Automotive Supply Chain Risk Digest #422
February 28 - March 6, 2025, by Elm Analytics
Contents
CLOSING
Audi Brussels factory shuts after 76 years
DISASTER
Explosion at Chuo Spring plant kills one
EXPANDING
Rivian expanding Normal plant for R2
HUMAN CAPITAL
Major suppliers cutting jobs, budgets
INDUSTRY DIRECTIONS
Stellantis eases supplier pricing policy
LABOR DISPUTE
Ultium Tennessee workers ratify union contract
MERGERS, VENTURES, ACQUISITIONS
Frontier Lithium plans Ontario facility
OPENING
TSMC investing $100B in Arizona plants
BYD considers third European plant
PRODUCTION INCREASE
Hyundai preparing Turkey plant for EVs
REGULATION
US delays auto tariffs for one month
EU extends CO2 target deadline to 2027
SUPPLY CHAIN
Cross-border trucking rates spike before tariffs
Why Xiaomi makes EVs, but Apple can't
Closing
The Audi factory in Brussels, Belgium, has officially closed after 76 years of operation, resulting in approximately 3k job losses. The closure was driven by overcapacity and high production costs, with the production of the Q8 e-tron shifting to Mexico.
Disaster
An explosion at Chuo Spring's Fujioka plant in Aichi Prefecture killed one worker and injured two others, reportedly involving a dust collector. The plant, which supplies parts to Toyota, experienced a similar accident in 2023 that led to production disruptions at some Toyota facilities.
Expanding
Rivian is expanding its Normal, IL, plant to begin R2 production in early 2026, with sourcing 95% complete. The company will later shift R2 production to its upcoming Georgia plant, which is expected to open in 2028, eventually ramping up capacity to 400k EVs annually. Rivian's global expansion plans include launching the R2 in Europe and other markets, supported by its growing manufacturing footprint.
Human Capital
Major North American suppliers, including Lear, Magna, Dana, and BorgWarner, are cutting jobs $, reducing engineering budgets, and scaling back EV investments amid uncertain vehicle sales and rising costs.
Lear, for example, cut 15k jobs in 2024 and plans the same in 2025, while Magna is slashing $500M in engineering spending by 2026. Suppliers are also bracing for further changes in US tariffs on Canadian and Mexican imports and higher steel and aluminum costs, which could further strain the supply chain.
Industry Directions
Stellantis North America purchasing chief Marlo Vitous announced a shift $ from the company's strict "no more claims" policy, stating that supplier pricing relief requests will now be considered with documentation and a commitment to a three-year cost savings plan.
The move follows strained supplier relations after the automaker faced $6B in claims last year amid operational struggles. Improving supplier relations and easing cost pressures could help stabilize Stellantis' North American production as tariffs and supply chain challenges threaten costs and vehicle output.
Labor
Nearly 1k UAW workers at the Ultium Cells battery plant in Tennessee have ratified their first union contract, which includes wage increases, fair work practices, and enhanced safety protections. This agreement, which aligns wages with Ultium's Ohio plant, establishes a significant precedent for future labor agreements as the automotive industry shifts toward electric vehicles.
Mergers, Ventures, Acquisitions
Frontier Lithium has received support from both federal and provincial governments for a planned lithium conversion facility in Thunder Bay, Ontario, Canada. This facility will process lithium from its PAK mine into battery-grade materials and is expected to produce 20k tonnes of lithium salts annually.
Opening
TSMC will invest $100B to build two additional semiconductor plants in Arizona, expanding on its existing three-factory project in the state. This investment aims to strengthen US chip manufacturing, which is critical for the automotive industry, as semiconductor shortages have previously disrupted vehicle production. Increased domestic chip production could reduce supply chain vulnerabilities for automakers, helping stabilize EV and advanced vehicle manufacturing.
BYD is evaluating the possibility of building a third European plant, with a final decision expected within two years. The company is already constructing factories in Hungary and Turkey, with a combined annual capacity of 500k vehicles. Like other Chinese EV makers, BYD is expanding local European production to counter rising tariffs on Chinese-made EV imports.
Production Increase
Hyundai is preparing its İzmit, Turkey, plant for EV production starting in 2026 while continuing to build combustion engine models. The company has ordered 550k electric motor components from supplier Posco, indicating long-term EV production at the facility. Hyundai has not disclosed which models will be built or the scale of production but describes the move as a "production expansion" to meet rising European EV demand.
Regulation
US President Donald Trump has postponed 25% tariffs on specific auto imports from Mexico and Canada for one month, providing temporary relief for US automakers reliant on cross-border supply chains.
The delay applies only to imports compliant with the USMCA trade pact, leaving a significant portion of vehicle and parts shipments subject to tariffs when they take full effect on April 2. Automakers have warned that the uncertainty surrounding these tariffs could disrupt production and delay investment decisions.
The temporary pause provides short-term relief for North American auto manufacturing, but ongoing trade tensions threaten supply chain stability and production costs.
The Trump administration's goal to lure manufacturers to the US to avoid hefty tariffs could backfire with some automotive suppliers $. While Commerce Secretary Howard Lutnick argued that automakers have "ample excess capacity in America" and could shift production within six months, a MEMA survey found that a third of US suppliers would move production outside the US if 25% tariffs on Canada and Mexico persisted for six months.
"It would be categorically false to suggest parts production could move in as little as six months," said MEMA President Collin Shaw, citing severe worker shortages in labor-intensive areas like seat and wire harness assembly. Shaw added that moving production is a "multiyear journey, at least two years," making quick adjustments unrealistic.
A MEMA survey also found that if tariffs on Mexico lasted six months, 57% of US suppliers would delay investments, and 47% would cut jobs. Without a clear long-term policy, uncertainty around tariffs is complicating production decisions for automakers and suppliers alike.
The European Commission will give automakers three years (2025→2027) instead of one to meet stricter CO2 emission targets, easing pressure on companies facing declining demand and competition from Chinese and US EV makers.
Automakers must still ensure at least 20% of sales are EVs to avoid heavy fines, which could have reached $15.7B in 2025 alone. While carmakers welcomed the flexibility, critics argue the delay weakens Europe's EV transition and competitiveness.
Supply Chain
Cross-border trucking rates spiked as automakers and suppliers rushed to move parts into the US ahead of new 25% tariffs on Canadian and Mexican imports. Load volumes surged on key automotive routes, such as Toronto to Chicago and Laredo, Texas, but experts predict a sharp decline in shipments as manufacturers adjust to higher costs. Higher logistics costs and trade disruptions may delay vehicle manufacturing and further strain the North American auto supply chain.
NYTimes: Why a Chinese Gadget Company Can Make an Electric Car and Apple Can't
