A report by research and advisory firm Gartner has raised concerns that several car factories in Europe and North America may be closed or sold this year as automakers deal with overcapacity and heightened price competition.
According to the report, production cuts are expected in 2025 as companies face challenges such as emissions regulations, tariffs, and increasing competition from Chinese electric vehicle (EV) manufacturers, who have a technological edge in software and electrification.
Pedro Pacheco, VP Analyst at Gartner, noted that closures or sales are more likely in higher-cost countries where “political and societal pressure will be offset by mounting competition.” Pacheco also likened the situation to a “pressure cooker,” explaining that “the pressure increases, increases and… that will push the number of automakers to take more pragmatic decisions.”
To address trade barriers, Chinese brands may opt to purchase existing European plants or set up new production facilities in lower-cost countries like Morocco or Turkey. Gartner predicts, “Chinese brands could buy plants to overcome trade barriers, or open new factories in lower-cost European countries and free-trade partners like Morocco or Turkey.”
In response to upcoming EU CO2 emission regulations, Bosch CEO Stefan Hartung suggested that automakers could face penalties, commenting, “The risk is that we end up reducing combustion engine vehicle sales to artificially beef up EV sales.” Despite challenges in the transition to electric mobility, Gartner anticipates that shipments of electric buses, cars, vans, and heavy trucks will grow by 17% in 2025. The firm also forecasts that by 2030, over 50% of all vehicle models on the market will be EVs. To meet this shift, Pacheco mentioned that “legacy carmakers may buy software architecture from newer EV makers and digital firms, boost research and development centres in tech hubs or partner with tech companies to create self-funded EV joint ventures.”
Source: Reuters