Contents
HUMAN CAPITAL
Volkswagen restructuring may cost $18.6B
Osnabrück sale could preserve Volkswagen jobs
Volkswagen approves major workforce overhaul
European auto suppliers slash employment
JLR plans 4k UK job cuts
UK suppliers seek JLR production support
McLaren investment creates 1k UK jobs
MERGERS, VENTURES, ACQUISITIONS
Stellantis explores Maserati partnership with Huawei
Ford expands Jiangling partnership for exports
FPT acquires Nippon Seiki software unit
Audi may shift operations to FAW
Cyclic opens Arizona magnet recycling plant
Xinhongye plans Morocco venture with ACOME
OPENING
Gestamp opens fifth India manufacturing plant
PRODUCTION DECREASE
Mexico auto production declines fourth month
PRODUCTION INCREASE
BMW Debrecen reaches 50k iX3s
ProLogium starts solid-state battery production
Dongfeng advances hybrid battery vehicle rollout
REGULATION
China tightens automaker supplier payment rules
Duffy challenges Ford’s Chinese business ties
Farley defends Ford’s China partnerships
RISK ANALYTICS
Indian suppliers may unlock manufacturing cash
SUPPLY CHAIN
Li Auto expands control over batteries
Human Capital
Last week’s approval of VW’s Future Plan 2030 now has a reported price tag. Volkswagen reportedly expects job cuts and possible plant closures to cost about $18.6B. About $11.6B would cover the cost of cutting up to 60k jobs worldwide. Phasing out production would cost about $1.2B each at Emden and Zwickau and $2.3B each at Hanover and Neckarsulm. CEO Oliver Blume has said half the savings must come from Germany, which Reuters reads as roughly 25k German job cuts. Lower Saxony, which holds 20% of the voting rights, says the closures are not a done deal.
One piece of Volkswagen’s spare German capacity already has a buyer. VW agreed to sell its Osnabrück plant, where it had planned to end car production in 2027, to investment company Aurelius and the state of Lower Saxony. The new owners plan to turn it into a security and defense site. The deal still needs final agreements and regulatory approval, and VW’s works council head says it saves more than 1.2k jobs. Suppliers are moving the same way. Rheinmetall said last year it would convert two auto-parts plants to weapons production, and Schaeffler has set defense revenue targets. Citi’s Harald Hendrikse still puts the chance of defense work absorbing all of VW’s at-risk jobs and capacity at zero. Defense conversion saves the site and most jobs, not the automotive supply base around it. An air-defense line buys from a different Tier 2 set than a vehicle plant.
The approved plan targets a 9% operating margin by 2030 on annual sales of about 9M vehicles, down from a pre-pandemic goal of 12M. Volkswagen will spend about $157B on capital expenditure and R&D from 2027 through 2031. Blume estimates its costs run about 30% above rivals’. The added 50k job cuts are a planning assumption behind the margin target rather than jobs already identified, and compulsory layoffs stay ruled out through 2030. For Emden, Zwickau, Hanover and Neckarsulm, VW will look at new industrial partners or buyers, potentially including Chinese automakers, as well as uses outside carmaking.
The squeeze reaches well past Volkswagen. European suppliers announced 104k job cuts in 2024 and 2025 while creating only 7k new positions last year, according to supplier association CLEPA. CLEPA warns 350k supplier jobs could be at risk by 2030. Germany’s auto workforce fell 5.8% in the year through June to 691.5k, its lowest since 2005. Suppliers shed jobs faster than automakers, down 7.6% against 6.1%. Porsche has raised its planned German job cuts to 8.9k, BMW plans to remove up to 8k German jobs by the end of 2027, and the German industry association VDA expects another 125k German auto jobs to be lost by 2035. CLEPA puts 2025 EU vehicle output about 20% below 2019 levels, a gap of roughly 3.1M vehicles, and expects production to remain broadly flat from 2026 onward. That leaves suppliers to close plants, move work, or cut payrolls, even as engineers and software specialists remain in short supply.
In the UK, Jaguar Land Rover confirmed it will cut about 4k jobs over two years to save about $2.3B. The Tata-owned carmaker employs 44k people globally and 34k in the UK. The cuts fall mainly on salaried management, marketing and R&D staff, with hourly shop-floor workers unaffected. CEO PB Balaji says the aim is for the company to break even on about 300k vehicles a year. Profits have been hit by US tariffs, Chinese competition and last year’s cyberattack. The attack halted production for four weeks, cost about $270M, and reduced pretax profit from $3.4B to $19M. JLR is also considering a deal with Stellantis to build some of its vehicles in the US to ease the tariff hit.
The Unite union says the cuts should not affect JLR’s UK manufacturing footprint or supply chain, but suppliers remain unsure. More than 700 companies make the roughly 30k parts in a JLR vehicle. The local Chamber of Commerce estimates 140k to 180k people work in businesses connected to that supply chain. David Roberts, chair of Coventry-based high-pressure aluminum die caster Evtec, has brought together about 15 JLR suppliers with $2.7B in revenue and 12k to 14k employees to press their case together. He expects UK auto demand to continue contracting and says no one knows how fast. A Birmingham plastics supplier says its workforce has fallen about 75%. It wants JLR to share more about future UK production so owners can justify new investment.
The UK’s one hiring headline this week came from McLaren. The supercar maker will add 1k jobs, including indirect and agency roles, as part of a $600M investment in its technology center in Woking, near the plant that builds all its cars. Owner CYVN Holdings, an Abu Dhabi government-owned investor, plans to put $2B into the loss-making company over five years. The wider UK picture is less friendly. UK carmakers face a 10% tariff on EVs shipped to the EU from early next year, and UK-built vehicles do not qualify for “Made in Europe” subsidies under current proposals. Industry group SMMT said this summer that companies with UK operations are weighing new models but holding back until the government relaxes its EV sales rules.
Mergers, Ventures, Acquisitions
Stellantis is in talks with China’s Huawei and JAC Group on long-term industrial cooperation for Maserati, two sources told Reuters. Italian daily Milano Finanza reported the talks are at an advanced stage and center on Huawei’s Harmony Intelligent Mobility platform. It said a first jointly developed vehicle is targeted for the end of next year, with possible dual branding under JAC’s Maextro marque in China. Stellantis said only that it holds discussions with many industry players. Maserati shipped fewer than 8k cars last year and posted an adjusted operating loss of $230M. CEO Antonio Filosa has said a Maserati partnership would lift production at the Cassino and Modena plants, following tie-ups already struck with Leapmotor and Dongfeng.
Ford is putting its Chinese partner to a different use. CEO Jim Farley told officials in Nanchang that Ford will deepen its work with Jiangling Motors Group to expand into international markets, according to a Jiangling disclosure. The joint venture just finished its first batch of about 1k electric vans for Europe. The Transit City shares a platform with Jiangling’s own JMC Touring van and will eventually ship to 52 countries and regions. Ford’s exports from China rose 9% last year to about 184k vehicles, driven mainly by Jiangling-built models, with the Territory crossover alone at 95k. The volume builds on a 2023 agreement to pair the venture’s low costs with Ford’s global distribution network.
Vietnamese IT services group FPT will take over Nippon Seiki Europe’s software development unit in Gdansk, Poland, effective Oct. 2. The unit has 50 people and focuses on embedded automotive software. Terms were not disclosed. Nippon Seiki will keep outsourcing software work to the new FPT Poland subsidiary, which will focus on embedded and head-up display (HUD) software and validation. Paired with last month’s agreement to buy Denso’s HUD business, the sale shows Nippon Seiki concentrating on head-up display hardware while keeping software outsourced to the buyer.
Audi has largely settled on a plan to place its entire four-ring brand business in China under FAW-Audi, leaving SAIC Audi to focus solely on the China-specific AUDI brand, Caijing reported. No contract has been signed, no implementation date has been set, and the partners are still dividing production and sales by model. Four-ring models sold more than 12.5k units at SAIC Audi in the first seven months, about half its total. Third-party data cited by Caijing shows zero four-ring production at SAIC Audi in July, while SAIC Audi says all models remain in production. Audi and SAIC opened a 300-person R&D center in Shanghai on Sept. 3 to develop four new AUDI models, the first due in 2028. The handover still has to be worked through suppliers, dealers, and after-sales networks.
Cyclic Materials has opened its first commercial-scale rare-earth magnet recycling plant in Mesa, Arizona. It can process 25k metric tons a year of magnet-bearing end-of-life products. More than 7k metric tons of feedstock have already arrived, and the company expects first commercial shipments to US customers later this month. The plant separates magnets from scrap equipment and produces a rare-earth magnet concentrate along with copper, aluminum, and steel. Rare-earth permanent magnets are used in many EV traction motors, and the supply remains heavily concentrated in China.
Chinese cable maker Wuxi Xinhongye Wire & Cable Technology plans a joint venture in Morocco with French automotive cable supplier ACOME. Xinhongye will invest up to $32M through a new Hong Kong subsidiary, pending approval from China and Morocco. ACOME has made automotive wire and cable at its Tangier Free Zone plant since 2018, and Xinhongye supplies cable for EVs, solar, and energy storage. The venture gives a Chinese wire supplier a production base in Morocco’s growing auto cluster, close to European customers.
Opening
Spanish supplier Gestamp has opened its fifth Indian plant, in Bhagapura, Gujarat, investing about $55M across two phases. The 342k ft² site employs about 240 people and makes body-in-white structural parts, including large lightweight parts from its Ges-Gigastamping family. It runs two hot-stamping lines, a laser-cutting line, and assembly and welding cells.
Production Decrease
Mexico built 345k light vehicles in August, down 1.4% from a year earlier and the fourth straight monthly decline, according to INEGI. Scheduled shutdowns and line adjustments at Ford and Nissan drove the drop, with Nissan output down 26%. Mercedes-Benz produced nothing after ending its operations in Mexico. Exports rose 1.3% to 300k units, with 88.8% of this year’s shipments going to North America as manufacturers watch the USMCA talks. Year-to-date, production of 2.65M is off by just 0.7%. Pickups, now 31.9% of output, grew 18.9% while SUVs fell 7.2% and compact cars fell 13.6%.
Production Increase
BMW built its 50,000th iX3 at Debrecen, Hungary, nine months after series production began. A second shift that started in February, ahead of schedule, drove the ramp. The company says the first Neue Klasse model is nearing 100k orders. Debrecen’s launch is the template for 40 new or updated BMW models planned by the end of 2027. In Mexico, BMW reaffirmed that San Luis Potosi will begin producing batteries and Neue Klasse iX3 and i3 models in 2027.
ProLogium, which has a technology cooperation agreement with Mercedes-Benz, has started mass production of its Gen 3.5 lithium ceramic battery. UL Solutions tested the cell under China’s new GB/T 43568-2026 method, and it qualified as an all-solid-state cell. That distinction matters, as the term is often stretched to include cells that still use liquid electrolyte. The Taoyuan, Taiwan plant starts at just 0.5 GWh, enough for about 6.25k 80 kWh packs a year, with plans to reach 1 to 2 GWh. A planned factory in Dunkirk, France, would start at 4 GWh and ramp toward 2030.
Dongfeng’s claim uses the other label. The automaker will unveil its in-house 350 Wh/kg battery in October and begin fitting it to production vehicles in the fourth quarter. It now refers to the cell as a solid-liquid hybrid rather than a solid-state cell, in line with China’s new terminology for semi-solid cells. A 0.2 GWh pilot line has been running since June 2025. Dongfeng plans 100 demonstration vehicles by year-end and 50k vehicles with its in-house cells in 2027, with small-scale all-solid-state production around 2030. Chery is on a similar fourth-quarter schedule for solid-liquid hybrids, while CATL and BYD target small-batch vehicle deployment of their solid-state cells in 2027.
Regulation
China’s Ministry of Industry and Information Technology (MIIT) and market regulator issued stricter supplier payment rules on Sept. 7. The rules close loopholes in the 60-day payment pledge 17 major automakers made in June 2025, and they now cover engineering and service providers as well as parts. Payment periods now start at acceptance. Production parts must be accepted within 3 working days, with silence constituting acceptance, or within 5 days when vehicle verification is required. During price negotiations, automakers must pay at least 90% of the last contract price for continuing supply, or 70% of the industry average or nomination price otherwise, and settle once the price is final. Small and medium suppliers should be paid within 30 days, and no later than 60 days. Automakers must file payment reports twice a year, and third-party assessments will be published annually. Companies with large payables or repeated complaints face regulatory interviews and possible penalties.
US Department of Transportation Secretary Sean Duffy sent Ford CEO Jim Farley a letter on Sept. 8 urging Ford to cut ties with major Chinese companies on national security grounds. Duffy objected to Ford’s use of licensed CATL battery technology at its Marshall, Michigan, plant, noting CATL is on the Pentagon’s list of companies accused of military ties. He also criticized Ford’s dealings with Geely and BYD, and its decision to keep building the Lincoln Nautilus in China until 2030. The letter landed days after Farley visited Jiangling Motors to talk up joint export growth, covered above. Congress is pushing to tighten the ban on Chinese vehicles, with major automakers urging passage before year-end. President Trump meets Xi Jinping later this month.
Farley called Duffy’s claims misunderstandings that a five-minute call could clear up. He flatly denied proposing a framework for Chinese joint ventures on US soil. Ford says it owns and runs the Marshall plant and employs its workforce. It also says the Geely deal, which puts Geely vehicles into Ford’s plant in Spain and co-develops an SUV, serves markets outside the US. The administration’s own signals conflict. The White House called Ford a great American company within a day of the letter, and Commerce Secretary Howard Lutnick had praised the Lincoln move Duffy criticized. The House Select Committee on China accused Ford of saying one thing and doing another. A CSIS analyst said there is broad agreement the US should depend less on China but little consensus on what that means, which always complicates automakers’ planning.
Risk Analytics
Resource: Vector Consulting Group white paper, “The Broken Flywheel: Building a Future-Ready Automotive Supply Ecosystem (pdf),” launched at the annual session of the Automotive Component Manufacturers Association of India. Worth a read for teams sourcing from India. It estimates Indian component suppliers hold about $10.3B in inventory, of which $3B to $4.1B could be freed through consumption-based replenishment and reinvested. It also finds plants running at 75% to 85% utilization, even as 91% of respondents cite capacity as a major constraint, because changeovers, rework, and poor material flow eat into actual capacity.
Supply Chain
Li Auto will put its own batteries in every one of its models, designing the cells and outsourcing their production to partners such as Sunwoda. (Dongfeng’s in-house cell program, above, reflects the same push to own battery design.) The company is investing $389.7M for an 11.17% indirect stake in Sunwoda EVB. The shift moves volume away from CATL, which counted Li Auto as its fourth-largest EV battery customer as recently as April. Interestingly, Li Auto has tried this before. Last year it shipped one model with either CATL or Sunwoda cells, assigned at random for the same price, and pulled the Sunwoda version after buyers protested. On another model, buyers waited longer for CATL cells rather than take a Sunwoda version that came with a free extended warranty. This time, buyers get no choice. Still, Li Auto says the cell maker will not affect quality or service.
