Contents

BANKRUPTCY

• Michigan manufacturer enters Chapter 11

• Toledo Molding sale preserves jobs

CYBER SECURITY

• Auto cyberattacks increasingly target suppliers

EARNING DIP

• Honda retreats from EV strategy

• Toyota forecasts war-related profit drop

EXPANDING

• DUCK IL opens Alabama plant

• Tesla expands Berlin battery production

HUMAN CAPITAL

• Automakers cut global workforce

• VDA warns of EU job losses

LABOR DISPUTE

• Samsung strike threatens chip supply

• Unifor targets Ford labor talks

MERGERS, VENTURES, ACQUISITIONS

• Huawei, JAC pursue Maserati EVs

• Stellantis, Leapmotor expand Spanish production

OPENING

• Toyota plans third India plant

PRODUCTION DECREASE

• Honda Canada halts Ontario EV complex

• Mazda delays dedicated EV launch

PRODUCTION INCREASE

• GWM starts Ora 5 production

RAW MATERIAL DISRUPTION

• Hormuz closure squeezes sulfur supply

REGULATION

• Canada seeks Section 232 removal

• USMCA review raises trade uncertainty

• Chinese suppliers face decoupling pressure

SUPPLY CHAIN

• Ford tightens supplier performance rules

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Bankruptcy

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

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

Cyber Security

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

Earning Dip

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

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

Expanding

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

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

Human Capital

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

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

Labor

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

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

Mergers, Ventures, Acquisitions

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

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

Opening

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

Production Decrease

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

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

Production Increase

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

Raw Material Disruption

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

Regulation

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

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

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

Supply Chain

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

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Contents

EXPANDING

• Hirschvogel expands Queretaro aluminum forging

INDUSTRY DIRECTIONS

• Honda delays next generations past 2030

LABOR DISPUTE

• Michigan UAW locals weigh strikes

• Stellantis Sterling Heights strike vote

MERGERS, VENTURES, ACQUISITIONS

• Foxconn backs Polish EV hub

• Ford reportedly explores Valencia sale to Geely

OPENING

• GM reopens Orion for trucks

• Mangrove opens Canadian lithium refinery

PRODUCTION DECREASE

• Nissan consolidates Sunderland production lines

• Canton shifts back to gasoline

PRODUCTION INCREASE

• Mercedes ramps electric GLC production

RAW MATERIAL DISRUPTION

• Aluminum squeeze hits truck inventories

REGULATION

• Trump raises EU auto tariffs

RISK ANALYTICS

• Shipping chokepoints threaten automakers

SHUTDOWN

• Honda freezes Alliston EV complex

SUPPLY CHAIN

• Lucid seat issue disrupts Gravity

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Expanding

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

Industry Directions

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

Labor

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

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

Mergers, Ventures, Acquisitions

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

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

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Opening

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

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

Production Decrease

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

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

Production Increase

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

Raw Material Disruption

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

Regulation

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

Risk Analytics

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

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

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

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

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

Shutdown

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

Supply Chain

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

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Contents

CLOSING

• American Fine Sinter closing Ohio plant

EARNING DIP

• Aston Martin losses narrow, debt grows

• BYD profit drops amid China weakness

EXPANDING

• GM boosts North American combustion capacity

HUMAN CAPITAL

• Yanfeng layoffs follow Volkswagen changes

INDUSTRY DIRECTIONS

• BYD discounts deepen China price war

MERGERS, VENTURES, ACQUISITIONS

• Apollo buys Forvia interiors business

• Aumovio sells Rheinbollen brake site

• Adient acquires Romulus foam plant

• Denso may abandon Rohm bid

• Volkswagen may share European capacity

• Hongqi eyes Stellantis Zaragoza plant

• SAIC plans Spanish MG factory over Hungary

PRODUCTION INCREASE

• Rivian Georgia capacity to reach 300k

• Nexteer begins steer-by-wire production

REGULATION

• Automakers book $2.3B tariff refund estimates

• Canadian moldmakers squeezed by tariffs

• USMCA may remove affordable cars from market

• Atlantic Council outlines USMCA scenarios

SUPPLY CHAIN

• Toyota suppliers face Iran disruptions

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Closing

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

Earning Dip

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

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

Expanding

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

Human Capital

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

Industry Directions

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

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Mergers, Ventures, Acquisitions

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

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

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

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

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

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

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

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

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

Production Increase

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

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

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Regulation

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

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

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

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

Supply Chain

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

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Contents

CLOSING

• Nemak to close Austria plant

EARNING DIP

• Hyundai profit drops on tariffs

EXPANDING

• Vibracoustic expands Mexico production capacity

• SiEngine opens Qingdao chip facility

• Valeo grows Wuhan R&D operations

INDUSTRY DIRECTIONS

• GM delays next-gen electric trucks

• SDV delays driven by integration complexity

• China JVs pivot to global exports

MERGERS, VENTURES, ACQUISITIONS

• Stellantis explores selling European plants

• Hangsheng Autoliv launch electronics joint venture

• Sony Honda scales back EV venture

PRODUCTION INCREASE

• Serra Verde boosts rare earth output

RAW MATERIAL DISRUPTION

• Japan faces aluminum supply crisis

• Aluminum shortages worsen EV demand pressures

REGULATION

• US says tariffs will remain

• New limits proposed on auto imports

• Changan considers Spain production plant

RISK ANALYTICS

• Automaker confidence declines amid tariffs

• Suppliers expect worsening pricing pressure

SHUTDOWN

• Honda cuts China ICE capacity

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Closing

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

Earning Dip

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

Expanding

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

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

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

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Industry Directions

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

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

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

Mergers, Ventures, Acquisitions

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

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

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

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Production Increase

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

Raw Material Disruption

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

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

Regulation

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

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

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

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Risk Analytics

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

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

Shutdown

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

Contents

BANKRUPTCY

• Evergrande EV unit collapses bankrupt

CHANGE IN MANAGEMENT

• Lucid appoints Napoli, raises funding, expands Uber

• Ford dissolves EV unit, Doug Field exits

• Chapter 11 Marelli names Henderson interim CEO

CLOSING

• Resrg closes plating plants amid demand shift

EARNING DIP

• Volkswagen books major ID4 writedown charge

HUMAN CAPITAL

• Stellantis cuts Opel engineers, refocuses tech

• BYD faces labor violation allegations Hungary

INDUSTRY DIRECTIONS

• Global OEMs localize EVs, China tech push

• Chinese lead software-defined vehicle development gap

• Nissan shrinks lineup amid EV demand shifts

LITIGATION

• Tesla faces multibillion-dollar litigation across fronts

MERGERS, VENTURES, ACQUISITIONS

• Nissan explores Chery UK manufacturing partnership

• Stellantis considers renewed Dongfeng European partnership

• Renault grants India autonomy, new platforms

PRODUCTION DECREASE

• Stellantis ending Poissy vehicle production 2028

PRODUCTION INCREASE

• Nissan reserves Chennai capacity

RAW MATERIAL COSTS

• Lithium prices surge, supply tightens globally

REGULATION

• US tariffs overhaul increases auto costs

• CBP launches IEEPA tariff refund tool

• Malaysia restricts imported EVs, push localization

RISK ANALYTICS

• German rubber suppliers warn OEM price pressure risks

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Bankruptcy

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

Change In Management

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

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

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

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Closing

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

Earning Dip

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

Human Capital

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

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

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Industry Directions

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

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

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

Litigation

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

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Mergers, Ventures, Acquisitions

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

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

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

Production Decrease

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

Production Increase

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

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Raw Material Costs

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

Regulation

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

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

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

Risk Analytics

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

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Contents

BANKRUPTCY

• First Brands wipers business shutdown sale

CLOSING

• SKF closes Monterrey plant, shifts production

EARNING DIP

• LG Energy reports loss, weak demand

EXPANDING

• Kia invests in Mexico EV capacity

• Hyundai Mobis expands Nuevo Leon

HUMAN CAPITAL

• Audi faces renewed labor tensions

LABOR DISPUTE

• GM Silao union reaches agreement

LITIGATION

• Stellantis & Kamax settle contract dispute

MERGERS, VENTURES, ACQUISITIONS

• Mutares acquires Magna supplier units

• Stellantis Opel EV with Leapmotor tech

• Electra restarts cobalt refinery project

OPENING

• Shenda launches NEV components plant

• InfiMotion unveils Jiaxing manufacturing base

• GMB USA opens Alabama facility

PRODUCTION DECREASE

• Mazda halts production for Middle East

• Lucid deliveries miss on supply issues

REGULATION

• US maintains ban on Chinese autos

• USMCA review unlikely by deadline

SHUTDOWN

• VW ends ID4 US production

SUPPLY CHAIN

• Hyundai reroutes shipping around Hormuz

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Bankruptcy

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

Closing

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

Cyber Security

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

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Earning Dip

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

Expanding

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

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

Human Capital

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

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Labor

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

Litigation

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

Mergers, Ventures, Acquisitions

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

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

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

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Opening

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

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

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

Production Decrease

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

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

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Regulation

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

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

Shutdown

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

Supply Chain

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

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Contents

BANKRUPTCY

• EV startup collapses, workers unpaid

CLOSING

• Astemo plant closes after contract loss

DISASTER

• March Plant Fires:

  • Michigan fire disrupts supplier output

  • Norway supplier fire halts JLR

  • Tennessee fire raises delivery risk

  • Ohio glass fire threatens OEM supply

  • Fatal Korea fire hits engine components

  • Texas chemical fire risks material flow

EARNING DIP

• Ford sales fall due to fire/supply shortage

EXPANDING

• Mercedes invests to expand US production

HUMAN CAPITAL

• BYD 100k job cuts amid EV competition

LABOR DISPUTE

• Webasto Michigan workers unionize

LITIGATION

• ZF pricing dispute halts Stellantis production

MERGERS, VENTURES, ACQUISITIONS

• Stellantis considers Canadian assembly of Chinese EVs

• GM Chinese JV may produce in Mexico

REGULATION

• US auto investments delayed over policy uncertainty

SHUTDOWN

• GM idles Detroit EV plant amid weak demand

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Bankruptcy

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

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

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

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

Closing

Customer concentration risk is also playing out domestically.

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

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

Disaster

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

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

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

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

  • Severity: 🔥🔥🔥🔥⚪ High-Medium.

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

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

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

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

  • Source: Local reporting / Yahoo
    

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

  • Severity: 🔥🔥🔥🔥⚪ High-Medium.

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

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

  • Potential customers affected: Jaguar Land Rover Solihull operations.

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

  • Source: Reuters / BBC / Wards / Automotive Logistics
    

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

  • Severity: 🔥🔥🔥⚪⚪ Medium.

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

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

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

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

  • Source: WDEF / Chattanooga Fire Dept.
    

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

  • Severity: 🔥🔥🔥🔥⚪ High-Medium.

  • What was manufactured: Automotive glass.

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

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

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

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

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

  • Severity: 🔥🔥🔥🔥🔥 High.

  • What was manufactured: Engine valves / auto parts.

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

  • Potential customers affected: Hyundai, Kia.

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

  • Source: Reuters
    

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

  • Severity: 🔥🔥🔥⚪⚪ Medium.

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

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

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

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

  • Source: Reuters / local reporting
    

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

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Earning Dip

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

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

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

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

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

Expanding

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

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

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

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

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

Human Capital

The pressure to localize is not limited to Western OEMs.

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

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

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

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

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

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Labor

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

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

Litigation

Supplier cost disputes are creating their own production risk.

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

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

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

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

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

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

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

Mergers, Ventures, Acquisitions

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

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

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

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

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

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

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

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

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Regulation

GM is not alone in reshaping its regional production strategy.

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

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

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

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

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

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

Shutdown

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

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

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

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

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

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Contents

EARNING DIP

• US vehicle sales forecast to fall

• FedEx surcharges signal Iran war volatility

EXPANDING

• Toyota invests $1B in US plants

INDUSTRY DIRECTIONS

• Iran war hits India auto output

• Oil shock boosts Asia EV demand

• Toyota warns tariffs demand restructuring

• Toyota pushes suppliers to raise productivity

• Battery plants pivot from EVs

LABOR DISPUTE

• GM Silao wage vote risks strike

• Japanese wage hikes raise supplier costs

MERGERS, VENTURES, ACQUISITIONS

• GM China venture faces uncertain future

OPENING

• Valeo opens Texas plant for GM

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