Tariffs, EV Struggles, and Policy: Can Auto Suppliers Keep Up?
Tariffs are back. The EV transition is shaky. Autonomous vehicles are still a question mark. The auto industry is staring down a future full of uncertainty, and suppliers are stuck in the middle of it all.
In this episode, Paul Eichenberg returns to break down the three biggest shifts shaking up the supply chain: the move away from globalization, the messy reality of electrification, and the evolving regulatory landscape for autonomy.
For decades, global supply chains were the name of the game—companies optimized for low-cost country sourcing, suppliers expanded internationally, and the industry embraced efficiency on a global scale.
But now? Tariffs and shifting trade policies are forcing a hard pivot to regionalization. Suddenly, localization isn’t just a buzzword—it’s a necessity. Suppliers that haven’t adjusted are running out of time.
Then there’s EVs—what was once an unstoppable movement is now facing resistance. Sure, automakers have committed to an electric future, but consumer adoption isn’t moving as fast as expected. Policy shifts and market uncertainty create a volatile mix in North America, while China and Europe continue pushing full speed ahead. The big question? How long can suppliers ride the fence before going all in?
And let’s talk about autonomy. It’s been overshadowed by EV hype and supply chain chaos, but it hasn’t disappeared. If anything, it’s quietly gaining momentum. With regulations starting to loosen, companies like Tesla are pushing harder than ever. The next few years could bring breakthroughs no one saw coming.
So, where does this leave suppliers? According to Paul, there’s no room for hesitation. The auto industry has always been at its best when its back is against the wall, and now is one of those moments. Scenario planning isn’t just an option—it’s survival. Transparency in the supply chain isn’t just about efficiency—it’s about being prepared for whatever comes next.
Themes discussed in this episode:
- The decline of globalization and the rise of regionalization in automotive supply chains
- How tariffs and trade policies are forcing suppliers to rethink their sourcing strategies
- The uncertain future of EV adoption and the market hesitation slowing it down
- Why regulatory shifts could make or break the transition to electrification
- The financial struggles of suppliers caught between ICE phase-out and EV ramp-up
- The critical need for scenario planning in an industry facing constant disruption
- How political and economic polarization is reshaping global supply chains
Featured on this episode:
Name: Paul Eichenberg
Title: Managing Director, Paul Eichenberg Strategic Consulting
About: With 25 years in the automotive industry, Paul Eichenberg has led strategy for top suppliers, including eight years as Global VP of Corporate Development & Strategy at Magna Powertrain & Magna Electronics. Now, through Paul Eichenberg Strategic Consulting, he advises hedge funds, private equity firms, investment banks, and automotive suppliers on product management, mergers & acquisitions, and future-focused strategies.
Connect: LinkedIn
Mentioned in this episode:
- What's Next for EDI? Be Part of the AIAG Survey
- AIAG Forced Labor Due Diligence Conference
- AIAG 2025 Hybrid Supply Chain Conference
- AIAG Charity Golf Outing
- AIAG 2025 Quality Summit
- Inflation Reduction Act
Episode Highlights:
[02:57] The Big Three: Tariffs, EV uncertainty, and shifting regulations—Paul Eichenberg lays out the three game-changers every auto supplier needs to watch.
[05:17] The EV Crossroads: Automakers are still betting big on electrification, but with market uncertainty, shifting policies, and profitability struggles, suppliers are left wondering—how long will this transition really take?
[10:09] Policy Shift: With shifting regulations and possible changes to the Inflation Reduction Act, suppliers and automakers must brace for a future where incentives fade, but infrastructure investments stay.
[12:39] Charging Ahead: The future of EV charging infrastructure depends on shifting policies, but one thing is clear—there’s no turning back now.
[13:50] The Demand Dilemma: With ICE demand shrinking and EV adoption uncertain, suppliers are stuck in limbo—waiting to see which way the industry turns.
[19:38] From Global to Local: As tariffs loom and supply chains shift, Tier One suppliers must rethink localization strategies before it’s too late.
[24:14] Autonomy’s Quiet Comeback: While EVs dominate the headlines, self-driving technology is gaining traction—looser regulations and bold moves from Tesla could bring more autonomous vehicles to the road sooner than expected.
[25:48] Chaos, Change, and the Need to Adapt: The auto industry is facing an unpredictable future, and suppliers who fail to embrace scenario planning and supply chain transparency risk being left behind.
Top Quotes:
[04:52] Paul: “When I look at the three major changes, first, it's the move towards localization and the impact of tariffs. Second of all, it's the shift towards electrification. And then, finally, the third thing is the regulatory environment around autonomous vehicles.”
[08:27] Paul: “Five years ago, suppliers were making a tremendous amount of money around internal combustion engine components. Now, in North America where you have 10% of the market being battery electric vehicles, you have more than 20% in Europe. As you have that, the efficiencies of making those parts are no longer there for the supplier, nor does the supplier have enough volume on the electrification side to really be making money. So, the industry is really in a difficult time, difficult because suppliers find it very hard to make money at this stage of the transition. And the transition could be drawn out longer as a result of this policy and the shifting policy back and forth between ICE and battery electric vehicles. That would create a very costly scenario for suppliers moving forward.”
[10:15] Paul: “I think what we're gonna see when it comes to electric vehicles is a change around the IRA, which was the Inflation Reduction Act and was a major element of the Biden administration's push towards electric vehicles. And there are really a couple of different elements of that. There was, first of all, credit that went to the individual who was buying. The electric vehicle and that incentive was broken down into an element that went into early adopters, but then also for the OEM that had a supply chain that was local when it came to things like battery production and power electronics, et cetera. So, there's a very good chance that goes away. But there were two other elements of the IRA; one was around building infrastructure. First was the infrastructure to localize those supply chains, and the other was the infrastructure around charging.”
[18:56] Paul: “I can tell you from the conversations that I've had at the OEMs and the suppliers, right now everybody's in a wait-and-see. See how this is negotiated. See if this becomes a negotiating tactic for the administration. But again, it's not like people are just going to be making these large investments and breaking down this global supply chain that's been built because of what has been invested in it and the economy of scale that's been achieved, and then the cost associated with reduplicating it on a regional or a local basis.”
[27:02] Paul: “We have a huge chasm to cross as we move in these significant changes in technology. It's a hard environment to make money in, but now we're adding a new type of disruption, more political or polarizing of the industry. And I think what you're going to see is, oh, people have talked about autonomous and electrification and all these big technology disruptions that we're dealing with, but now we got to start thinking of this polarization that we have in the industry, which is really the breaking down of these global supply chains as we've known it. And as a result, what companies need to do is really start scenario planning around these scenarios and what's gonna happen and what's likely to happen. To start to be much more aggressive to understand how are they gonna win in this constantly changing environment.”
Transcript
[Transcript]
[: [: [: [: [: [: [: [: [: [: [: [: [:The second thing is the regulatory environment. And there's two areas there of real change that's taken place in the regulatory environment: First, we have everything that's happening around EVs and the move towards electrification. So, the shift from the Internal Combustion Engine to the EV.
That's a global trend that's taken place, but obviously here in the US, we have the impact of the new administration and the move of the administration to protect the fossil fuels and the powertrain associated with that. So, that's one impact that we have in the immediate regulatory environment.
And the other activity we have in the regulatory environment, which is, again, based here in the US, more so than what you see in other economies, but this softening regulatory environment and what it ultimately means for autonomous vehicles. So, when I look at the three major changes, first it's the move towards localization and the impact of tariffs. Second of all, it's the shift towards electrification. And then, finally, the third thing is the regulatory environment around autonomous vehicles.
[: [: [: [: [: [:So, I think it all depends on does the current administration. If they honor the idea of the infrastructure that's going in place around the battery, the local supply chain, et cetera, for these electric vehicles, I think you'll see the charging infrastructure piece of that will stay in place also as a result of just the industrial policy that's coming from the new administration.
[: [: [: [: [: [:Now, think about it as a supplier, "Hey, I am Mobileye and I'm producing self-driving technology, and I'm selling that to multiple OEMs who don't have scale." The great thing that somebody like Mobileye could do or Bosch or Active, what they can do is they can sell that technology across borders, across OEMs to be able to build scale into that technology. But when you can't take the same semiconductor that you're building that technology around in a market like China, which is the largest car-producing market in the world and is very aggressive looking for these self-driving technologies for a number of different reasons, that is a huge strategic challenge that you have to deal with. And it doesn't only impact autonomous vehicles, but it also impacts electrification.
So, when you're looking at that as a supplier, this is probably, for me, the paramount issue you have to start to deal with is how do I create multiple developments for multiple markets based on access to technology as a result of that? I think that's the first state, and I would tell you my instinct is because of what you can see across multiple administrations, whether it's Democratic or Republican. There is this policy that's gonna stick from administration to administration. I don't know that that's gonna be the case when it comes to producing things like wire harnesses and moving from markets like China to Vietnam to Malaysia because there's just a lower cost of manufacturing and labor associated with those markets. I think. It's too early in the game to be able to look at it that way and say specifically what's gonna happen as a result of that.
[: [:So, this is the push, and I think you are going to see an environment where there's going to be more of these types of vehicles on the road. So, whether you worry about it from a safety standpoint or you are looking at it from an adoption standpoint, I think it's safe to say there will be more of these vehicles on the road. Really, before the end of the year and over the course of the next three or four years.
[: [:To be honest, this level of disruption, I mean, let's take the past 10 years and the move towards economists and the move towards electrification and the move towards centralized compute. These are huge technology disruptions that the industry is still dealing with. And we talked about earlier, we have a huge chasm to cross as we move in these significant changes in technology. It's a hard environment to make money in, but now we're adding a new type of disruption, more political or polarizing of the industry. And I think what you're going to see is, oh, people have talked about autonomous and electrification, and all these big technology disruptions that we're dealing with, but now we gotta start thinking of this polarization that we have in the industry, which is really the breaking down of these global supply chains as we've known it.
And as a result, what companies need to do is really start scenario planning around these scenarios and what's gonna happen and what's likely to happen. To start to be much more aggressive to understand how are they gonna win in this constantly changing environment. And I think if I can leave a bit of advice for anybody at this point in time, it's just that how do you start to put together scenarios and how do you start the forecast where things may be going, and then as you see, the direction going one way or another. Then, you really got an opportunity to put together a strategy that's going to hopefully give you an advantage moving forward.
[: [: [: [: [: [: [: