German automotive supplier ZF has agreed with several customers to terminate a number of electrified drivetrain projects ahead of schedule, citing weaker-than-expected profitability amid a slower ramp-up of electric mobility.
The decision was announced alongside ZF’s preliminary financial results for 2025. The company did not disclose which customer projects would be affected but said the move would result in a one-time charge and a reported loss for the year.
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“The decision will result in a one-time charge and a reported loss for 2025,” ZF said in a statement, adding that the affected projects were no longer meeting profitability expectations under current market conditions.
The move comes as part of a broader restructuring of ZF’s Electrified Powertrain Technologies division, which has been under pressure after electric vehicle demand grew more slowly than anticipated. Despite its name, the division also produces conventional transmissions and hybrid systems, and was impacted by contracts agreed at low prices during earlier customer negotiations.
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ZF said operational performance in the division has “improved significantly year-over-year” and remains in line with the restructuring plan, which is set to continue through 2026.
In autumn 2025, ZF management reached an agreement with employees on a so-called restructuring alliance, ending plans to sell the division and ruling out site closures. The agreement nevertheless includes substantial workforce reductions, with about 7,600 jobs set to be cut in the powertrain unit.
Chief Executive Mathias Miedreich said progress in the turnaround was becoming visible. “The improved operating performance and faster debt reduction are encouraging. Our transformation measures are working,” Miedreich said. “This is not a reason for complacency but an important milestone and motivation to keep pushing on our path forward.”
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At group level, ZF said performance in 2025 was stronger than previously forecast. Adjusted free cash flow is expected to exceed 1 billion euros ($1.08 billion), while the adjusted EBIT margin is projected to come in well above 4%, compared with earlier guidance of 3% to 4%. Strong cash generation is expected to allow the company to reduce financial debt by the end of 2025, earlier than planned.
Chief Financial Officer Michael Frick said the write-downs linked to electric mobility would help position the company for longer-term improvement. “The one-time charge in electric mobility will lead to a reported loss for 2025. But it frees us from legacy burdens and creates room for sustainable profitability in the coming years,” he said.
