of their cost base, and they have less ability to absorb the increase or pass it through.

Adding to sourcing headaches, disruptions tied to the Iran war are forcing Japanese and South Korean auto suppliers to look for alternative aluminum sources, including talks with Russia’s Rusal for primary foundry alloy used in wheels, engine blocks, and cylinder heads.

The shift follows a force majeure declared by Aluminium Bahrain and delayed loadings by Emirates Global Aluminium, two major Gulf suppliers to Japan and South Korea, after shipping through the Strait of Hormuz was disrupted.

Some Japanese buyers who had voluntarily avoided Russian metal since the 2022 invasion of Ukraine are now reconsidering purchases as prices rise and alternative supply tightens, while others are also exploring sources in India and elsewhere in Asia.

The situation shows how conflict-driven disruption in one trade lane can quickly force uncomfortable sourcing decisions for critical automotive raw materials.

Risk Analytics

Taken together, the auto sector is being hit by a confluence of shocks: rising oil prices, uncertainty over AI’s impact on jobs, tariffs, reduced consumer sentiment and spending, and war-driven geopolitical risk.

Stress in the $1.7T private credit market adds a parallel financing risk we're watching, as it has recently heightened fears of tighter credit and higher borrowing costs for automakers and suppliers.

• S&P Global: Economic implications of war - Middle East war and the automotive industry

• Reuters Graphics: How the Strait of Hormuz closure affects global oil supply

Supply Chain

It is important to note that the closure of the Strait of Hormuz affects much more than just oil supply and competition for liquified natural gas.

For example, the Middle East accounts for 10% of Japanese vehicle exports.

Aluminum production, which is energy-intensive, is becoming increasingly constrained (see the force majeure under Raw Materials above).

Additionally, about a third of the world’s helium supply is also restricted, putting extra pressure on Asia’s electronics industry and worsening the memory-chip shortage, with demand already outpacing supply by 40% to 50%.

Petrochemical shipments, such as ethylene glycol, are slowing too, which is impacting the production of automotive plastics.

Ford plans to give suppliers a 3-year outlook on vehicle programs to improve planning and help address quality issues.

The company will also introduce a two-way scorecard and a help desk to improve communication and resolve problems faster.

The effort is part of a broader push to rebuild supplier relationships after several years of strained ties.

Contents

BANKRUPTCY

• First Brands sells factories to survive

CHANGE IN MANAGEMENT

• Auto CEO turnover hits record pace

CLOSING

• First Brands shutters four Ohio sites

EXPANDING

• Shinhwa expands Alabama production footprint

• Astotec boosts pyrotechnic initiator capacity

LABOR DISPUTE

• IG Metall labor push falls short at Tesla Berlin

LITIGATION

• Wingtech threatens $8B Nexperia claim

MERGERS, VENTURES, ACQUISITIONS

• MG narrows hunt for Europe facility

• GKN drops European magnet plant

REGULATION

• Italy seizes CEVA Logistics funds in probe

SUPPLY CHAIN

• Iran conflict rattles global supply chains

• Hormuz rerouting slows parts shipments

• Gulf disruption tightens automotive logistics

• Qatar LNG shutdown heightens energy risk

• Europe suppliers face gas-cost pressure

• Qatar LNG restart may take weeks

Bankruptcy

Bankrupt auto supplier First Brands is selling its remaining factories, including three that supply Ford, to avoid liquidation.

With four potential buyers in the mix, the company is operating week to week as talks continue, while automakers, including Ford, provide advance payments and other funding to keep production running.

Ford’s attorney called the support unprecedented:

“This may be the most expensive parts deal in the history of auto supply.”
- Mark E. Freedlander, attorney for Ford Motor Co.

The case highlights the risk of severe production disruptions and financial fallout when key suppliers come under distress.

Change In Management

Since early 2025, nine global automakers, Toyota, BMW, Nissan, Stellantis, Renault, Volvo, Jaguar Land Rover, Porsche, and Hyundai, have replaced their CEOs.

The leadership shake-up comes as the industry faces rising tariffs, tougher Chinese competition, and the shift to EVs and software-defined vehicles.

Analysts say boards are placing more weight on technology, AI, and digital expertise as automakers adjust strategy to volatile EV demand and new mobility rivals.

Some CEO changes followed business crises or strategic disagreements, including at Stellantis and Renault, while others were part of planned succession.

The rapid turnover highlights the pressure on automakers as they try to protect legacy vehicle profits while funding major investments in electrification and software.

Closing

First Brands will close four facilities in Ohio, including its headquarters in Cleveland and plants in Greenville, Tiffin, and Bowling Green, with 1.3k layoffs set by April 30

Expanding

Shinhwa Auto USA is investing $37M to expand its plant in Auburn, Alabama. The project brings Italian toolmaker SAPP into the operation and adds dedicated tooling capacity. That gives Shinhwa a more vertically integrated US manufacturing base for aluminum die casting, machining, and component assembly.

Austria’s Astotec Automotive has committed $10.7M to grow capacity at its plant in Pápa, Hungary. The site produces pyrotechnic igniters and micro gas generators for automotive safety systems, including airbags, seatbelt pretensioners, and battery disconnect devices.

Labor

IG Metall lost ground in the works council elections at Tesla’s Grünheide plant, winning 13 of 37 seats and falling short of the majority needed to press for collective bargaining.

The result leaves the factory as the only German automotive plant without a union contract.

Ongoing labor tensions at a site operating at about 40% of capacity could continue to weigh on production stability.

Litigation

Wingtech Technology may seek $8B in compensation under the China-Netherlands investment protection treaty if Dutch authorities keep blocking its control of Nexperia.

The dispute follows a court decision suspending Nexperia’s Chinese CEO and restricting Wingtech’s voting rights while an investigation into possible mismanagement continues.

Because Nexperia’s chips are widely used in vehicles, the case could prolong semiconductor supply risk for automakers.

Mergers, Ventures, Acquisitions

MG plans to build a European factory by 2027 and has shortlisted five countries as it looks to avoid 45% EU tariffs on Chinese-built EVs. The move could broaden regional supplier sourcing as the brand localizes production.

GKN has reportedly canceled its planned European rare-earth magnet plant, which was set to begin a pilot operation in Germany and could have supplied Schaeffler.

The project was one of only a few magnet production efforts planned in Europe and aimed to reach 4k metric tons of annual capacity by 2030.

It was said to have been dropped late last year, before GKN PM’s $1.44 billion takeover by Detroit-based American Axle & Manufacturing, now called Dauch Corp. The business was considered non-core, with uncertain profits due to changing EV demand and increased competition from China.

Regulation

Italian authorities seized $31.8M from France’s CEVA Logistics units in a tax and labor investigation tied to alleged false invoicing and labor-law violations.

CEVA supports automakers including Ford, Stellantis, Renault, and Volkswagen with parts transportation, sequencing, and logistics services.

Because many vehicle plants run on just-in-time schedules, disruptions at a provider like CEVA can quickly interrupt parts flow and threaten plant uptime.

Supply Chain

The US- and Israel-led attack on Iran, along with Iran’s retaliation, has intensified global supply chain disruptions.

Energy markets, shipping routes, and logistics costs are all affected. Iran’s closure of the Strait of Hormuz, a key energy chokepoint, has raised oil prices and threatened the supply of natural gas, oil, and petrochemicals.

Shipping lines are avoiding the area, and rerouting vessels around the Cape of Good Hope may add up to two weeks to transit times. This reduces vessel capacity and increases freight and insurance costs.

Vessel traffic through the Strait of Hormuz fell about 70% after the strikes, while Jebel Ali Port temporarily suspended operations and Gulf airspace closures cut global air cargo capacity by 18%.

Major carriers, including MSC, Maersk, CMA CGM, COSCO, and Hapag-Lloyd, halted or restricted bookings, rerouted services, and in some cases imposed war-related surcharges of $1.5k to $4k per container.

What does this mean for automotive supply chains?

Higher energy prices, increased risk to petrochemical feedstock, and longer shipping lead times may raise production costs and disrupt the movement of parts and raw materials.

For automotive manufacturing, the bigger risk is execution: Asia-Europe flows are slowing, booking options are tightening, and just-in-time plants in Germany, the UK, the US, and Mexico could begin to feel component delays within weeks if disruptions persist.

While most are talking about the impact on oil, liquified natural gas (LNG) seems to have found itself in the eye of the perfect storm.

Qatar, one of the world’s largest LNG suppliers, has halted production, sending natural gas prices in Europe and Asia sharply higher.

With global LNG supply already tight and export facilities, including those in the US, already running at full capacity 🔊, lost Qatari volumes cannot be replaced quickly.

As a result, major importers such as China, Japan, and South Korea may face supply shortages if the shutdown lasts more than a few days. Europe looks especially vulnerable because gas inventories are already low.

This disruption has significant implications 🔊 for automotive manufacturing. A prolonged LNG shortfall could drive up electricity and industrial energy costs, increasing expenses for energy-intensive operations like metals processing and component manufacturing.

The greatest supply chain risk is in Europe, where suppliers of aluminum, steel, chemicals, and glass, all highly sensitive to natural gas prices, face heightened exposure if Qatari LNG remains offline.

Qatar’s complete LNG shutdown could last at least a month.

Restarting operations would require about two weeks, with an additional two weeks needed to reach full capacity.

I’m excited to share that Elm Analytics’ own Sig Huber was a guest on this week’s Rubber News’ Livestream:

• Navigating through Headwinds: A look at supply chain challenges, opportunities

Here are the Top 7 key takeaways from Sig’s discussion:

1. The “new normal” is persistent disruption.
   Companies must design for resilience and gain true multi-tier visibility to plan and respond effectively.

2. Localization is accelerating.
   “Buy where you build” and nearshoring will continue regardless of politics, with many OEMs now mandating North American content.

3. The biggest near-term risks: supplier financial distress (liquidity, covenant breaches, slow-pay exposures) and facility fires.
   Monitor risk holistically across “six pillars” (e.g., liquidity, labor, parts, demand, transport, facility).

4. AI will be transformative but uneven.
   High-value uses today: mining public intel/news and deep financial diagnostics; limits remain in multi-tier mapping, and cybersecurity is a gating concern.

5. Resilience is not redundancy.
   Use predictive, pillar-based risk management and targeted mitigations (e.g., facility fire-risk analytics) to lower risk without duplicating suppliers.

6. EV demand whiplash has trapped capital and weakened suppliers.
   Industry support is largely tapped out; plan for tighter financing conditions and a tougher baseline.

7. Collaboration and trust are prerequisites.
   Two-way, real-time information sharing with suppliers and customers enables true resilience. Checkboxes on surveys don’t.

You can watch the entire livestream at Rubber News.

Warmly,
Nick Gaydos

Contents

CHANGE IN MANAGEMENT

• Cybercab program manager exits pre-launch

DISASTER

• Cartel unrest disrupts Mexican logistics

EARNING DIP

• Stellantis posts massive EV-related loss

HUMAN CAPITAL

• Aston Martin cuts 20% workforce

• Lucid reduces staff to conserve cash

INDUSTRY DIRECTIONS

• Humanoid Robots… Horsenoid Robots?

LABOR DISPUTE

• VW Chattanooga workers ratify UAW contract

• Tesla Grünheide union clash threatens expansion

MERGERS, VENTURES, ACQUISITIONS

• Hyundai plans major Korea tech investment

• Novonix sells Canadian battery unit

REGULATION

• Supreme Court blocks tariffs

• New 150-day global tariff announced

• Post-IEEPA tariff guidance playbooks

• China restricts rare-earth exports to Japan

SUPPLY CHAIN

• Nio ES8 hit by chip shortage

Change In Management

Victor Nechita, the program manager for Tesla’s Cybercab, has left the company just days after the first production unit was completed at Giga Texas.

His departure is the latest in a series of senior exits, following the recent departures of the program leads for the Cybertruck and Model Y. As a result, Tesla no longer has its original program managers in place for any of its current production vehicles.

The Cybercab is still ramping up production slowly and is designed around unsupervised autonomy, a capability that has not yet been achieved.

These technical and operational challenges increase execution risk as the vehicle moves from pilot builds to full-scale manufacturing. The leadership turnover adds further uncertainty to the launch at a crucial time for this new, autonomy-focused vehicle.

Disaster

After the death of cartel leader El Mencho, more than 250 road blockades were reported across 20 Mexican states, with highways obstructed by burning vehicles and spikes.

Airports in Guadalajara and Puerto Vallarta saw disruptions, and Jalisco halted public transport under a “code red.”

The unrest exposed how quickly security incidents can disrupt automotive logistics flows in key automotive manufacturing corridors.

Earning Dip

Stellantis reported a $26.3B net loss after booking charges tied to canceled EV platforms, including the Ram 1500 EV and Jeep Wrangler 4xe programs, as well as a stake sale in a Canadian battery plant.

CEO Antonio Filosa said the loss “reflects the cost of overestimating the pace of the energy transition,” as the company pivots back toward hybrids and internal combustion models, including the relaunch of Hemi V8 variants and legacy nameplates.

The company is issuing bonds and pausing shareholder payouts to stabilize its balance sheet.

The strategic reset signals capital reallocation, supplier program cancellations, and potential capacity shifts across EV and battery supply chains, increasing near-term sourcing volatility.

Human Capital

Aston Martin will cut up to 500 jobs, about 20% of its workforce, to save around $50M after posting a pre-tax loss of $459M in 2025.

Management cited US tariff impacts, supply chain challenges, and very weak demand in China as key drivers of lower volumes and margins.

The restructuring may help stabilize costs, but it could also constrain output recovery and lead to more volatile, stop-start ordering patterns for suppliers.

Lucid has cut 12% of its US staff as it pushes for profitability, while preserving hourly manufacturing roles at its Arizona plant.

The cuts come as the company leans on a lower-priced SUV and richer incentives to sustain volumes, generate cash, and fund its next midsize platform.

Despite these efforts, the company expects only moderate 2026 production growth, reflecting continued exposure to material shortages and global sourcing complexity.

Industry Directions

The CCTV Spring Gala is the most-watched event in China each year.

Last year, people were amazed by a highly synchronized traditional folk dance performed with dancers and Unitree Robotics’ humanoid robots.

This year was something else... same company, just one year of innovation later. Not only does this year’s performance show how fast humanoid robots are advancing, but also how fast China is moving in this space and in automotive manufacturing.

Robots like these are quickly moving from choreographed stages to real work. It is also not just humanoids, though. The same capabilities behind them, sensing, balance, actuators, and rapid iteration, are starting to show up in entirely different machines.

Which makes Kawasaki’s CORLEO feel less like a gimmick and more like a preview of what happens when you have its motorcycle and robotics divisions under one roof.

Kawasaki is now pushing CORLEO toward commercialization as a four-legged, hydrogen-fuel-cell off-road mobility platform (e.g., Electric Horse) that borrows ideas from motorcycle-style suspension and is being positioned for real deployment at Expo 2030, with a longer commercialization horizon beyond that.

Labor

VW Chattanooga workers have approved their first UAW contract with 96% support, securing 20% wage increases, lower healthcare costs, and stronger job security protections.

The ratification follows the plant’s April 2024 unionization vote and several months of negotiations, including the threat of strike action.

For automotive manufacturers and suppliers in the region, the agreement signals a potential shift in labor dynamics across Southern US manufacturing hubs.

Tesla’s Grünheide plant is heading into works council elections where the German union IG Metall is trying to gain more influence, and Tesla management is pushing back against that effort.

Elon Musk and local management have implied that a planned plant expansion may not go ahead if “external organizations” like the union gain stronger representation through the works council.

At the same time, both Tesla and IG Metall have filed complaints related to an alleged secret recording at a works council meeting, and have then reached a limited settlement so the election can proceed.

Mergers, Ventures, Acquisitions

Hyundai is expected to announce a multi-billion-dollar investment in the Saemangeum region, focusing on robotics, an AI data center, and hydrogen infrastructure.

This move supports Hyundai’s push into autonomous driving, smart factories, and robotics, with plans to purchase up to 50,000 Nvidia AI chips.

The South Korean buildout could reshape supplier footprints and logistics flows in Korea as new automation and hydrogen capacity come online.

Novonix is selling its Nova Scotia battery-testing business to founder Chris Burns for $1, including the unit’s assets and liabilities.

The divestment allows Novonix to narrow its focus and accelerate growth in its US synthetic graphite production, particularly at its Chattanooga anode materials plant.

Regulation

The US Supreme Court ruled 6-3 that President Trump lacked the authority under the IEEPA to impose certain national-level tariffs.

Within a day, he responded by introducing a 15% global duty under Section 122 of the Trade Act of 1974.

Vehicles and auto parts already covered by Section 232 tariffs are not affected by this new duty, nor are steel, aluminum, copper, or USMCA-compliant goods from Canada and Mexico.

Section 232 and Section 301 tariffs still apply, including those on vehicle imports, parts, and metals.

The new global tariff will last up to 150 days unless Congress extends it.

The White House also indicated that more Section 301 investigations could lead to additional tariffs.

For supply chains, this decision removes some overlapping tariffs but keeps auto sector tariffs in place and adds ongoing legal and refund uncertainty.

Companies will need to keep updating their cost models and stay alert to trade compliance.

Foley has published the first 3 of 5 in their post-IEEPA-tariffs playbook series:

1. Preserving the Right to IEEPA Tariff Refunds

2. Contractual Issues for Importers of Record

3. Customs & Supply Chain Issues for Importers of Record

Also worth checking out:

• When Trade Becomes National Security: What the Administration’s 2025 National Security Strategy Signals for Companies and Cross Border Business

  

China has introduced new export controls on rare-earth and other dual-use materials for 20 Japanese companies, including Subaru, Hino, Mitsubishi Materials, TDK, Nitto Denko, and NOF Corp.

Exporters must now obtain special permits and demonstrate that the materials will not be used for military purposes.

These requirements add extra compliance steps, increase documentation requirements, and increase the risk of shipment delays for key automotive materials used in engines, electronics, and EV systems.

As a result, Japanese automakers that rely on rare-earth materials from China face higher exposure to supply disruption, longer lead times, and potential cost increases.

Supply Chain

Nio’s ES8 SUV is facing a shortage of signal-processing chips, triggering a temporary production change starting March 2.

Vehicles will ship without the “Hyper-Immersive” sound system mode, with financial compensation and a paid retrofit option offered at a later date.

This is the ES8’s second chip-related production change since launch, a reminder that semiconductor risk is still a live issue for EV programs.

Contents

CHANGE IN MANAGEMENT

• Stellantis hires GM supply executive

EARNING DIP

• Renault expects lower 2026 margins

EXPANDING

• JSW MG triples India capacity

• Valeo expands India EV operations

• Nexperia secures loan to boost chips

• GM invests in Oshawa stamping

INDUSTRY DIRECTIONS

• Automakers rewrite contracts for tariffs

• Stellantis revives diesel models Europe

LABOR DISPUTE

• Tesla union dispute escalates Berlin

OPENING

• Elastomer Solutions opens Mexico plant

PRODUCTION INCREASE

• Renault considers EV production Spain

• GM boosts Korean output for US

REGULATION

• EU proposes local content EV rules

• ITC reviews USMCA auto origin rules

RISK ANALYTICS

• Supply chains shift to adaptive resilience

Change In Management

Stellantis has hired Marcelo Conti, a former GM supply chain executive, as its new North America purchasing chief, while Marlo Vitous moves into a global role overseeing indirect purchasing.

The reshuffle comes as Stellantis faces mounting cost pressures and EV-related losses, and at the same time pushes to strengthen supplier relationships and improve quality.

In parallel, GM’s work on Tier-n mapping and deeper supply chain visibility underscores how critical multi-tier risk management and strong supplier relations have become for the industry, especially as Stellantis ramps up production.

Earning Dip

Renault expects lower 2026 margins due to EV growth, international expansion, and consolidation of its India JV. Ongoing cost-reduction targets highlight continued pressure on suppliers and on manufacturing efficiency.

Expanding

JSW MG Motor, the Indian joint venture between SAIC and JSW Group, plans to invest up to $440M to triple plant capacity to 300k units and support a wave of new hybrid and EV launches in India.

The company aims for new energy vehicles to make up most of its lineup and is pushing deeper localization to reduce import and currency exposure.

The expansion creates new opportunities for suppliers in India, but also adds financial and geopolitical risk to the regional footprint.

Valeo plans to invest more than $216M to expand and localize operations in India, aiming to lift sales to about $756M by 2028.

The company has also secured a nearly $1B order for electric powertrains for Mahindra’s Born Electric platform.

From a supply chain risk perspective, the strategy shifts more EV sourcing to India, reducing reliance on China but increasing ramp-up and localization execution risks.

Invest International, backed by the Dutch government, will lend Nexperia $60M to upgrade its global chip production sites.

The funding is aimed at boosting output, modernizing production lines, and improving efficiency. It follows Nexperia, owned by Wingtech, facing heightened scrutiny over its governance amid geopolitical tensions. A

The Dutch state intervened by installing a European management team, a move that also contributed to disruptions in the supply of automotive chips.

In a separate step, a Dutch court has ordered an investigation into possible mismanagement, while allowing the current European leadership to remain in place.

For automotive supply chains, the loan should support near-term capacity and stabilize supply, but ongoing trade tensions and governance issues are likely to keep pressure on the availability of high-volume commodity semiconductors.

GM is investing $47M in Oshawa stamping operations to prepare for next-generation full-size pickups, extending production into the late decade.

The announcement comes amid layoffs and ongoing tariff pressure. The upgrade signals a long-term commitment to the program, but also continued exposure to trade-related costs.

Industry Directions

As automakers expand production across the US Sun Belt, many are rewriting supply contracts to more directly address tariff risk, raw-material price volatility, and ongoing inflation.

Older agreements that lack clear price adjustment mechanisms or flexible force majeure terms are now under strain, prompting renegotiations and, in some cases, disputes.

As a result, contract design is emerging as a primary lever for managing supply chain resilience.

Since late 2025, Stellantis has reintroduced diesel variants on at least seven European passenger car and van models, reversing course as EV demand underperforms and emissions rules soften.

Diesel now accounts for only 7.7% of new EU car sales, compared with 19.5% for full EVs, but the powertrain still offers a lower-cost option and helps address a competitive gap versus Chinese entrants that are heavily focused on EVs.

Labor

Legal complaints and defamation claims between Tesla and IG Metall are escalating ahead of a key works council election at the Berlin plant.

The dispute is closely linked to wage standards, union influence, and potential investment decisions that could shape Tesla’s European production capacity.

The controversy also comes amid a sharp decline in European sales and recent workforce reductions at the site.

Opening

Elastomer Solutions México has opened a $15M, 54k ft² plant in Zacatecas to produce elastomer components for automotive applications. The facility will supply OEMs, including BMW, Audi, VW, Mercedes-Benz, and Nissan.

Production Increase

Renault is considering building its next-generation compact EVs at its Palencia, Spain, plant, expanding production beyond its France-based ElectriCity network.

The potential shift aligns with CEO François Provost’s broader restructuring agenda, including the reintegration of Ampere and a review of current EV ventures.

Allocating these programs to Spain would reshape European supplier volumes and adjust logistics footprints tied to Renault’s AmpR platforms.

GM plans to lift Korean production to 500k units to meet US demand for Trax, Trailblazer, and Buick crossovers, even as tariff rules remain uncertain.

The Korean plants operate mainly as export bases, making them highly sensitive to a potential duty hike from 15% to 25%.

This trade risk could flow directly into cost structures and threaten the continuity of supply for these high-volume US nameplates.

Regulation

The EU reportedly plans to require EVs to contain at least 70% EU-sourced content and to meet additional requirements for battery components to qualify for subsidies under the upcoming Industrial Accelerator Act.

The proposal is designed to counter Chinese competition and reinforce Europe’s manufacturing base, but automakers are split over the risk of higher costs and the potential for retaliation.

The rule would push OEMs and suppliers to build deeper Tier-n visibility and realign regional sourcing strategies to keep projects eligible for incentives.

The ITC is reviewing USMCA automotive rules of origin to assess economic and competitiveness impacts and reflect recent technology changes, with a report due in July 2027.

Current rules require 75% North American content, along with specific “core parts” and labor value thresholds, for vehicles to qualify for duty-free treatment.

Most automakers support extending USMCA, while Stellantis argues that non-North American vehicles should face origin requirements that mirror USMCA, or that tariffs on USMCA-compliant vehicles produced in Mexico and Canada should be removed.

Any reforms that emerge from this review could trigger sourcing shifts and increase compliance burdens across North American supply chains.

Risk Analytics

Automotive supply chains are entering a new era in which disruption is no longer episodic but structural, driven by geopolitics, tariffs, industrial policy, and rapid technological change.

The 2026 AlixPartners Disruption Index (pdf) shows that leading companies are moving beyond tactical firefighting toward strategic supply chain redesign.

They are diversifying suppliers, shifting production footprints, and increasing investment in resilience.

At the same time, AI is moving quickly from pilots to day-to-day use, especially in procurement and operations.

Energy availability and cost are also emerging as critical constraints that shape manufacturing and supplier network decisions.

The message for supply chain leaders is clear: build flexibility, modernize systems, and embed continuous adaptation into the operating model, or risk falling behind.

Dear Reader,

This issue marks the 9th anniversary of the Automotive Supply Chain Risk Digest... which feels both impossible and exactly right, given how much supply chain chaos the world can pack into a single year.

Thank you for reading, sharing, challenging, and contributing. Every forward, every quick reply, every “this helped us make a decision” note is fuel. We aim to keep this practical: what’s changing, why it matters, and what you may want to do next.

Whether you’ve been here since the early days or you joined somewhere along the way, I’m genuinely grateful you’re part of this. Special thanks to the regular insightful commenters, recommenders, and the heart-icon faithful (Mark, you’re still undefeated!).

Onward to year nine. Same mission. Sharper lens... and hopefully fewer fire drills.

Warmly,
Nick Gaydos
Editor, Automotive Supply Chain Risk Digest

Contents

BANKRUPTCY

• GM suppliers to mitigate risk with sub-tier mapping

CHANGE IN MANAGEMENT

• Toyota taps CFO Kon as CEO

• Honda CFO to lead American Honda

• GM hires Gast to drive partnerships

• Tesla elevates Ward to global sales

HUMAN CAPITAL

• GM cuts Ramos Arizpe shift, trims output

LITIGATION

• Renault faces German stop-sale IP dispute

• Sunwoda settles Geely battery defect claim

MERGERS, VENTURES, ACQUISITIONS

• Stellantis takes $26B EV strategy writedown

• NextStar stake sold to LG by Stellantis

• Samsung battery venture exit also considered

• Reuters: Stellantis EV pivot looks permanent

• ACC cancels Italy and Germany gigafactories

• France funds Imerys Emili lithium project

• Chery targets 2026 Barcelona production start

• BYD and Geely bid for Nissan/Mercedes Mexico plant

OPENING

• Evoring opens Hungary EV driveline plant

REGULATION

• EPA endangerment finding reversed by Trump

• Dutch court orders Nexperia governance probe

SHUTDOWN

• Albemarle halts Kemerton conversion expansion

Bankruptcy

GM held an urgent supplier call this past week to assess exposure to the bankrupt supplier, First Brands, and urged suppliers to map sub-tiers to identify potential risks and avoid disruption.

First Brands, which owns brands including Fram and Raybestos, is operating under Chapter 11. Customers are helping fund a $48M cash advance.

The bankruptcy is a reminder of financial instability risk deep within the supply base, and why Tier-n mapping matters.

Change In Management

Toyota has named CFO Kenta Kon as CEO, effective April 1, replacing Koji Sato. The shift comes as Toyota braces for higher US tariffs, tougher competition, and new supply chain pressure tied to China.

Japan’s latest trade deal leaves a 15% US tariff in place on auto exports. At the same time, China has threatened to curb rare-earth exports, a move experts say could hit Japan’s auto industry quickly.

Inside Toyota, Kon is known for stockpiling semiconductors ahead of pandemic-era shortages and for tightening financial discipline at Woven by Toyota. Kon has stressed that a strong profit structure is key to keeping Toyota resilient in tougher conditions.

Overall, the leadership change signals Toyota’s push to protect financial stability and secure raw materials as tariffs and supply constraints squeeze costs, margins, and production.

Honda appointed CFO Eiji Fujimura as CEO of American Honda effective April 1, replacing Kazuhiro Takizawa, as it faces affordability pressure, increased tariff exposure, and cooling EV demand in its largest market.

Honda has sharply cut its global EV target, reduced Prologue EV volume plans, and is shifting production toward lower-cost gasoline trims. It is also exploring more US manufacturing to offset tariff costs. The leadership change points to continued volatility in the US powertrain mix and in the sourcing volumes that sit behind it.

GM tapped former Lucid strategy leader Claudia Gast to run strategy and corporate development with a mandate to pursue technology partnerships, starting March 1. She replaces Zach Kirkman (ex-Tesla), who is departing after joining in 2023. The hire suggests GM expects greater reliance on partnerships for EVs, software, and automated-driving capabilities, which could shift the supply base and increase integration risk.

Tesla has appointed Joe Ward, its EMEA VP, to lead global sales following the departure of Raj Jegannathan, its North America sales head. The change comes as Tesla’s deliveries have fallen for a second consecutive year and as competition intensifies. That has pushed Tesla to lean more on incentives and to reposition its story around autonomy and robotics.

Human Capital

GM will eliminate a shift at Ramos Arizpe and cut about 1.9k jobs as EV sales soften, reducing output by roughly half. The plant’s gasoline Blazer will be moved to the US earlier than planned, adding uncertainty to the Ramos Arizpe site. The decision creates near-term volume risk for suppliers across northern and central Mexico.

Litigation

Renault could face a stop-sale order in Germany for the Clio and Mégane after a court ruled in favor of Broadcom in a dispute over in-vehicle Ethernet technology licenses. For now, enforcement is suspended.

The case sits within a broader trend: OEMs are becoming more dependent on semiconductor-sector technologies and embedded networks, which increases IP and licensing exposure.

Broadcom pursued a similar action against Volkswagen in 2018, seeking up to $1B in damages. That dispute was resolved before any effective suspension of sales.

Sunwoda has reached a settlement with Geely’s VREMT regarding alleged battery cell defects in Zeekr 001 WE86 packs from 2021→2023. As part of the agreement, VREMT will withdraw its $323M claim.

Sunwoda will pay an additional $89M, and both parties will share any costs incurred after 2025. The affected packs will transfer to Sunwoda. This case demonstrates how cell quality issues can pose significant financial risks and operational disruptions for EV programs.

Mergers, Ventures, Acquisitions

Stellantis is set to absorb a $26B loss as it unwinds much of its US-focused EV strategy. Of this, $15.9B is linked to canceled EV programs and lower sales, while $2.2B stems from scaling back battery production plans. The reset also includes payments to suppliers, additional warranty and quality-related charges, and job cuts in Europe.

CEO Antonio Filosa explained that the company is correcting its “overoptimism on the electrification adoption” by redirecting capital toward hybrids and gas-powered models. He also highlighted a $13B US investment plan aimed at reviving nameplates and shifting some production to avoid tariffs.

For automotive supply chain risk teams, this abrupt pivot points to program cancellations, stranded battery capacity, and risks to tooling recovery. That directly affects suppliers’ revenue visibility and capital planning.

As part of its shift, Stellantis will sell its 49% stake in Windsor’s NextStar battery plant to LG Energy Solution, granting LG full control. The plant has already pivoted to prioritizing grid storage batteries over automotive applications.

Stellantis states it will continue sourcing from the facility and does not anticipate layoffs among the 1.3k workers. This move further signals softening EV demand and a redirection of battery capacity away from automotive programs.

Additionally, Stellantis is reportedly considering divesting from its StarPlus Energy battery joint venture with Samsung SDI, Bloomberg reported.

While a decision has not yet been finalized, an exit could be costly and protracted, potentially requiring a third-party stake sale. Any changes in ownership or pace could disrupt battery capacity timelines and sourcing stability for North American EV programs.

• Reuters: Stellantis’s EV handbrake-turn is a one-way street

  

Automotive Cells Company (ACC), the Stellantis-, Mercedes-, and TotalEnergies-backed battery JV, has definitively shelved its planned gigafactories in Termoli, Italy, and Kaiserslautern, Germany.

The projects had been on hold since May 2024 due to weak EV demand. ACC will instead concentrate capacity in France, scaling to two production blocks of 13GWh and 15GWh. Production for Mercedes is expected to start there in mid-2026.

Stellantis reiterated plans to invest in gearbox and engine production at Termoli, and said current ACC employees will be offered roles within Stellantis. The cancellations tighten Europe’s battery localization pipeline and underline how demand swings can derail long-term sourcing plans and regional electrification strategies.

France will invest $54M in Imerys’ Emili lithium project as Imerys looks for additional backers. Production is now planned for 2030. Rising capex estimates and environmental scrutiny are keeping timing and cost risk elevated across the EU battery materials supply chain.

Chery says it will start building its own vehicles in Barcelona “as soon as possible” in 2026. That follows multiple delays from an original 2024 start and a later target of Q4 2025. Chery has cited EU tariffs on Chinese-made EVs as a commercial headwind.

The site is a joint venture with the revived Spanish brand Ebro at a former Nissan plant. It is positioned as a strategic foothold as Chinese automakers gain market share in Spain amid a domestic EV price war.

Chery says the Barcelona plant will build the Omoda 5 (EV + ICE) and later the Jaecoo 7. It also plans to use the facility as an export base for Latin America, targeting up to 150k units by 2029.

For automotive supply chain risk teams, repeated schedule slips and tariff-driven strategy shifts introduce timing and cost uncertainty into European localization plans. The knock-on effects can show up in sourcing decisions, logistics lanes, and supplier ramp schedules.

BYD and Geely are among the finalists to buy the 230k-unit Nissan-Mercedes plant in Aguascalientes. The plant has been closed after US tariffs and weak demand for the model hit exports.

Mexico’s 50% tariff on Chinese vehicle imports is pushing Chinese OEMs to consider local manufacturing more seriously, even as officials weigh the risk of US trade tensions. If a Chinese automaker wins the deal, it would reshape sourcing and increase the supply chain's exposure to geopolitical and trade risks.

Opening

Evoring Precision Manufacturing opened a new plant in Jászfényszaru, Hungary, with a $109M investment and plans for 450 jobs, producing EV gears and axles. The company is part of Zhejiang Shuanghuan Driveline Group, which supplies global customers including Tesla, Volvo, and ZF.

Regulation

The Trump administration reversed the EPA’s 2009 endangerment finding, the legal basis for the federal government’s regulation of greenhouse gas emissions from vehicles.

If the decision stands, it would remove federal GHG standards for all vehicle and engine types. The shift would unwind more than 10 years of emissions rules. It also follows earlier steps, such as rolling back California’s waiver, relaxing fuel-economy standards, and ending federal EV tax credits.

Automakers have argued that prior standards did not match market demand. But some companies, including Ford and Tesla, have warned that removing standards entirely could undermine the regulatory stability they need for long-term planning.

The repeal injects fresh uncertainty into North American powertrain strategies, EV investment plans, and supplier capacity decisions. With legal challenges expected, timelines and requirements could stay in flux.

A Dutch court has ordered a formal investigation into alleged mismanagement at Nexperia. The court also imposed interim controls: it suspended a director, appointed a temporary director, and transferred all but one share to an administrator.

The ruling limits Wingtech’s voting power while the case proceeds. The court raised concerns about unmanaged conflicts of interest, strategy changes made without internal consultation, amid looming sanctions, and potential non-compliance with agreements with the Ministry of Economic Affairs. It also pointed to restrictions on European managers and announced dismissals.

The court said internal divisions between Chinese operations and European and Southeast Asian units have “severely disrupted the production chain,” triggered financial and legal disputes, and put customer deliveries at risk.

The case is a warning sign for the continuity of semiconductor supply and the stability of governance at a key chip supplier. Geopolitical constraints could continue to disrupt production coordination and delivery schedules.

Shutdown

Albemarle is shutting down Kemerton’s remaining conversion train and scrapping expansion plans in Western Australia. Lithium prices remain too low to support the economics of Western hard-rock conversion. The decision reduces near-term capacity and increases the risk of supply concentration for battery-grade metals.

Contents

DISASTER

• Novelis aluminum output still disrupted

LABOR

• Volkswagen UAW reach tentative agreement

LITIGATION

• Lear sues Forvia over noncompete

MERGERS, VENTURES, ACQUISITIONS

• Ford Geely explore EV partnership strategy

• Suzuki Nissan sell plants amid competition

• China approves CATL Chery joint venture

• Pirelli board blocks Sinochem spin-off

OPENING

• Dongwon Autopart builds new Georgia plant

PRODUCTION DECREASE

• Stellantis Peugeot EVs delayed by batteries

• Hyundai pauses Kona Electric production

PRODUCTION INCREASE

• Stellantis boosts Italy output with new models

• Factorial launches commercial solid-state program

• QuantumScape starts solid-state pilot line

• CATL Changan ramp sodium-ion EVs

REGULATION

• MEMA warns on proposed CAFE reset

• Brazil ends China EV kit tariff break

RISK ANALYTICS

• PwC outlines automotive industry outlook 2026

Disaster

Aluminum production at Novelis, a key supplier to Ford, has not fully recovered more than 4 months after a major fire at its New York plant in September. Another fire in November caused more delays.

At the time, Ford lowered its 2025 profit forecast and expected to lose production of up to 100k F-Series trucks with a $2B impact. Ford has been buying aluminum from different Novelis plants while waiting for full recovery.

The company is expected to provide an update during its Q4 earnings call this coming week. This extended outage underscores the risk of relying on a single material source for high-volume vehicles like the F-Series.

Labor

Volkswagen and the UAW have reached a tentative agreement at the Chattanooga plant, covering approximately 3.2k workers. The agreement includes a 20% wage increase and enhanced job security.

This deal follows months of negotiations after workers authorized a potential strike but ultimately did not walk out. It represents a significant labor milestone in the South and reduces production risk at the plant.

Litigation

Lear has sued rival supplier Forvia and its new North American CFO, former Lear executive Christian Alejandro Carreon, alleging that he violated a one-year noncompete agreement by accepting the role months after leaving the company.

The complaint, filed in Michigan, seeks to block Carreon from working at Forvia, claw back a lucrative separation package, and recover any revenue or profits Forvia may have gained from what Lear describes as misuse of its confidential commercial and financial information.

The case highlights how large, competing auto suppliers rely on noncompete and trade secret protections as they battle for market share, even as the broader legality of noncompete agreements remains under pressure in the US.

Mergers, Ventures, Acquisitions

Ford is reportedly discussing a potential EV partnership with Geely. The plan could use Ford’s underused plants in Europe and share advanced vehicle technology.

This deal might help Geely avoid EU import tariffs and give Ford access to stronger EV and software skills. If the agreement goes ahead, it would signal a shift in recent supply chain strategy from going it alone to partnering.

Suzuki and Nissan are exiting plants in Thailand and South Africa, selling these assets to Ford and Chery amid increased competition from Chinese carmakers. Chinese brands have quickly gained ground in emerging markets by offering lower prices and more features.

China has approved a joint venture between CATL and Chery, indicating closer alignment in battery supply. However, the details of the venture are not yet clear.

Pirelli’s board voted against a spin-off proposed by Sinochem, Pirelli’s largest shareholder and a Chinese group, meant to resolve governance tensions and de-risk US expansion. The ongoing dispute keeps regulatory and strategic uncertainty elevated for a key tire supplier.

Opening

Korea’s Dongwon Autopart Technology plans to invest $30M to build a new manufacturing facility near Swainsboro, Georgia. The company produces structural automotive components, including doorframes, seat frames, and battery frames, and says its existing operations in Hogansville, Georgia, will remain open.

Production Decrease

Stellantis is facing delays of up to eight months for full-electric Peugeot models, including the 3008 and 5008, due to manufacturing issues at its battery supplier, Automotive Cells Co (ACC).

The ACC plant in Billy-Berclau, France, is reportedly producing batteries for only about 1k vehicles per month, well below plan, with high scrap rates prompting the use of Chinese experts to stabilize output.

ACC said the ramp-up “is difficult but we are learning every day,” while also exploring cost-cutting measures in France to offset the impact.

In the automotive supply chain, the situation is a reminder of Europe’s ongoing challenges in scaling local battery production, which directly constrains EV output and OEM delivery timelines.

Hyundai will pause Kona Electric production and skip the 2026 model year, saying 2025 inventory is sufficient to meet demand. The automaker expects the model to return for 2027, with production restarting in June 2026. This creates a temporary interruption and restart cycle for Kona EV-related suppliers and inbound materials.

Production Increase

Stellantis will boost production at several Italian plants in 2026 by adding shifts and launching new models, following commitments made to the Italian government after last year’s sharp output decline.

At Melfi, production of the new DS 8 and Jeep Compass is underway, with strong demand prompting the return of a second shift. Additional DS and Lancia models are planned through 2028.

The company will hire about 500 workers in Italy, restart extra shifts at Mirafiori and Atessa, and keep investing in Euro 7-compliant gasoline engines and a new e-DCT gearbox line at Termoli.

This plan should help stabilize Italy’s supplier base in the short term after a steep decline, but recovery will depend on steady demand for new hybrid and electric models.

Three battery technology milestones just moved closer to real-world scale this week:

• Factorial Energy launched its first commercial solid-state battery program in the US, partnering with Karma Automotive to power its Kaveya ultra-luxury EVs. Factorial says its cells can deliver 500 to 600-plus miles of range with about 40% weight savings and are compatible with up to 80% of existing lithium-ion manufacturing equipment, reducing retooling risk. The program moves solid-state batteries from lab testing into real production validation, building on prior demonstrations with Mercedes-Benz and Stellantis.

• QuantumScape launched its Eagle Line pilot to produce solid-state cells for OEM sampling, testing, and integration. The pilot incorporates its Cobra separator process and is intended to demonstrate scalable, automated production, serving as a meaningful step toward supply chain readiness, provided OEM validation supports commercialization.

• CATL and Changan are ramping up production of the first mass-produced passenger EVs powered by sodium-ion batteries, starting with the Nevo A06 in China. CATL says the technology matches LFP energy density, performs better in extreme cold, and reduces exposure to rising lithium prices. If volumes ramp as forecast, sodium-ion could materially change sourcing and cost risks for battery materials across EV supply chains.

Regulation

MEMA’s comments to NHTSA (pdf) state that the proposed SAFE Vehicles Rule III would reset CAFE requirements by aiming for a 34.5 mpg average fleetwide level by 2031. This change would directly affect how suppliers plan products, allocate capital, and schedule time for new technology rollouts.

MEMA stressed that stable regulations are essential because suppliers typically plan on 5- to 10-year cycles, and sudden changes can lead to wasted investments and workforce-planning issues.

The group also warned that slow or weak progress on fuel economy could hurt US supplier competitiveness and shift innovation investments to other regions.

For supply chains, the final rule will affect which technologies get funding, how quickly programs move from development to launch, and how compliance credits are distributed among suppliers.

Brazil has let a temporary tariff exemption on EV and hybrid vehicle kits imported from China expire, forcing companies like BYD and Great Wall Motor to pay up to 35% in import duties again.

The six-month break, capped at $463M, was heavily criticized by Brazil’s auto industry, which argued it favored low-value assembly over local manufacturing and threatened domestic supply chains.

While the move raises costs for China-dependent assembly models, it also reinforces Brazil’s push toward deeper localization over kit-based EV production.

Risk Analytics

• PwC: Automotive Industry Outlook 2026

Contents

BANKRUPTCY

• First Brands fraud indictment fallout

HUMAN CAPITAL

• Aumovio cuts 4k jobs globally

• GM Oshawa shift cut layoffs

LABOR

• IG Metall signals tougher wage talks

MERGERS, VENTURES, ACQUISITIONS

• Supplier consolidation wave expected 2026

• Mazda seen as Japan's consolidation trigger

OPENING

• Toyota Idemitsu solid-state battery pilot

PRODUCTION DECREASE

• Tesla pivots spending away from EVs

• ZF ends EV projects early

PRODUCTION INCREASE

• Toyota posts record global sales

RAW MATERIAL COSTS

• Kia hit by precious metals surge

• Sodium-ion batteries accelerate as lithium rises

REGULATION

• Canada opens door to Chinese vehicles

• Korea-Canada auto manufacturing talks

• Ottawa hedges USMCA with Asia ties

• Washington softens stance on China

• India EU auto tariffs slashed

Bankruptcy

First Brands founder Patrick James was indicted on fraud and conspiracy charges related to alleged schemes to conceal billions in liabilities ahead of the supplier’s bankruptcy last September. First Brands has begun shutting down its Brake Parts, Cardone aftermarket parts, and Autolite spark-plug units, affecting 4k jobs in total.

The collapse disrupted parts supply for many manufacturers, including Ford and GM. Both are now providing $48M in short-term prepayments to keep operations running. The case is a reminder of heightened legal and continuity risk around financially distressed Tier-1 suppliers.

Human Capital

Aumovio will cut up to 4k jobs (~5%) as it restructures R&D to cut costs, mostly by year-end, across sites in Germany, Romania, Serbia, Singapore, India, and Mexico. Spun off from Continental last year, it cites high costs, weak European demand, and tougher competition from China.

GM Canada is cutting a shift at its Oshawa plant, affecting about 500 GM workers and up to 1.2k jobs across the supply chain. The move follows US tariffs and weak demand, even as GM adds jobs at a parallel pickup plant in Indiana.

Labor

IG Metall is signaling potential escalation ahead of wage talks this autumn as German automakers face mounting pressure from Chinese rivals, tariffs, and soft EV demand. With unions exerting strong governance influence, labor tensions could heighten supply chain and production risks amid ongoing restructuring.

Mergers, Ventures, Acquisitions

Analysts and executives expect a new wave of automotive supplier consolidation in 2026. High costs, labor shortages, tariffs, and volatile production schedules continue to squeeze supplier balance sheets.

Many suppliers held off on M&A in 2025. Trade policy shifts, geopolitical developments, and changes in automakers’ EV strategies created excessive uncertainty. Now, as conditions look more stable, more deals could move off the sidelines.

Financial stress is still widespread. In a recent read on the market, 61% of supplier executives said they are concerned about distress in their supply chains. Suppliers also cut at least 60k jobs across North America and Europe in 2025, alongside multiple bankruptcies.

For many, consolidation is becoming the most practical lever to pull. It can cut costs, reduce geopolitical exposure, and help stabilize supply chains, even as auto manufacturers continue to face policy and demand uncertainty.

• Reuters: Japan's auto reckoning could start with Mazda

Opening

Idemitsu Kosan and Toyota have started building a pilot plant in Chiba, Japan, to make solid electrolyte for all-solid-state lithium-ion batteries. The plant is expected to be finished in 2027.

This project moves Idemitsu from making lab samples to commercial production and helps Toyota work toward launching electric vehicles with these batteries by 2027 or 2028. The new facility will also guide plans to increase production to several hundred tons per year in the future.

Production Decrease

Tesla plans to spend about $20B in 2026, more than doubling its capital spending as it shifts from a traditional electric vehicle focus to robotics, driverless technology, and AI infrastructure.

The company will stop making the Model S and Model X, convert its Fremont plant to produce Optimus humanoid robots, and increase investment in robotaxis, AI computing, and battery facilities.

In 2025, Tesla’s automotive revenue dropped by 10%, and total revenue fell for the first time, showing the impact of global EV competition and slower model updates. For automotive supply chains, this shift means slower long-term vehicle growth and more uncertainty for suppliers focused on EVs.

Germany’s ZF Friedrichshafen is ending some EV projects earlier than planned as demand ramps more slowly than expected. The company also expects a 2025 loss tied to an e-mobility charge. The pullback raises near-term risk of program resets and supplier reallocation across EV components.

Production Increase

In 2025, Toyota sold a record 11.3M vehicles, a 4.6% increase that kept the company at the top of global sales. Strong demand in the US and Japan led this growth. Hybrids accounted for 42% of Toyota’s sales, while battery-electric vehicles accounted for 1.9%.

Raw Material Costs

Kia said price increases in platinum, palladium, and rhodium are materially affecting its costs. The update points to renewed metal-driven cost pressures in the automotive supply chain.

As lithium prices climb, CATL, BYD, and other Chinese battery makers are accelerating production and investment in sodium-ion batteries. CATL aims to deploy sodium-ion batteries in passenger cars by 2026.

Meanwhile, BYD and others are ramping up output as global shipments of sodium-ion batteries rose sharply in 2025. The shift could help entry-level EV supply chains rely less on lithium. It also introduces fresh execution risk as suppliers scale a newer chemistry and manufacturing footprint.

Regulation

After bilateral talks, Canada will allow limited imports of Chinese-made vehicles after US tariffs and EV policy changes disrupted its auto sector and reduced OEM investment. GM, Ford, and Stellantis have already scaled back production in Canada.

At the same time, Chinese OEMs are gaining a symbolic but strategic foothold. The change could add fresh competitive pressure across North American supply chains as Chinese automakers gain more regional access.

Building on its pivot to China, Canada signed a preliminary agreement with South Korea to explore establishing Korean vehicle manufacturing in Canada, as Prime Minister Mark Carney seeks to diversify away from a US-dependent auto trade following tariffs and EV policy shifts that destabilized the sector.

The accord is light on details but comes as US automakers continue pulling back in Canada. The push to attract non-US OEM investment introduces another structural shift risk to North American supply chains, potentially altering where vehicles and key components are sourced and built over time.

Canada’s new arrangements with China and South Korea give it modest leverage and a bit more diversification heading into the 2026 USMCA review.

“There’s a reasonable chance that we could end up in 2026 without a meaningful, workable trade deal with the United States ... and Canada needs to be prepared.”
- Eric Miller, Rideau Potomac Strategy Group

The flip side: they could also trigger US concerns over EVs, steel and aluminum, and perceived “backdoor” Asian access to the North American market.

For automakers and suppliers, the moves cut both ways.

They can hedge against a hostile USMCA outcome, but they may also raise the odds that Washington pushes for tighter rules or side letters covering China-linked and Asian content.

That backdrop is now colliding with a sharp policy turn in Washington.

The Trump administration has pushed out Elizabeth “Liz” Cannon, the career official whose ICTS office wrote the rules that effectively barred most Chinese-connected vehicles from the US market on national security grounds.

The removal of the rules’ architect, plus the decision to shelve additional measures (a drone ban and Nvidia compute), signals a softer line on China-related auto-tech risks.

President Trump has also publicly invited Chinese automakers to build plants in the US. Speaking to a Detroit audience, he said that if they “build a plant and hire you and hire your friends and your neighbors, that’s great, I love that ... let China come in.”

For North American automakers and suppliers, that mix is destabilizing.

Canada is testing limited Chinese and Korean auto production as a hedge against USMCA uncertainty. Meanwhile, Washington appears more open to China-based companies that localize production.

The risk is that US policymakers respond to Canada’s moves not only with tariff threats, but also with stricter rules of origin, tighter content requirements, or new security provisions targeting vehicles and components tied to Chinese platforms. Even if those vehicles count as “North American” under current rules.

Not to be left out, India and the EU have finally struck a trade agreement that will slash or remove tariffs on almost all goods moving between them. This pact aims to boost trade and give both sides more independence from the US in a tense global market.

India’s auto tariffs, which have been as high as 110%, will gradually drop to 10%. In the short term, tariffs will fall to 30%-35% on up to 250,000 EU cars annually, which is good news for brands like Volkswagen, BMW, Mercedes-Benz, and Renault.

For carmakers and suppliers as a whole, the deal cracks open India’s tightly controlled market and helps them build more resilient global supply chains.

Contents

CHANGE IN MANAGEMENT

• Mitsubishi names new president, COO

DISASTER

• Winter storm threatens southern US auto supply

EXPANDING

• Delta Tecnic expands Querétaro wiring capacity

INDUSTRY DIRECTIONS

• Supplier sentiment up, outlook pessimistic

• Slovakia leads cars per capita

• S&P Global 2026 Supplier Outlook

MERGERS, VENTURES, ACQUISITIONS

• Renault reintegrates Ampere EV unit

• PwC sees steady rising auto M&A

PRODUCTION DECREASE

• Honda, GM end fuel cell venture

PRODUCTION INCREASE

• Geely targets 6.5M global sales

• Rivian builds R2 validation units

• Mercedes starts electric GLB Hungary

• BMW keeps US BEV launch plan

• Dongfeng launches giant die casting plant

RELOCATING

• GM shifts Buick Envision China → Kansas

SUPPLY CHAIN

• Looming: AI data centers squeeze auto DRAM

Change In Management

Mitsubishi Motors will name Keisuke Kishiura president and COO on April 1, with Takao Kato moving to the chairman and CEO role, as it seeks to address weaker performance and partnership execution.

The company is facing sales declines in Southeast Asia, an interim net loss, an 81% drop in operating profit, and US tariff headwinds because it imports all vehicles from Japan.

Mitsubishi is discussing access to Honda and Nissan local factories, a move that could reshape its manufacturing footprint and supplier mix.

Disaster

The Winter Storm Fern is likely to slow or shut down some automotive suppliers across the Southeastern US. Ice-driven outages, road closures, and staffing gaps can trigger short stops at just-in-time plants.

Sites in Texas, Arkansas, Tennessee, the Carolinas, Georgia, and Virginia look most exposed because they depend on road corridors in the storm path.

If disruptions last more than a few days, southern freight failures could cascade into meaningful production and revenue hits for OEMs and Tier-1s.

Expanding

Delta Tecnic is expanding in Querétaro, Mexico, with an $11.5M investment to add capacity for automotive wiring components, supporting its nearshoring push.

Industry Directions

Supplier sentiment improved in Q4 2025, with 60% rating their own performance as excellent or good, driven by stronger demand and improved supply chain resilience.

But the six-month outlook for the broader industry stayed pessimistic as tariffs, input costs, and regulatory uncertainty squeezed margins and limited pricing leverage.

Financial distress remains a key risk signal: most respondents are concerned, and more expect conditions to worsen.

Slovakia is the world’s top carmaker per capita, building almost 1M vehicles a year with a population of 5.4M.

Since 1989, Kia, Volkswagen, Stellantis, and Jaguar Land Rover have scaled up there, drawn by lower labor costs, strong productivity, a central location, and a supplier base of about 360 firms.

Low-carbon power and incentives also help, including Kia’s $32M tax credit for a $118M EV line upgrade, while the industry supports jobs and training pipelines in the Zilina region.

• S&P Global: 2026 Automotive Supplier Outlook: What top executives are saying about the year ahead

Mergers, Ventures, Acquisitions

Renault plans to close Ampere Holding and fold its EV and software work back into the group to streamline the organisation, cut costs, and speed up future projects.

The plan was presented to trade unions and is due to take effect on July 1, with most employees’ jobs and contracts expected to stay in place.

Ampere, launched in late 2023 with an IPO plan that was later put on hold, now reports to Renault Group CTO Philippe Brunet and is expected to serve as Renault’s advanced engineering centre for EVs and software.

Ampere’s Electricity division factories in northern France and its engine plant are set to return to direct Renault control.

It is the second major restructuring in under two months under CEO François Provost, following the December move to close Mobilize’s car-sharing services and reintegrate its energy and data activities.

PwC expects auto M&A to stay steady or rise in 2026 as suppliers face inflation, lower volumes, and shifting tariffs.

Those pressures are driving consolidation and vertical integration, with suppliers selling non-core assets, raising cash, and tightening spend on capacity and electrification.

PwC also flags AI-driven analytics as a growing factor in deal valuation and integration, which could speed deal cycles and accelerate supply chain changeovers.

Production Decrease

Honda and GM plan to stop producing their joint fuel-cell battery system in Michigan in 2026, ending a partnership that began in 2017.

Production began in January 2024 to support Honda’s fuel cell vehicle work in Ohio, but both companies now cite low demand and slower growth in the hydrogen market.

GM has also shifted focus away from hydrogen research toward EVs, batteries, and charging, while Honda is reallocating as well.

Production Increase

Geely is targeting more than 6.5M global vehicle sales by 2030 and aiming for a top-five spot, with about one-third of sales expected to come from overseas by decade’s end.

It plans new energy vehicle platforms across A to E class models to shorten R&D cycles and cut per-model production costs by more than 30%, while deepening partnerships such as Renault.

For suppliers, that usually means larger-volume requests, faster RFQs, and tighter cost and delivery targets as Geely expands in Southeast Asia and Latin America.

Rivian has started building R2 validation units on its Normal, Illinois line, after completing the R2 factory in just 12 months.

The pre-production builds are a key step toward H1 2026 deliveries. They stress-test parts fit, supplier consistency, and build quality before the production ramp.

Mercedes has started producing the electric GLB in Kecskemét, Hungary, after moving production from Mexico and adding local battery-pack assembly to cut logistics costs and time.

It also plans to shift some C-Class production to Hungary in 2026, citing costs there that are less than half Germany’s.

The footprint shift supports margin protection and lowers tariff exposure as US tariffs and China competition pressure profitability.

BMW still plans to start BEV production in Spartanburg in late 2026, even after AESC paused construction of its South Carolina cell plant in June 2025.

Until the Woodruff battery assembly plant and local cell output are ready, AESC will supply cells from its global network. That reduces launch-delay risk, but it increases tariff and geopolitical exposure if cells are imported.

Dongfeng has launched a Wuhan die-casting plant with the industry’s largest 16k-ton and 10k-ton lines, with mass production expected in April.

The site will make integrated NEV structural parts such as battery casings and trays, initially for models including the eπ 007, eπ 008, and Voyah Dreamer.

Relocating

GM will shift next-generation Buick Envision production for North America from China to Fairfax Assembly in Kansas City, Kansas, in 2028. That will push a supplier and logistics reset toward US content as Fairfax moves from a limited Bolt EV run to higher-volume ICE SUV output.

Supply Chain

Automakers are bracing for a new semiconductor squeeze as AI data center growth tightens DRAM supply.

Some suppliers are already seeing memory chip prices rise by more than 100%, and UBS warns disruptions could start in Q2.

Even though automotive uses less advanced memory than AI servers, both compete for upstream inputs like silicon wafers, and DRAM makers are prioritising higher-margin data center demand.

S&P Global Mobility warns the window is narrowing to redesign electronics and lock in supply, with ADAS-heavy vehicles and electronics-focused suppliers most exposed.

If DRAM tightens further, module shortages could quickly spill into production stoppages, echoing a smaller version of the pandemic-era chip crunch as vehicle electronics content keeps rising.

Contents

CHANGE IN MANAGEMENT

• Lucid overhauls software leadership, OTA push

EXPANDING

• ZF expands EV axle production Hungary

HUMAN CAPITAL

• ZKW to cut 600 Austria jobs

INDUSTRY DIRECTIONS

• Dark factories advance toward full automation

LITIGATION

• Dutch court weighs Nexperia governance probe

MERGERS, VENTURES, ACQUISITIONS

• Ford explores BYD battery supply deal

• Italy approves FountainVest EuroGroup acquisition

OPENING

• SL MEX opens Mexico lighting plant

PRODUCTION DECREASE

• Stellantis ending North America PHEV production

REGULATION

• USMCA 2026 review drives North America uncertainty

• EU & China agree EV price framework

SHUTDOWN

• Volvo pauses Novo Energy battery project

SUPPLY CHAIN

• Maersk Red Sea test highlights risk

• Wingtech localizes Nexperia China supply

Change In Management

Lucid is overhauling its software leadership and pushing OTA fixes after a viral critique exposed persistent quality and system reliability issues. The response comes amid executive turnover and heavy program load, including new vehicle launches and Saudi production ramp-up.

Expanding

ZF Chassis Modules is investing about $30M in Debrecen, Hungary, to expand production of front and rear axles for electric vehicles built at BMW’s nearby plant, creating 230 new jobs.

Human Capital

ZKW will eliminate 600 jobs in Lower Austria by the end of 2027, mostly at Wieselburg, as part of a 2.3k position global reduction tied to restructuring.

Industry Directions

Dark-factory automotive assembly is moving from concept to early deployment, with China already running highly automated EV lines that operate 24/7 with minimal on-site labor and dimmed lights, and Western OEMs and suppliers retrofitting existing lines to close the gap.

Analysts now expect the first truly fully automated car assembly line to be in production by around 2030, likely at a US or Chinese automaker. In these plants, humanoid and specialized robots will handle the remaining manual tasks. Intricate parts such as wiring harnesses and interiors will be redesigned to enable automation.

Meanwhile, the broader “dark factories” market for highly automated plants is projected to grow rapidly through the 2020s, as OEMs and Tier 1s pursue labor savings, faster model changeovers, and greater supply chain resilience.

Litigation

Nexperia was back in an Amsterdam courtroom earlier this week as judges weighed whether to launch a formal probe into alleged mismanagement tied to its Chinese owner, Wingtech.

Earlier clashes over control triggered export disruptions and chip shortages, reminding automakers how quickly political tensions around a single supplier can disrupt global production.

Wingtech says Nexperia’s Dutch team has blocked its integration plans and restricted wafer flows, harming the broader group’s manufacturing.

Nexperia’s European leaders say the real problem is risky, opaque moves on the Chinese side that threatened the company’s stability and have led to steps such as suspending the CEO and parking Wingtech’s shares with a court‑appointed custodian.

For carmakers, the ongoing tug of war keeps a key chip source looking fragile, raising the risk of renewed export freezes, sudden allocation cuts, or last‑minute re‑sourcing if governance flares up again.

The court will now decide whether to open a full investigation and possibly tighten interim controls, with a written decision expected in the coming weeks that will be closely watched across the auto supply base.

Mergers, Ventures, Acquisitions

Ford is reportedly discussing a battery supply deal with BYD to address tightening battery supply options for its expanding hybrid lineup, as electric vehicle demand cools.

The potential deal would involve importing BYD batteries to Ford plants outside the US, heightening dependence on Chinese capacity and raising geopolitical risk in powertrain sourcing.

Italy approved Chinese private equity firm FountainVest’s purchase of a major stake in EuroGroup Laminations. The approval was granted under golden power rules.

The decision allows the EV motor component supplier to be taken private in 2026. The deal includes unspecified conditions. The approval follows a steep drop in EuroGroup’s valuation, caused by slower EV momentum and supply chain strain.

Opening

South Korea’s SL MEX has opened a new automotive lighting module plant in San Luis Potosi, Mexico, investing $44M and adding more than 500 jobs to support global OEMs including BMW, GM, Kia, and Hyundai. The facility has capacity for up to 1M lighting modules annually and is designed to scale production as demand grows.

Production Decrease

Stellantis will end all North American PHEV production in 2026, eliminating Jeep 4xe and Pacifica PHEV models despite strong prior demand. This decision follows recalls and shifts the company's focus to other electrified powertrains. Suppliers that depend on PHEV volumes may face immediate demand losses, driving supply chain consolidation and contract renegotiation risks.

Regulation

Automakers face significant policy risk as the USMCA enters a high-stakes 2026 review. Political noise compounds uncertainty, sharply exposing companies that rely on North American integration for cost, sourcing, and capacity planning.

The mandatory July review forces the US, Canada, and Mexico to decide whether to renew the pact, withdraw, or take no action, fueling uncertainty about future trade rules.

President Trump’s sharp rhetoric signals he may threaten market access to extract concessions. In this environment, Canada’s auto sector is on hold, with automakers and suppliers facing risk on costs, sourcing, and production plans until the framework becomes clear.

Industry leaders and key state policymakers are lobbying to preserve and refine the agreement, emphasizing its role in North American competitiveness with China and continued EV and supply chain investment.

Mexico heads into 2026 with strong domestic demand but weaker output and exports. USMCA uncertainty affects plant use and investment, with most vehicles sent to the U.S. Tighter rules or higher tariffs could quickly disrupt cross-border parts flows.

Taken together, the 2026 review has turned USMCA from a background assumption into a central strategic variable for North American automakers.

OEMs and suppliers must now develop scenario plans addressing multiple possible trade and regulatory outcomes, identifying operational, sourcing, and investment implications under each scenario, while hoping policymakers ultimately choose continuity over disruption.

Over the past week, the EU and China agreed on a framework for “price undertakings” that would let Chinese EV makers avoid some or all EU anti-subsidy tariffs by accepting minimum prices and volume limits on exports.

The European Commission issued detailed guidance on how companies can submit these undertakings, with approvals to be decided on a case-by-case basis and conditioned on offsetting the subsidy advantage.

Now, individual firms must assess whether to participate by evaluating the terms set by the Commission and deciding if accepting minimum prices and volume caps is preferable to continuing to pay existing duties of up to 35.3% above the standard 10% car tariff.

Both sides present this as a breakthrough or “soft landing.” However, the dispute is not fully resolved, as each company must make its own decision.

Analysts expect fewer ultra-cheap Chinese EVs but higher margins and potentially higher consumer prices in Europe, while political scrutiny inside the EU over minimum-price mechanisms is likely to continue.

Shutdown

Volvo Cars has halted its Novo Energy battery project after costs rose and the search for a new partner failed following Northvolt's bankruptcy. The last 75 jobs are being cut.

Management says they are still talking with battery makers, but EU financial support is needed to restart the project. Delays in building battery capacity in Europe have created sourcing risks for automakers planning future electric vehicle production in the region.

Supply Chain

Last week, Wingtech said Nexperia China is choosing local silicon wafer suppliers and expanding domestic packaging to stabilize production. While the local sourcing pivot may reduce near-term supply risk in China, it will likely deepen global supply fragmentation for automakers.

Maersk’s cautious Red Sea test transit signals progress but leaves automotive logistics exposed to continued delays and cost risk.

Contents

BANKRUPTCY

• First Brands nears cash depletion

CHANGE IN MANAGEMENT

• Former CEO named Volvo design chief

CYBER SECURITY

• Cyberattack cut JLR Q3 volumes 43%

EARNING DIP

• GM books $6B EV loss

INDUSTRY DIRECTIONS

• CES: automakers partner with tech

• BMW India push boosts local sourcing

LITIGATION

• Dutch hearing may probe Nexperia

MERGERS, VENTURES, ACQUISITIONS

• Dongfeng explores Turkey production launch

• SDV open-source alliance grows to 32

PRODUCTION DECREASE

• Stellantis Italy output hits 1950s lows

REGULATION

• China urges battery capacity discipline

• China hints rare earth export curbs

• Japan suppliers absorb US tariff costs

SHUTDOWN

• Honda delays restart amid chip shortage

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Bankruptcy

First Brands faces an imminent cash crisis, warning it could deplete its funds by the end of January, with just $190M of the $1.1B in bankruptcy financing remaining.

The company, which sells parts such as filters, wipers, brakes, and lighting systems, is urgently seeking additional funding and accelerating its asset sales.

While restructuring under Chapter 11 and investigating alleged invoice fraud linked to its former CEO, creditors remain uncertain about the company’s true value.

This escalating situation poses an immediate risk to its automotive customers and casts significant doubt on future ownership and financial stability.

Change In Management

Volvo appointed former Polestar CEO Thomas Ingenlath as design chief amid a broader management reset and turnaround push under returning CEO Hakan Samuelsson.

The shift, alongside tighter collaboration with Geely and imminent new-model launches, could change platform commonality and supplier sourcing decisions.

Cyber Security

JLR reported that its Q3-2025 wholesale volumes fell 43.3% due to prolonged production halts caused by cyberattacks.

Earning Dip

GM is taking a $6B earnings charge after pulling back on EV plans, primarily to settle canceled supplier contracts.

These cancellations result from regulatory rollbacks that weakened earlier assumptions about EV demand.

The move highlights increased supplier and financial risk when manufacturers reverse capital-intensive strategies mid-cycle.

Industry Directions

CES 2026 underscored a broad shift by automakers and suppliers toward partnerships with tech companies to accelerate the development of software-defined vehicles, AI, and autonomy.

Executives said earlier attempts to build everything in-house drove fragmentation, higher costs, and slower deployment.

For supply chains, collaboration can ease financial strain and integration risk, but it also tightens interdependencies among OEMs, Tier 1s, and tech partners.

Automotive News:

• Live updates from CES 2026

• Why 2026 will test automakers' agility like never before

  

BMW plans to launch 10 new models in India this year. To support this, the company also wants to increase local sourcing above its current 50%, which would help manage high import tariffs and boost luxury sales.

This strategy reflects a broader industry trend: as rising tariffs and tax differences push automakers to use more local parts and assemble in domestic markets, supply chains are becoming more fragmented.

As a result, companies are moving sourcing closer to their main markets to keep costs down and maintain demand.

Litigation

A Dutch court will hold a public hearing on 14 January to decide whether to open a formal investigation into alleged mismanagement at Nexperia.

In this case, the Dutch government has already invoked rare emergency powers to briefly take control of the company and to transfer Wingtech’s voting rights to a court‑appointed administrator.

This hearing is the first full airing of the dispute in open court.

It has become a test case for how Europe manages the risks associated with Chinese‑owned semiconductor assets under US export‑control pressure.

Extended legal and ownership uncertainty at Nexperia directly increases supply chain risk by threatening to prolong component constraints and triggering renewed, rolling production disruptions for OEMs and Tier 1 suppliers.

Mergers, Ventures, Acquisitions

Dongfeng’s Turkish distributor says the company is in talks with an investor to start making passenger cars in Turkey, with plans to begin production this year.

Although a final investment decision has not been made, the investor already has a facility ready.

Chinese automakers are looking to avoid extra Turkish taxes on cars imported from China and to benefit from Turkey’s access to the EU customs area.

Eclipse SDV and VDA have expanded their open-source automotive software collaboration to 32 companies, including OEMs, suppliers, semiconductor firms, and software providers.

The group is building a shared, automotive-grade software stack to reduce duplicated development work and speed up vehicle program launches.

For automotive supply chains, this approach could lower integration risk and cost volatility, while increasing systemic exposure to shared software dependencies.

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Production Decrease

Stellantis’ Italian output dropped sharply in 2025 to levels last seen in the 1950s, driven by soft demand and delayed model launches.

The slump heightens ongoing volume and scheduling risks for Italy-based suppliers, despite hopes of a partial rebound in 2026.

Regulation

China’s industry ministry warned battery makers to optimize capacity and curb overcapacity risk, calling for tighter regulation of competition and stronger supervision across EV and energy storage batteries.

If China’s battery market tips into sustained oversupply, as in the solar sector, financial stress can ripple through, affecting manufacturers' health and destabilizing sourcing for global EV supply chains.

China has hinted it may restrict exports of rare earths to Japan under new dual-use controls, raising fears of supply disruption for EV motors and other automotive applications.

Japan has reduced but not eliminated its dependence on Chinese rare-earth materials and remains highly exposed to heavy rare-earth elements.

For automotive supply chains, even temporary controls could quickly constrain output and drive cost volatility across EV and electronics programs.

A Nikkei survey found that less than half of Japanese auto parts suppliers hit by higher US tariffs have managed to raise their prices.

As a result, many are absorbing the extra costs or looking for other ways to cope.

To address these challenges, some are moving production or investing more in the US to reduce the impact, while others are trying to become more efficient.

However, ongoing pressure on profit margins means weaker suppliers may have to cut capacity, delay investments, or leave certain programs.

Shutdown

Honda’s three GAC Honda plants in China have delayed reopening several times due to semiconductor shortages.

The latest restart date was moved from January 5 to January 19, extending shutdowns that started in late December.

Honda also stopped production in Japan for two days, January 5 and 6, after its key supplier, Nexperia, paused shipments. The company is seeking additional suppliers to maintain stable production.

Since late October, Honda has reduced North American output of some main models and now expects the chip shortage to lower operating profit by about $954M for the fiscal year ending March 2026.

Contents

CHANGE IN MANAGEMENT

• Porsche CEO handover amid turnaround

• Hyundai Motor India names first Indian CEO

CLOSING

• Cooper Standard Ohio plant closure

CYBER SECURITY

• Endurance Technologies reports cybersecurity incident

INDUSTRY DIRECTIONS

• SUVs dominate Europe vehicle mix

• Europe shifts toward affordable PHEVs

MERGERS, VENTURES, ACQUISITIONS

• LG Energy cancels Freudenberg battery deal

• Tesla 4680 cathode contract collapses

• Korea Zinc plans US smelter

• NationGate acquires Valeo Malaysia

RAW MATERIAL COSTS

• Platinum prices surge on policy shift

• Every Mineral is a Critical mineral

REGULATION

• Mexico hikes tariffs impacting auto supply chain

• Maquiladora operations impact

Change In Management

Porsche is handing the CEO role from Oliver Blume to incoming chief Michael Leiters at a difficult moment for the business. Weak demand in China, missteps in its EV rollout, and higher tariffs are pushing 2025 results close to break-even.

The turnaround plan linked to the leadership change focuses on a reset of product strategy and multi-billion-euro cost cuts… moves that could reshape volumes and sourcing priorities across Porsche’s supply base.

Hyundai Motor India has named Tarun Garg as its new MD and CEO, making him the first Indian to lead the company since it began operations in 1996. He will oversee a $5M plan running through 2030 that focuses on EVs, hybrids, connected mobility, and expanded manufacturing and exports.

Closing

Cooper Standard Automotive plans to close its metal tubing plant in New Lexington, Ohio, which produces brake and fuel lines. About 228 employees will be laid off, according to a WARN notice submitted to Ohio officials on December 8, 2025.

Layoffs are scheduled to begin on February 6, 2026, and will continue until the plant closes around July 1, 2027. The company cites plant utilization and operating efficiency as the reasons for the shutdown.

Cyber Security

Endurance Technologies has reported a cybersecurity incident affecting its IT systems, detected on December 23, 2025, and disclosed to Indian stock exchanges on December 29.

The Pune-based company says it quickly isolated the affected systems and began remediation efforts, and so far reports no significant impact on its core operations.

Endurance Technologies produces aluminium die-cast components, including alloy wheels and powertrain housings, for automakers such as Volkswagen Group and Stellantis. The company is still investigating and has not provided details about the breach or whether any data was compromised, citing the ongoing probe.

Industry Directions

SUVs continue to reshape Europe’s market mix, rising from 41% in 2020 to 59% in 2025. Automakers and suppliers are now prioritizing SUV platforms and right-sizing them for urban use, while hatchbacks, sedans, and wagons increasingly take a back seat.

Europe’s market is tilting toward more affordable PHEVs as buyers push back against rising new-car prices and policymakers signal a longer runway for hybrids and ICEs beyond 2035.

That shift, combined with China’s rapid adaptation to tariffs and compliance requirements, is likely to keep Europe in a mixed-powertrain world for longer and will complicate automaker and supplier planning for capacity, content, and localization.

Mergers, Ventures, Acquisitions

LG Energy Solution has terminated a $2.7B battery contract with Freudenberg after Freudenberg exited its battery business.

The LG Energy Solution-Freudenberg project was structured initially so that LGES would supply lithium-ion cell modules, which Freudenberg would then assemble into commercial-vehicle battery packs at its XALT gigafactory in Midland, Michigan.

The move came just a week after Ford ended a $6.6B EV battery supply deal.

These back-to-back cancellations highlight how quickly EV demand shifts and OEM strategy changes can ripple through to supplier revenue and utilization risk.

L&F, a South Korean cathode supplier, has effectively written off a long-term high-nickel cathode contract with Tesla for 4680 cells used in the Cybertruck. The contract value has dropped by 99%, from about $2.9B to just $7k, following a “change in supply quantity.”

The scale of the cut indicates that demand for 4680 cells is far lower than expected, likely tied to a slow Cybertruck ramp, soft sales, tariffs, and a broader EV market slowdown. As a result, L&F now faces a meaningful revenue hit.

Tesla first introduced the 4680 cell at Battery Day 2020 as a core element of its strategy to lower costs and expand in-house battery production, but ongoing manufacturing and performance challenges, combined with the sharp contract reduction, show that the 4680 rollout still falls well short of Tesla’s original targets.

In a regulatory filing, Korea Zinc said it will establish a non-ferrous metal smelter in Tennessee to produce core minerals such as antimony and gallium.

NationGate Holdings will acquire Valeo Malaysia CDA from Valeo for $15M, taking a 100% equity stake through its subsidiary, NationGate System. Valeo Malaysia produces plastic injection-molded components and PCB assemblies and conducts final testing and assembly of automotive modules.

Raw Material Costs

Platinum prices have jumped 146% in 2025, reaching a record $2.5k/oz. The spike is being driven by the EU’s revised approach to the 2035 combustion-engine ban, constrained supply, and rising investor demand.

Uncertainty around US tariffs and the recent addition of platinum-group metals to the US critical minerals list are pulling more material into the US and prompting defensive stock-building.

That is tightening supply in other regions and adding price pressure, which can quickly raise catalyst costs and hedging risk for ICE and hybrid vehicle programs.

• Reuters: Every mineral is critical in the new metals age

Regulation

Mexico’s new tariffs of up to 35% on non-free-trade-agreement imports starting January 1, 2026, could raise costs and accelerate re-sourcing across Mexico’s auto supply chain.

The move is widely seen as an effort to align more closely with the US trade posture ahead of the USMCA review.

• Foley: Mexican January 2026 Tariff Tsunami: Maquilas Aren’t Immune

This has been a year of moving targets: policy shifts, volatile tariffs, uneven EV demand, and a steady drumbeat of operational surprises.

Through it all, you’ve continued to open, read, share, and challenge what we publish.

That engagement is what lets us keep refining this digest into something genuinely useful for purchasing, supply chain, risk, and finance teams who don’t have time to chase every headline, but can’t afford to miss the ones that matter.

We’re truly grateful for your trust, your time, and your feedback.

Whether you’ve been with us from the start or only recently subscribed, you’re helping shape how we track and interpret risk across the global automotive value chain.

As you read this week’s edition, we hope it gives you a clearer view of what’s ahead and a bit more confidence in the decisions you’ll have to make next year. Thanks again for reading and for being part of this community.

Warmly,

Nick Gaydos
Editor, Automotive Supply Chain Risk Digest
Elm Analytics, Inc.

Contents

CHANGE IN MANAGEMENT

• Kia Europe names new CEO

INDUSTRY DIRECTIONS

• Western EV plans retreat as China advances

LABOR DISPUTE

• Tariffs and labor threaten North American plants

MERGERS, VENTURES, ACQUISITIONS

• LGES sells Ohio battery assets to Honda

• Samsung Harman buys ZF ADAS business

PRODUCTION DECREASE

• Ford delays Europe EV platform decision

RAW MATERIAL DISRUPTION

• Congo halts artisanal cobalt processing

• Battery metals weaken despite EV growth

REGULATION

• Tariff uncertainty clouds 2026 auto planning

• China tightens approvals for self-driving cars

• Stellantis warns EU auto rules deter investment

• German auto exports hit by US tariffs

SUPPLY CHAIN

• Nexperia China localizes wafer supply

• Maersk tests Red Sea route return

Change In Management

Kia has appointed Soohang Chang as CEO of Kia Europe, effective January 1. European sales fell to 479k vehicles in the first 11 months from 495k a year earlier, putting pressure on the new leadership team.

Chang is expected to stabilize volumes, speed up electrification, and manage tougher competition and regulation. He replaces Marc Hedrich, who becomes president of Kia France, maintaining leadership continuity while shifting focus to priority markets.

For suppliers, leadership changes during a sales downturn often signal shifts in model mix, EV launch timing, and resource allocation, with knock-on effects for logistics and inventory planning across Europe.

Industry Directions

Over the past year, Western automakers pulled back from ambitious EV plans as demand softened, costs stayed high, and policy support weakened in the US, Canada, and Europe.

Programs were canceled, plants were retooled, and significant losses followed, including Ford’s $19.5B write-down.

As governments eased or rolled back EV mandates and incentives, future sales became less predictable, forcing both automakers and suppliers to rethink investments in batteries, motors, and electronics.

China moved in the opposite direction, combining strong subsidies with an efficient domestic supply chain and a shift to plug-in hybrids to sidestep European tariffs.

As Western EV growth slowed, Chinese players rapidly gained market share. By year-end, the gap between China’s large-scale EV industry and the West’s uneven progress had widened.

In 2025, Western suppliers adjusted their expectations for EV demand, faced excess capacity and delayed launches, and saw rising risks to the recovery of prior investments, while China extended its cost and volume lead.

Labor

Unifor reports that US tariffs have already led to plant shutdowns, reduced shifts, and production moving out of Canada.

The union expects further disruption as major auto contracts enter negotiations in 2026.

For supply chains, this mix of trade volatility and labor pressure raises the risk of sudden shutdowns, uneven output, and forced realignment of North American manufacturing footprints.

Mergers, Ventures, Acquisitions

LGES plans to sell the Ohio battery plant building and selected assets to Honda for $2.86B, while keeping its joint venture structure and ownership stake. The goal is to streamline operations before production begins next year.

The move highlights a broader shift toward more flexible battery plants and supply arrangements for electric and hybrid vehicles. For nearby suppliers, however, changing ownership and operating models can translate into more volatile short-term materials demand and less clarity on long-term volumes.

Samsung Electronics said its Harman division will acquire ZF Friedrichshafen’s autonomous driving technology business for about $1.8B. The deal adds products such as front-facing cameras and ADAS controllers, extending Samsung’s in-car platform strategy well beyond audio.

For automotive supply chains, this is another sign of consolidation in ADAS and telematics, with potential shifts in bargaining power, integration requirements, and continuity risk for downstream suppliers.

Production Decrease

Ford is delaying a decision on bringing its new Universal Electric Vehicle platform to Europe, saying it wants to prove the architecture in the US first, given the high engineering and capital spend required.

The in-house EV platform will debut on a midsize electric pickup built in Kentucky in 2027, while Ford Europe continues to rely on partnerships with Volkswagen and Renault to limit financial exposure after earlier EV bets missed profitability targets.

The cautious stance reflects lessons from prior EV programs and a broader shift toward smaller, lower-cost vehicles with redesigned manufacturing processes and supply chains. The wait-and-see approach in Europe leaves suppliers uncertain about future sourcing, tooling, and production capacity tied to Ford’s next wave of EVs.

Raw Material Disruption

Congo has suspended artisanal processing of copper and cobalt until operators can prove the origin of mined material. The step is intended to improve transparency and curb illegal or corrupt exports.

Because Congo supplies about 70% of the world’s cobalt, tighter controls could reduce traceable supply and increase short-term price volatility and compliance risk for battery and EV supply chains. Buyers may need to step up due diligence and source tracking to maintain a certified supply.

• Reuters: EV revolution rolls on but battery metals lose their charge

Regulation

Automakers and suppliers face heightened supply chain uncertainty heading into 2026 as the US Supreme Court prepares to rule on the legality of Trump-era tariffs and the US, Canada, and Mexico launch a required review of the USMCA trade agreement.

The auto industry has already paid about $8.6B in tariffs now under review. Even if the court overturns some duties, the administration may still seek new tariffs under other authorities.

“There’s enough uncertainty with the current administration that each day has the potential to change course for businesses... Every day is Groundhog Day right now.”

- Jeff Lamb, partner at Honigman

At the same time, the US is weighing tariffs on industrial robotics and critical minerals, both of which are heavily used in automotive manufacturing, and plans to expand the list of parts subject to auto tariffs.

With court rulings, trade agreement reviews, and potential new duties all in play, automakers and suppliers are struggling to set sourcing strategies, automation investments, and North American production plans.

After a fatal March crash involving a Xiaomi SU7, Chinese regulators tightened approvals for self-driving vehicles, slowing automakers’ plans for mass deployment this year.

So far, only Beijing Automotive Group and Changan have received approval, and only for limited Level 3 robotaxi tests on selected highways, not for broader commercial use.

At the same time, companies such as Geely, XPeng, and Li Auto have already built vehicles with Level 3 hardware but are selling them with Level 2 software while authorities reassess safety, liability, and insurance rules.

“What looked like an imminent L3 rollout was, in hindsight, a marketing-led acceleration running ahead of governance, insurance frameworks and public trust.”
- Bill Russo, an EV consultant in Shanghai.

This regulatory reset creates significant risk for suppliers, as customers with advanced hardware platforms may face prolonged inventory and operational uncertainty while they wait for approvals.

Stellantis warns that the EU’s proposed auto package increases policy uncertainty and could chill investment, slowing localization and making it harder to build a resilient regional supplier base.

For suppliers, that raises the odds of delayed launches, shifting sourcing footprints, and more cautious commitments to tooling, labor, and logistics contracts.

German automotive exports to the US fell nearly 14% in the first three quarters of 2025, the steepest drop among major German industries. The decline reflects the impact of higher baseline tariffs, which have reset the economics of shipping vehicles into the US.

If these tariffs persist as the new normal, automakers should expect continued volume volatility, margin pressure, and potential shifts in production and sourcing to reduce tariff exposure.

Supply Chain

Nexperia’s China unit has secured silicon wafer supply from local firms to cover its full 2026 production of IGBT power chips after its Dutch parent cut off wafer shipments amid a corporate and geopolitical dispute.

The China business, which declared itself independent of European management two months ago, said it has locked in capacity with suppliers including Wingsky Semi, GAT Semiconductor, and United Nova, deepening the supply chain split with Nexperia’s headquarters.

Earlier, the suspension of wafer supplies and China’s temporary halt of finished-product exports triggered chip shortages for automakers, with Honda already warning of factory stoppages tied to constrained chip availability.

Nexperia says it is not in talks with its China subsidiary and warned that disruptions could resume without a long-term resolution. The dispute accelerates semiconductor supply chain decoupling, raising continuity risk for global automakers relying on power semiconductors and reinforcing China’s push to localize critical chip inputs.

Maersk said one of its vessels has successfully transited the Red Sea and Bab el-Mandeb Strait for the first time in nearly two years, testing a potential return to the Asia-Europe route via the Suez Canal after a Gaza ceasefire reduced security risks.

The company stressed it has no plans for a full reopening and will take a “stepwise approach,” as carriers remain cautious after Houthi attacks forced long reroutes around Africa since late 2023.

“Most carriers appear to be adopting a wait-and-see approach, monitoring developments, and any meaningful reopening would likely unfold gradually.”
- Nikos Tagoulis, analyst at Intermodal Group

Maersk emphasized that the test transit does not signal an imminent shift back to the Suez route despite pressure from longer transit times and higher freight rates.

Even a gradual return to Suez could shorten lead times and ease freight costs, but uncertainty still leaves logistics planners exposed to routing volatility and capacity swings.

Contents

BANKRUPTCY

• Luminar files Chapter 11, sells chip unit

• First Brands seeks $250M customer payments

CLOSING

• Renault dissolves Mobilize, refocuses on core sales

• Mercedes ends Mexico GLB, exits Nissan JV

EXPANDING

• Ford retools Oakville for Super Duty trucks

• Tesla expands Germany cell output for 2027

• Nissan expands A1 for NP300/Frontier production

INDUSTRY DIRECTIONS

• Supplier finances weaken, bankruptcy risk rises

LITIGATION

• Hyundai Kia add theft fixes, settle probe

MERGERS, VENTURES, ACQUISITIONS

• Xpeng talks Malaysia EV production with EPMB

PRODUCTION DECREASE

• Ford pivots from EVs toward hybrids

RAW MATERIAL COSTS

• Copper surge raises wiring and EV costs

REGULATION

• EU weighs softer 2035 ICE restrictions

• China targets below-cost pricing, supply margins

• Wanxiang pays $53M to settle duty claims

RISK ANALYTICS

• Connected vehicle AI compliance minefield

Bankruptcy

Luminar has filed for Chapter 11 bankruptcy after losing Volvo as a customer. The company plans to sell its chip unit for $110M, restructure its debt, and seek buyers for its LiDAR business.

These actions may create short-term uncertainty for automakers and suppliers relying on Luminar’s LiDAR technology, including potential delays in delivery, support, and future arrangements.

First Brands has asked the bankruptcy court for quick access to about $250M in customer payments for orders it has already delivered, arguing that the restriction is putting unnecessary pressure on its cash flow.

The company says operations remain normal and are backed by $1.1B in DIP financing, but the cash limits are still a red flag for customers watching supply continuity and vendor risk.

Closing

Renault is dissolving Mobilize Beyond Automotive as a standalone unit, pulling back from bets on car-sharing, micro-vehicles, and several digital mobility services that have not shown clear profitability.

Under new CEO François Provost, the group is refocusing on core vehicle sales and near-term returns, shutting down projects such as the Zity car-sharing service and the Mobilize Duo micro-vehicle.

Mercedes will end GLB production at its COMPAS plant in Aguascalientes by May 2026, effectively exiting the Mexican site and closing out its last manufacturing partnership with Nissan, which had already stopped production there.

As the plant winds down and GLB production moves to Hungary, Mexico-based suppliers face uncertainties about contract renewals and continued demand, while cross-border logistics providers tied to this joint venture risk losing significant business volume in the near term.

Expanding

Ford says it still plans to restart production at its Oakville Assembly Complex in Canada in 2026. The company is moving forward with a $2.2B upgrade to build F-Series Super Duty pickups, even as uncertainty over US tariffs persists.

The plant has been idle since spring 2024 and is being converted from a canceled EV program to heavy-duty pickup production. The shift is expected to help ease capacity constraints at Ford’s US Super Duty plants, which are already running near full capacity.

While 25% US tariffs on medium- and heavy-duty trucks complicate the economics, Ford appears willing to absorb higher costs on non-US content, given the Super Duty’s high margins and the potential for trade rules to change during USMCA renewal talks in 2026.

Tesla plans to ramp its Gruenheide, Germany, gigafactory to produce up to 8 GWh of battery cells per year starting in 2027. The company is investing several hundred million more euros, bringing total investment in the cell factory to nearly $1.1B.

By producing everything from battery cells to finished vehicles at a single European site, Tesla aims to deepen vertical integration and, in its view, make its supply chain more resilient.

Nissan Mexico has started expanding its Aguascalientes Plant A1 to move NP300/Frontier pickup production into the facility. The goal is to make this site the company’s largest automotive hub in Latin America.

The project is scheduled to be completed by the end of Nissan’s fiscal year in March 2026 (!) and includes cross-plant upgrades, a new production line, and new chassis manufacturing equipment. Shifting pickup production and adding chassis work could reshape supplier footprints, local content strategies, and logistics flows around the plant.

Industry Directions

Automotive suppliers are heading into 2026 under growing financial pressure. In 2025, they cut more than 60k jobs as orders from automakers declined, rising competition from Chinese parts, high interest rates, and ongoing investment in new technology all squeezed margins.

Industry groups report that 70% of European suppliers expect profits below the 5% level typically needed to sustain investment.

Smaller Tier-3 and Tier-4 suppliers are most exposed, but even midsize companies could face insolvency.

Analysts say automakers’ own profit challenges are being pushed up the supply chain, raising the risk of more bankruptcies and production disruptions. Recent failures at suppliers such as Voit, Marelli, and AE Group underscore these risks.

If suppliers remain financially weak, 2026 could bring sudden bankruptcies, part shortages, and forced re-sourcing, especially in internal combustion engine supply chains and Europe-based networks.

Litigation

Hyundai and Kia plan to install free ignition-cylinder protection on about 7M vehicles in the US and will add immobilizers to all future US models. These steps resolve a 35-state attorney general investigation tied to recent waves of car thefts and highlight ongoing security and liability risk around older vehicle fleets.

Mergers, Ventures, Acquisitions

Xpeng is negotiating with EPMB to launch mass EV production in Malaysia in 2026, using the country as a right-hand-drive base for ASEAN markets.

If the project moves forward, it would signal deeper China-to-ASEAN localization to reduce tariff risk and improve margins, with potential knock-on effects on supplier footprints and regional trade flows.

Production Decrease

Ford expects a $19.5B profit hit as it reduces its focus on fully electric vehicles, shifts toward hybrids, and updates several programs after overestimating short-term EV demand.

The company will convert a planned Tennessee EV pickup plant to produce gasoline models, cancel an electric commercial van program in Ohio in favor of new gasoline and hybrid options, and modify the F-150 Lightning to use an auxiliary gasoline generator once the battery runs out.

CEO Jim Farley said the strategy makes Ford “much more China-proof,” but University of Michigan professor Erik Gordon warned that Ford could face new risks if EV adoption accelerates again.

For suppliers, canceled programs, plant retooling, and battery strategy changes can quickly force shifts in sourcing for powertrains, batteries, and electrical parts, and may lead to inventory and tooling write-downs across the EV supply chain.

Raw Material Costs

Copper prices are up 35% this year and are now approaching $12k per metric ton. US buyers, worried about potential tariffs, are stockpiling copper and pulling material away from other regions, even though a global surplus had been expected.

Combined with mine disruptions and higher premiums outside the US, this is creating near-term cost and availability risk for wiring, power electronics, and EV parts in the automotive industry.

Regulation

The EU is considering changes to its 2035 rules that would drop a full ban on internal combustion engines.

Instead, the proposal would require a 90% cut in tailpipe emissions and allow hybrids and some ICE vehicles to remain on the market. Automakers could close the remaining gap with measures like low-carbon steel, e-fuels, and biofuels.

The plan would also give manufacturers more flexibility for light commercial vehicles and add incentives for small, affordable EVs.

Industry groups largely support the shift toward technology neutrality, while environmental groups warn it could slow electrification. Some automaker associations also argue that the changes do not go far enough to ease cost and competitiveness pressures.

Overall, easing the rules reduces short-term compliance risk and supports hybrid and ICE supply chains in Europe, but it also increases uncertainty for long-term EV investment, sourcing, and planning.

China is proposing tighter oversight of below-cost vehicle pricing and other “unfair” practices to rein in the ongoing price war. The proposed rules could also target suppliers accused of unjustified price hikes, adding a new compliance burden and margin pressure across the auto supply chain.

Wanxiang Group has agreed to pay $53M to resolve DOJ claims that it underpaid customs and antidumping duties by misclassifying wheel hub assemblies and other parts imported from China.

Risk Analytics

• Foley: Connected Vehicle AI: Goldmine or Compliance Minefield?

Contents

BANKRUPTCY

• Luminar debt distress threatens sensor continuity

CHANGE IN MANAGEMENT

• BMW appoints production chief as chairman

EXPANDING

• Aisin Canada adds Lexus sunroof line

• Coficab opens second Durango cable plant

HUMAN CAPITAL

• Avancez cuts shift after sudden cancellation

• Auto Industry’s Talent War

LITIGATION

• Stellantis supplier pricing dispute risks shutdowns

MERGERS, VENTURES, ACQUISITIONS

• Ford & SK On end battery joint venture

• Ford & Renault partner on small EVs

• Audi sells majority Italdesign stake

• Tianyouwei buys insolvent German supplier

RAW MATERIAL DISRUPTION

• China eases rare earth export licensing

• US backs Congo cobalt copper supply

REGULATION

• Mexico imposes steep Asian import tariffs

• Indian automakers hit by Mexico tariffs

• USMCA future uncertainty alarms automakers

• EU tariffs shift Chinese sales mix

• US warns against China-linked EV entry

SUPPLY CHAIN

• Nexperia governance fight tightens chip supply

Bankruptcy

Luminar Technologies has missed several interest payments and hired a chief restructuring officer as it tries to reorganize its debt. Lenders are holding off on enforcement for now, but pressure is building.

The situation is also complicated by a dispute with Volvo, where Luminar is claiming “significant damages.” Volvo has decided to stop using Luminar LiDAR on the EX90 and ES90 starting in April 2026 and has already begun production without Luminar sensors.

Luminar, which also supplies Tesla, reported a large operating loss in Q3, and its stock is down 85% this year.

Financial distress at a LiDAR supplier that is tied to key OEM programs raises continuity risk for ADAS and autonomy sensor sourcing, potential last-minute revalidation costs, and knock-on exposure for connected Tier-1 and electronics supply chains.

Change In Management

BMW has chosen Milan Nedeljković as its next chairman, effective after the annual meeting in May, replacing Oliver Zipse. Nedeljković, who currently leads production, will be responsible for steering BMW through trade tensions, new tariffs, and ongoing supply chain issues.

The company depends heavily on factories in the US and China, which makes it vulnerable to tariff changes, higher duties on EVs from China in Europe, and shortages of rare earths and semiconductors. BMW has also seen its sales in China decline amid intense competition from local EV makers.

This leadership change comes as BMW faces rising geopolitical and supply chain risks that could reshape its cost base, production footprint, and sourcing strategies.

Expanding

Aisin Canada plans to expand its Stratford, Ontario, facility by adding a new panoramic sunroof production line for Toyota’s Lexus NX. Production is expected to begin in December 2026. The project includes about $8M in new equipment and programs.

According to Aisin, the new line will shift sunroof production from Japan to Canada and help sustain the plant as it faces higher tariffs and logistics costs this year, while deepening North American content for the Lexus NX program.

Coficab has opened Coficab II, a second facility making automotive electrical cables at the Durango Industrial Logistics Center in Mexico, and the plant is already operating. The company said it has invested $60M in the new phase, and employment is now over 1.4k across the two sites.

Human Capital

Avancez is permanently laying off 143 workers at its Hazel Park, Michigan, facility after a customer abruptly canceled production, likely GM Factory Zero.

Avancez specializes in just-in-time manufacturing, suspension modules, sequencing, and tire and wheel assembly. The move underscores how quickly OEM or Tier-1 schedule changes can ripple into supplier employment and capacity decisions.

• Foley: The Auto Industry’s Talent War: Winning the Race for Skilled Workers

Litigation

Stellantis has accused Woodstock, Ontario, brake rotor supplier Peterson Springs of threatening to halt shipments to Michigan plants unless it was paid double the previously agreed price.

A judge has appointed an independent supervisor to review the supplier’s finances and operations after Stellantis said the proposed increase would add about $55M in costs and risk the shutdown of two Michigan assembly plants.

Peterson Springs said it was sometimes losing money under legacy pricing set by the prior owner, while Stellantis said it was honoring existing purchase orders.

Disputes over pricing and supplier financial health can quickly escalate into production-stopping risks, highlighting the growing strain on supplier-OEM relationships.

Mergers, Ventures, Acquisitions

Ford and SK On are ending their $11.4B BlueOval SK joint venture and will split ownership of the three US battery plants covered by the deal.

Ford will assume full control of both Kentucky battery plants, one already in operation and the other still under construction.

SK On will own the Tennessee plant and plans to use it to serve a broader customer base, including energy storage projects. The company said the change reduces its reliance on Ford’s volatile EV demand and lets it focus more on the faster-growing energy storage segment.

Ending the joint venture before all plants are fully online signals less confidence in Ford’s future EV production and introduces new uncertainty around battery supply, capacity, and sourcing for upcoming EV programs in North America.

Ford and Renault will co-develop small, affordable Ford-badged EVs for Europe, using Renault’s AmpR Small platform to reduce development time and cost. Production of the first model is targeted for a Renault plant in northern France, with launch planned in 2028. The partnership fills a gap in Ford’s European EV lineup and counters increasing Chinese competition.

The challenge is timing. A 2028 launch puts Ford at risk of arriving after rivals have already established volume in the budget EV segment. That matters because Ford’s European business is already under pressure.

Explorer and Capri EV sales have been weak, and its underutilized Cologne, Germany, plant could face repurposing or closure if Ford cannot feed it with new products.

The partnership also includes joint van development, reinforcing the broader industry shift toward shared platforms and joint production.

Renault’s scalable architecture gives Ford a cost-effective entry point, but a partner-led strategy adds execution, timing, and supply chain risk. That includes questions about plant utilization, supplier capacity reservations, and long-lead commitments, especially if competitors lock in volume earlier.

Suppliers should expect tougher pricing conversations, more platform commonality across nameplates, and more frequent sourcing resets. Standardized EV architectures can shift which suppliers win high-value content that carries across multiple models, and which suppliers get squeezed on price as OEMs defend cost positions in Europe.

Volkswagen-Audi will sell a majority stake in Italdesign to US-based technology firm UST as part of its broader restructuring and focus on EVs and core technologies.

Lamborghini and Audi will retain minority stakes under the deal, and Audi will remain a long-term strategic customer, preserving existing program relationships.

UST plans to combine Italdesign’s automotive design and engineering capabilities with its strengths in digital systems, software-defined vehicles, and AI, and has committed to protecting jobs and keeping sites open for four years.

The change in ownership at this major European engineering and design supplier introduces medium-term uncertainty around capabilities, talent retention, and strategic direction, even as continuity with key OEM customers continues.

China’s Tianyouwei will buy insolvent German supplier Krämer for $1.1M, aiming to pair its product lineup with Krämer’s European customer relationships. The deal could preserve continuity for cockpit and infotainment programs, but it carries integration and financial stability risks.

Raw Material Disruption

Ford reported that some of its Chinese rare-earth magnet suppliers have received Beijing’s first batch of new “general” export licenses. These permits allow larger shipments to specific customers for one year and require fewer approvals per shipment.

The change, which follows a meeting between Xi and Trump, is intended to ease shortages caused by China’s April shift to shipment-by-shipment licensing, which disrupted parts of the auto supply chain.

Germany’s foreign minister noted that German automakers were not included in this initial round. In response, BMW is monitoring the situation, while VW said its supply remains stable as suppliers continue working to obtain licenses.

Even if access improves for some manufacturers, the selective licensing approach keeps rare-earth magnets a key chokepoint and leaves supply risks uneven across automakers and suppliers.

The US Development Finance Corporation is planning an investment in a new joint venture between Congo’s state miner Gecamines and Swiss commodities trader Mercuria. The aim is to secure supplies of cobalt and copper.

The proposed agreement would give US manufacturers first rights to buy some of the output. It would also help fund export-enabling infrastructure, such as the Dilolo-Sakania rail link, to improve logistics out of the region.

For automakers and battery makers, the upside is a more reliable and traceable source of cobalt, which could gradually reduce dependence on China’s processing ecosystem.

However, in the near term, volatility is likely to persist, as supply remains tight. Price swings will likely continue until Congo’s export quota framework and new trade rules are finalized, even as new capacity and logistics investments ramp up.

Regulation

Effective January 1, Mexico will impose new import tariffs of up to 50% on vehicles and auto parts from countries without a free trade agreement, including China, South Korea, India, Thailand, and Indonesia.

Most auto- and parts-related tariff lines will rise to 35%, while select auto parts and specialty vehicles will hit the 50% ceiling.

The move is widely seen as an effort to ease US pressure over China-linked content entering North American supply chains ahead of the 2026 USMCA review.

For automakers and suppliers, these higher landed costs could accelerate sourcing shifts, disrupt Mexico-based production footprints that rely on Asian inputs, and increase both cost and compliance risks across North American vehicle programs.

The tariff hike hits roughly $1B in Indian vehicle exports, with Volkswagen, Hyundai, Nissan, and Maruti Suzuki among the most exposed.

This comes despite lobbying that Indian vehicles account for only a small share of Mexico’s market and are not focused on US re-exports. The higher tariffs increase utilization and scale risks for India-based plants that depend on Mexico-bound volumes.

Automakers and suppliers are urging the Trump administration to preserve the USMCA as a trilateral agreement, warning that a shift to separate bilateral deals with Canada and Mexico would disrupt deeply integrated North American supply chains.

Industry groups told US trade officials that vehicle and parts programs have been built and optimized in accordance with USMCA rules, and that replacing them would require costly supply chain redesigns and add significant uncertainty.

Trade officials have confirmed that the administration is considering revising or even exiting the agreement ahead of its 2026 review, despite companies having invested billions of dollars on the assumption of long-term continuity.

Rising uncertainty around USMCA raises near-term risk for sourcing decisions, rules-of-origin compliance, and capital planning across North American vehicle and parts supply chains.

EU tariffs aimed at Chinese EVs have pushed Chinese automakers to shift toward hybrids and ICE models, driving a sharp rise in overall European sales. The result is higher import penetration without meaningful local production, raising costs and increasing competitive pressure on European supply chains.

US automakers are warning that Chinese-backed automakers and battery makers pose significant risks to US EV and battery supply chains, urging Washington to prevent their entry, codify effective import restrictions, and address subsidy-driven dumping.

These concerns highlight the possibility of policy-driven shifts in sourcing, localization requirements, and cost structure.

If US restrictions tighten, suppliers could see faster regionalization of battery and EV sourcing, higher compliance costs, and a reshuffling of long-term capacity, pricing, and customer strategies tied to China-linked content.

Supply Chain

Wingtech, the Chinese parent of Netherlands-based Nexperia, has invited the court-appointed custodians overseeing Nexperia’s shares to talks.

This signals a possible step toward easing a governance dispute that intensified after Dutch intervention and the court-ordered removal of Wingtech’s founder as CEO.

Nexperia said it is aware of the invitation but claims it has not seen a willingness to engage on its priority: restoring normal operations and supply chain flows.

Wingtech insists that “lawful control” must be addressed first.

The standoff is already disrupting chip availability. Automakers face production issues, dwindling inventories, and warnings that shortages could re-emerge in January.

Europe-China wafer shipments remain halted amid payment and substitution disputes.

This governance fight is directly tightening semiconductor supply, raising short-term allocation risk and potential line-down exposure for OEMs and Tier-1s if wafer and packaging flows do not normalize quickly.

Contents

CLOSING

• Rent deferral keeps Bulten operating

EARNING DIP

• Chinese EV makers face profit squeeze

MERGERS, VENTURES, ACQUISITIONS

• Mahindra trims CIE stake for cash

• Factorial, POSCO advance solid-state materials

• Symbio restructures after Stellantis exit

OPENING

• Sodecia, AAPICO build SC ladder-frame plant

• Tongling adds Mexico interior components plant

• GO Enerji, LG open Turkish battery facility

PRODUCTION DECREASE

• Stellantis forecasts declining French output

RAW MATERIAL DISRUPTION

• Congo export halt triggers cobalt squeeze

• Indonesian nickel oversupply risk grows

REGULATION

• Trump administration eases fuel-economy targets

• Canada warns Stellantis over Brampton default

• EU delays decision on auto CO2 package

RISK ANALYTICS

• Chinese connected-vehicle rise amid restrictions

SUPPLY CHAIN

• Nexperia governance clash threatens chip flow

• Border blockade forces costly part airlifts

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Closing

North Lincolnshire Council has deferred rent payments on Bulten’s Scunthorpe plant to keep the automotive fastener supplier operating at Normanby Enterprise Park in the UK. The move helps the council avoid the cost and risk of a large industrial vacancy after Bulten warned that mounting pressure on the site could threaten its local presence.

Earning Dip

China’s major EV makers, including BYD, Xpeng, Li Auto, and Nio, are posting lower-than-expected earnings.

This has raised new concerns about their profits as government support fades and local demand weakens heading into 2026.

To make up for smaller tax breaks, automakers are offering more rebates, even as battery costs rise, which puts more pressure on already thin margins.

Analysts think competition will get tougher, with mass-market brands like BYD and Geely in a stronger position as buyers look for cheaper cars and automakers increase exports to boost profits.

These challenges could slow the growth of EV programs and change how batteries and parts are sourced, especially for higher-end models that face the most price cuts.

Mergers, Ventures, Acquisitions

Mahindra is selling part of its CIE Automotive stake for $138 million to raise cash, but will still keep CIE as an associate company and maintain its strategic relationship.

Factorial Energy and POSCO FUTURE M are working together to develop key materials for all-solid-state batteries.

They aim to overcome electrolyte and cost challenges that have slowed commercial use. Their partnership is meant to help bring solid-state technology to a larger market.

Michelin, Forvia, and Stellantis will restructure and refinance their Symbio joint venture after Stellantis dropped its hydrogen fuel cell program, cutting the JV’s workforce from about 650 to 175 and refocusing on a 10k systems-per-year target at the SymphonHy site in France between 2028 and 2030.

The deal preserves a smaller automotive hydrogen capability but signals weaker demand from core OEM customers, making hydrogen-focused suppliers’ order books a key watch point.

Opening

Sodecia and AAPICO plan to invest $120M in a new 400k ft² plant in Orangeburg County, South Carolina, to make ladder frames for Scout Motors. The factory, scheduled to open in 2027, will create up to 392 jobs, adding more North American capacity for chassis parts.

Tongling Mexico is investing $91M in a new plant in Irapuato to expand its North American capacity for interior components, including door panels and dashboards, for automakers such as VW and GM. Local leaders describe the project as a clear sign of accelerating Chinese nearshoring to Mexico amid ongoing shifts in global supply chains.

GO Enerji and LG Energy Solution will build a $52M battery pack plant in Ankara, Turkey, that can scale to 7.5 GWh and will target regional export markets.

Production Decrease

Stellantis expects car production in France to drop by about 11% by 2028, to roughly 588k units across its five assembly plants, according to estimates shared with unions.

Three factories are expected to see lower output, with Poissy facing the biggest cut. However, this forecast could change after the EU makes decisions on CO2 rules and support for the auto industry.

These planned cuts come after temporary shutdowns at Poissy and Mulhouse earlier this year, due to weak demand in Europe and a small decline in Stellantis’s French market share as new CEO Antonio Filosa updates the product plan.

Raw Material Costs

Congo’s 10-month stop on cobalt exports, now replaced by a quota system that is not yet approved, has cut off supply from a country that produces about 70% of the world’s mined cobalt.

This has pushed cobalt hydroxide prices from $6 to $23 per pound. The delay is putting pressure on China’s processing chain, with imports dropping sharply since May and inventories running low.

Analysts warn that even if exports restart soon, there could be a cobalt shortage in early 2026.

Longer delays could make the problem worse, especially as the EV market moves toward cobalt-free LFP batteries.

For carmakers and battery producers who rely on cobalt sulphate, this means more price swings, higher costs, and harder sourcing choices.

China played a big role in Indonesia’s rise as the world’s top nickel producer over the past decade, but now Chinese EV makers are moving to nickel-free LFP batteries.

Because of this, more Indonesian nickel is being stored in London Metal Exchange and Shanghai warehouses, inventories are growing, and prices are stuck near production costs.

Still, Indonesian nickel projects are expanding, which could lead to years of oversupply and a large stockpile of unused metal.

Future demand is likely to come from Western EV markets, where nickel-based batteries are still common, but these buyers will want cleaner, lower-carbon nickel, which is a challenge for Indonesia’s coal-powered industry.

Regulation

The Trump administration plans to reduce Biden-era fuel economy rules, lowering the 2031 target from 50 to 34.5 mpg and removing penalties for missing it.

This aims to support gasoline vehicles and cut short-term costs, but it conflicts with the large investments automakers have already made in EV plants, equipment, and supply chains.

Along with tariffs, higher car prices, and different US and global efficiency rules, carmakers and suppliers now face more planning risks and uncertainty about capacity, powertrain choices, and sourcing for North American programs.

Canada has formally notified Stellantis of a default after the company stopped retooling its Brampton, Ontario, plant and moved Jeep Compass production to Illinois.

This puts about $379 million in forgivable loans at risk and leaves about 3k jobs without a replacement plan.

Some funding for Stellantis’s new Windsor battery plant also depends on keeping production at Brampton, making talks with the federal government more important.

Ottawa has already tightened tariff exemptions on Stellantis imports, showing stricter enforcement of incentive deals and adding uncertainty to Stellantis’s Canadian operations, future model plans, and local parts sourcing.

The EU has postponed its December 10 meeting on the Auto Package, which covers possible changes to the 2035 ban on new combustion cars and a Small Affordable Cars initiative.

The meeting is now set for early January. Germany, Italy, and the auto industry want more flexibility and technology neutrality, including allowing hybrids and e-fuels after 2035.

France and environmental groups want the 2035 ban enforced strictly and are also discussing local-content rules for EVs.

UBS expects the outcome to be more flexible, focusing on powertrain mix and CO2 targets, which could lower some industry risks but still require major EV investment to compete with Chinese manufacturers.

Risk Analytics

• Foley: Made in China: What the Automotive Industry Should Know About the Global Emergence of Chinese Manufacturing of Connected Vehicles Amid Increasing US Restrictions

Supply Chain

Nexperia is once again in conflict with its Chinese owner, Wingtech, after the Dutch government paused its planned takeover of the chipmaker but kept a court ruling that removes Wingtech’s voting rights and its China-backed CEO.

Wingtech and Nexperia’s China branch say Dutch management is trying to “de-Chinafy” the company by moving up to 90% of production out of China by mid-2026, including a planned $300M expansion in Malaysia.

The Dutch side claims Chinese entities are blocking payments, misusing company seals, diverting customer funds, and sending unauthorized messages, while global customers warn of possible production stoppages.

Although China has resumed export exemptions and 7.4B chips have shipped since October, both sides say output is still at risk as the dispute continues.

Ongoing governance issues at Nexperia threaten stable supply from this key automotive chipmaker, raising the risk of allocation cuts and delivery delays for global carmakers and suppliers who depend on its China-based packaging and testing.

A four-day farmer blockade at the El Paso-Juarez ports stranded about 7k trucks, forcing some maquiladoras to book $70k to $90k air charters to keep US plants operating.

The protest ended only after Mexico promised to protect farmers’ water rights. This shows how quickly local disputes can close key routes and lead to expensive measures to keep automotive supply chains running on time.

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As the year begins to wind down and many of us take a moment to reflect, I want to say a sincere thank you. For reading. For sharing. And for being part of this growing community.

Writing this newsletter is a small way to stay connected with people who care deeply about the resilience and integrity of the automotive supply chain.

It’s more than analysis and alerts. It’s about building a network of professionals who believe in better communication and collaboration between suppliers and their customers.

Whether you’re in the US, still full from celebrating Thanksgiving, or simply pausing for a break this Friday, I hope you get a moment to recharge. We’re grateful to have you with us.

Warmly,
Nick Gaydos
Editor, Automotive Supply Chain Risk Digest
Elm Analytics

Contents

CLOSING

• Continental closing Aldora Mills plant

DISASTER

• Novelis partially restarts fire-hit plant

• Fire evacuates Vistech Ohio facility

EXPANDING

• Carlex expanding Nashville glass capacity

HUMAN CAPITAL

• Yanfeng cutting 192 Romulus jobs

• Autokiniton planning 165 Detroit layoffs

INDUSTRY DIRECTIONS

• Automakers boosting supply chain collaboration

LITIGATION

• EV delays driving supplier litigation

• First Brands faces CEO fraud claims

MERGERS, VENTURES, ACQUISITIONS

• Changan acquiring idled Hyundai plant

OPENING

• Schaeffler opening China logistics hub

• Dual Borgstena launching Mexico plant

RAW MATERIAL DISRUPTION

• Addressing future automotive material risks

• EV motors shifting from rare earths

REGULATION

• India warns of Mexico tariff impact

SUPPLY CHAIN

• Protest blocks key Mexico-US crossing

• Nexperia chip crisis disrupts supply chains

Closing

Continental plans to shut down its Aldora Mills plant in Barnesville, Georgia, which currently employs about 230 people. The facility produces textile reinforcement materials used in the company’s tire and industrial products, including tire cord fabric, hose yarn, and knitted fabric. Layoffs will begin in stages starting in March, and the plant is scheduled to fully close by the end of 2026.

Disaster

Novelis has restarted cold-mill and heat-treatment operations at its fire-damaged aluminum plant in Oswego, New York, and continues to ship finished material to Ford. The company expects its hot mill to be back online by the end of December and is using other plants to cover remaining gaps.

This partial recovery, along with the planned Bay Minette, Alabama, plant, reduces but does not eliminate near-term supply risk for Ford’s F-Series, which already faces an estimated 90k to 100k-unit production hit.

A fire at Vistech Manufacturing Solutions in West Chester Township, Ohio, triggered a full evacuation and a multi-department emergency response. No injuries were reported, but short-term production delays are possible. Vistech supplies die-cut acoustic components, soft trims, and flooring underlayments used for vehicle noise and vibration control.

Expanding

Carlex Glass America is expanding its Nashville, Tennessee, plant by mid-2026 with a nearly $55M investment. The project will add new production lines for larger precision-formed automotive glass, increasing North American capacity and improving supply reliability for OEM programs that use its windshields and roof glass.

Human Capital

Yanfeng plans to lay off 192 employees at its Romulus, Michigan, interior trim and electronics plant by early January as it shifts some operations to other sites. The cuts will primarily affect plant and assembly operators, as well as related support roles.

Autokiniton will close its Oakland Stamping body-frame structural assembly facility in Detroit, Michigan, by early 2026. WARN notices cover 165 layoffs across production and technical roles, starting in December and January.

This closure, along with Yanfeng’s, reduces available capacity and adds to a broader pattern of Michigan auto supplier plant closures, potentially affecting sourcing flexibility in the region.

Industry Directions

It was great to meet so many Automotive Supply Chain Risk Digest readers at the MEMA Annual Conference last week.

The most encouraging theme was clear: supply chain resilience is moving from a talking point to real execution.

Automotive News echoed that shift, reporting that years of disruption and new Trump-era tariffs are pushing automakers to build shared data and collaboration with every tier of the supply chain, not just at Tier-1.

Leaders at GM, Ford, Stellantis and Valeo stressed that trust-based transparency with Tier-1, Tier-2 and below is now critical for mapping risk, spotting bottlenecks, and responding quickly to supply chain shocks, while still protecting sensitive commercial information.

For buyers and supply chain teams, the takeaway is straightforward:

Shared data and closer collaboration between automakers and all tiers of the supply base can materially reduce exposure to disasters, geopolitical shifts, and material disruptions that threaten production stability.

Litigation

EV strategy resets at OEMs are cascading into litigation, cash stress, and potential instability among lower-tier suppliers, raising supply chain risk around future EV launches.

Automakers that overestimated EV demand are delaying and canceling programs, which is leaving smaller suppliers with stranded capital, thin margins, and mounting pressure to recover sunk costs.

The dispute between Tier-1 Nexteer and Tier-2 Swoboda is one visible example: Swoboda is suing to recover about $3M in tooling and machinery after Nexteer canceled orders tied to Ford’s delayed next-gen electric pickup.

While large Tier-1 suppliers can usually absorb program cancellations and delays, smaller parts makers are far less equipped to do so.

Steven Wybo, Senior Managing Director at Riveron Consulting, warned that sub-$1B suppliers that committed 10% to 15% of their business to BEV programs “don’t have the luxury of the capital markets or a bunch of cash sitting around to weather it.”

For buyers, the risk is that seemingly isolated EV program changes at OEMs can lead to heightened financial fragility and potential disruption among lower-tier suppliers.

First Brands Group’s $10B bankruptcy now includes a lawsuit accusing its former CEO of large-scale financing fraud and misappropriation. The case layers governance and credit risk on top of existing operational uncertainty for suppliers and customers as the restructuring unfolds.

Mergers, Ventures, Acquisitions

Changan has acquired Beijing Hyundai’s idled 300k-unit Chongqing plant in China to build its Deepal EVs, helping close a capacity gap as the company targets 3M sales next year.

Opening

Schaeffler has opened a new logistics center in Taicang, Suzhou, China. The site is now the main hub for raw material flows into the Taicang manufacturing base and for consolidating outbound shipments from nine plants across China. It supports the distribution of automotive bearings, powertrain and chassis components, and e-drive products to customers across the region.

South Korea’s Dual Borgstena has opened a new manufacturing plant in Monclova, Coahuila, Mexico, just eight months after breaking ground in March. The facility, backed by an initial $15M investment, will produce car seat covers, textiles, and interior moldings. It is expected to create 880 direct jobs once fully ramped, with phase one launching at roughly one-third of that headcount.

Raw Material Disruption

• Foley: Securing the Future: Tackling Automotive Material Challenges in a Changing World

• NYTimes: An Auto Holy Grail: Motors That Don’t Rely on Chinese Rare Earths

Regulation

India’s auto manufacturers and component suppliers have warned their government that Mexico’s proposed tariff hike on imports from non-free-trade-agreement countries would sharply raise duties on passenger vehicles and auto parts, putting India’s $887M auto export market at risk.

Mexico plans to increase tariffs on passenger vehicles from 20% to 50% and on auto parts from a current range of 0% to 35% to a higher band of 10% to 50%, with implementation possible as early as January.

The higher tariffs would erode price competitiveness for Indian OEMs and parts makers, increase costs and market-access risk, and could force rerouting of supply chains serving Mexico and downstream US customers.

Supply Chain

On November 24, farmers and agricultural workers from Chihuahua, protesting changes to water rights, blocked cargo lanes at the Ysleta-Zaragoza International Bridge, a key border crossing between Mexico and the US.

The action temporarily halted maquila-related truck traffic.

Even short-lived disruptions like this at major ports of entry can upset just-in-time cross-border flows and create immediate delivery risk for OEM and Tier-1 automotive plants that rely on the Juarez/El Paso corridor.

• Reuters: How the Nexperia chip crisis upended auto supply chains - again