Tag: Pedro Pacheco

Emission regulations, trade tensions challenge automotive sector

Emission regulations and growing trade tensions between China and the West, particularly in the electric vehicle (EV) market, will be major challenges for carmakers in 2025, says consultancy Gartner, Inc.

Software and electrification will remain the two main drivers of the automotive sector’s transformation, notes Gartner analyst Pedro Pacheco.

“For years, production overcapacity has been a challenge for several European and North American car factories, but the recent increase in import tariffs on Chinese EVs imposed by the US and the EU is likely to exacerbate this issue,” Gartner observes. “In response, Chinese automakers may set up factories in Europe and the US or in free-trade partners like Morocco or Turkey to maintain competitive pricing.”

According to Gartner, this situation will likely force several automotive factories with low utilisation to close or be sold to other automakers. “This will also create a domino effect, leading to the closure of supplier factories. This will redefine the car manufacturing map of the US and Europe, making low-cost countries the major hubs in the automotive production capacity and supply chain.”

The evolving political landscape in the US and EU is reopening the discussion on vehicle emission regulations, creating uncertainty for the automotive industry. As a result, some original equipment manufacturers (OEMs) may be reluctant to put EVs at the centre of their strategy, Kallanish notes.

Gartner estimates global EV (bus, car, van and heavy trucks) shipments will grow 17% in 2025. By 2030, it predicts that more than 50% of all vehicle models marketed by automakers will be EVs.

“Legacy OEMs have struggled to advance their in-house software capabilities,” the group observes. “As a result, many have made agreements with Chinese OEMs to acquire their vehicle electrical/electronic (E/E) architecture, thereby increasing their reliance on the software and hardware capabilities of Chinese EV makers.”

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