As automakers scale back their electric vehicle plans, some are paying hundreds of millions of dollars to suppliers that have seen the payoff potential of their own investments in EVs evaporate.
Homayune Ghaussi, Warner partner and chair of the firm’s Supply Chain Industry Group, discussed these payments with Automotive News for its article “Why automakers are paying suppliers hundreds of millions of dollars after canceling EVs.”
The auto industry miscalculated EV volumes, leaving many suppliers with underutilized plants and decimating the return on their investments to ramp facilities for EV programs that never came to pass. Some major publicly traded suppliers, including Magna International and BorgWarner, have been among the first to report financial recoveries from the auto makers.
“In the past year we’ve seen a lot of suppliers who have just basically said, ‘We can’t afford this. We need a price change, we need a price increase or we need some type of agreement or reimbursement,’” Ghaussi said. “The effect of the Iran war on logistics and commodity prices is likely to spur more negotiations between automakers and suppliers.”
Automotive News subscribers can read the full article here.
With deep roots in the heart of the U.S. automotive industry, Warner’s Automotive Industry Group provides proactive, timely and cutting-edge advice to suppliers throughout Michigan, North America and around the globe. Warner attorneys are recognized leaders in every area of law that impacts the global automotive and mobility market and understand the complex relationships between parts suppliers and vehicle manufacturers.
