Europe’s auto suppliers estimate that around 350,000 jobs are at immediate risk as Chinese competitors gain market share across the continent — urging EU lawmakers to act fast.
According to the European Association of Automotive Suppliers (CLEPA), suppliers have so far borne the brunt of the industry’s transformation.
The 350,000 figure, drawn from a Roland Berger study commissioned by CLEPA, reflects the combined effect of the powertrain transition and the transfer of value creation outside the EU by 2030.
A CLEPA survey released last month found that one in four European suppliers is bracing for negative profitability in 2026, up from 15% in the previous edition — while 76% expect margins below the 5% threshold considered necessary to sustain long-term investment.
Layoffs Across the Industry
According to data published by CEPLA, companies across the sector announced 104,000 job cuts between 2024 and 2025.
Germany’s largest Tier 1 suppliers were hit particularly hard.
ZF is cutting 7,000 jobs in its electric and hybrid powertrain division by 2030.
The company said it needs to close a cost gap of more than €500 million by 2027.
Bosch, the world’s largest automotive supplier, announced 13,000 job cuts in September, primarily at mobility division sites in Germany.
The company cited a €2.5 billion annual cost gap driven by weak European demand, competition from China, and stalling hydrogen and electromobility businesses.
Continental is cutting up to 10,000 positions — 7,000 announced in late 2023, plus an additional 3,000 in automotive R&D disclosed in early 2025.
Automakers themselves have needed to cut costs.
Volkswagen Group said in March it plans to cut 50,000 jobs by 2030 — up from the 35,000 it had previously disclosed — as the company’s annual profit nearly halved.
The layoffs affect workers across all of its brands, including the Volkswagen brand, Audi, Skoda, Seat/Cupra, and Porsche.
Chinese Automakers
The pressure is mounting as Chinese automakers accelerate plans to manufacture vehicles directly in Europe.
BYD began trial production at its first European passenger car plant in Szeged, Hungary, earlier this year, with full production expected in the second quarter.
The facility has a planned capacity of up to 200,000 vehicles per year. The company is also considering Spain and Portugal for a third European factory.
Spain is emerging as a particularly active hub.
SAIC Motor’s MG brand is planning a factory in the country, Bloomberg reported last week.
A Spanish plant would allow MG to reduce its exposure to the 45.3 percent tariff on its China-built EVs — the highest rate of any Chinese brand.
Stellantis-backed Leapmotor is set to begin production in Zaragoza in the second half of 2026, while Chery has started assembling vehicles at a former Nissan plant in Barcelona through its Ebro joint venture.
Reuters reported on Monday that FAW Group’s luxury brand Hongqi is in talks with Stellantis to build vehicles at the Zaragoza plant as well, using Leapmotor’s EV platform to accelerate its European entry without investing in a standalone factory.
Beyond Spain, XPeng started producing EVs at Magna Steyr’s plant in Graz, Austria, last September, and GAC’s Aion brand began assembling its UT hatchback at the same facility in March.
Suppliers Push for Tighter Rules
Against that backdrop, CLEPA is calling on the European Parliament and EU Council to close what it describes as key loopholes in the European Commission’s draft Industrial Accelerator Act (IAA).
The legislation introduces ‘Made in Europe’ requirements for public procurement and subsidy schemes, along with stricter rules for certain foreign direct investments in strategically important industries, including automotive and batteries.
CLEPA argues that the Commission’s proposed rules are too easy to circumvent.
It insists that a vehicle should only qualify as European if at least 70% of its value is generated within the region, cautioning against any dilution of that threshold.
At the same time, the association does not expect significant price increases from stricter local-content requirements “at this stage.”
The association is also pushing for tighter controls on foreign direct investment.
While the current draft imposes strict conditions on investments exceeding €100 million in strategic production sectors, including joint venture requirements, CLEPA wants that threshold lowered to €30 million.
CLEPA is advocating for the United Kingdom and members of the European Free Trade Association (EFTA) — including Norway — to be treated on par with EU member states.
The association also urged for safeguards to prevent companies from using third countries to bypass local-content rules, proposing an opt-in system subject to strict assessment criteria, including fair trade conditions.
Under this approach, the Commission would determine whether partners meet clearly defined requirements — such as reciprocity, regulatory alignment, and fair competition — and would ensure “robust monitoring.”
Different Perspectives
CLEPA’s stance highlights an increasingly visible divide between suppliers and European automakers.
Suppliers broadly support the IAA’s objective of anchoring more industrial value creation in Europe, arguing that competitors from China and other regions benefit from what they see as unfair competitive conditions.
Automakers are pushing back.
The European automakers’ association ACEA says the challenges facing the industry include the EU’s lack of competitiveness because of bureaucracy, high energy costs, and extensive regulation.
ACEA Director General Sigrid de Vries warned last week against overly rigid ‘Made in Europe’ rules.
“One thing is clear: ‘Made in Europe’ requirements alone will not achieve this,” she said.
Without tackling the underlying issues, ACEA warns, the IAA could prove counterproductive — weakening rather than strengthening Europe’s industrial base.
German automakers in particular remain cautious about protectionist measures, partly because of their substantial business exposure in China.
The European Parliament and EU Council are set to examine the IAA framework in the coming weeks.
