Western automakers face high costs, tariffs, competition, and strict carbon rules while shifting to EVs

Auto makers across Europe and the United States are dealing with several crises ￰0￱ profits, workforce reductions, and cost-cutting are ￰1￱ the same time, the US has started a probe into Honda over safety ￰2￱ and analysts say rising costs, tariffs, strong competition, logistics problems, and tighter rules are colliding with a bumpy shift to ￰3￱ automaker says the pressure looks like a perfect ￰4￱ bills are climbing, ￰5￱ remain in place, supply lines are still vulnerable, and policy demands keep ￰6￱ Källenius, CEO of Mercedes-Benz Group, put it starkly: “Our industry is experiencing heavy rain, hail, storms, and snow at the same time.” Sigrid de Vries, director general of the European Automobile Manufacturers’ Association, said the move to zero-emission vehicles was already “the biggest transformation for the industry in its history.” De Vries said that the EU has the world’s toughest and strictest carbon rules.

“We want to make this work; that’s very important, but we feel we have our hands tied behind our ￰7￱ cannot deliver on this objective ￰8￱ need the other parts of the equation to be there as well.” As part of its climate plan to reach neutrality by 2050, the EU has ordered a 55% cut in CO2 emissions from new vehicles by 2030 versus 2021 ￰9￱ 2035, all new vehicles sold must have zero exhaust emissions, effectively ending sales of new fossil fuel-powered ￰10￱ analysts warn of structural disruption and policy strains Vice President Henner Lehne, of S&P Global Mobility, said the Western auto industry “is clearly undergoing a profound structural disruption.” Automakers have committed large sums toward electrification and digital platforms, but adoption has been slow and volumes are under plan, prompting some to revisit internal-combustion programs once slated for ￰11￱ is adding another ￰12￱ from Chinese brands remains intense, while the Trump administration’s tariff regime and broader protectionist trends are reshaping global flows.

“Globalization is in retreat,” Lehne ￰13￱ US starts a probe into Honda vehicles In the United States, safety scrutiny is the ￰14￱ 2024, the ￰15￱ safety agency examined 1.4 million Honda vehicles after a November 2023 recall of 249,000 ￰16￱ an August 20 letter, the agency said it is opening another investigation to assess the scope and severity of a possible crankshaft manufacturing defect that can lead to connecting-rod bearing to engine ￰17￱ cope with the headwinds, many carmakers are pursuing a strategy focused on value rather than volume, favoring higher-margin models instead of mass-market lines, Transport & Environment ￰18￱ campaign group says Europe’s sales challenges reflect a transition rather than a crisis across the ￰19￱ are also expanding hybrid offerings, shifting some production to cheaper countries, and forming collaborations with Chinese companies.

Germany’s VDA said the country’s car industry will focus on more innovation and present its vision at the IAA Mobility car show, with plans to invest around 320 billion euros in R&D between 2025 and 2029, including 220 billion euros in capital investments. Don’t just read crypto ￰20￱ ￰21￱ to our newsletter. It's free .