Auto suppliers and the EV shift

For an auto supplier, some of today’s parts will gradually drop out of orders. How fast, and in which families, remains to be seen. The pace depends on rules that in October 2026 are still being negotiated in Brussels, but the direction for the plant can already be read.

Where the rules stand

Regulation (EU) 2023/851 set that, from 2035, average CO2 emissions of new cars registered in the EU must fall by 100%, which in practice means only vehicles with zero tailpipe emissions. In 2025, Regulation (EU) 2025/1214 gave carmakers short-term flexibility: compliance for 2025-2027 is calculated as a three-year average, not year by year.

On 16 December 2025 the Commission proposed, in the automotive package COM(2025) 995, that the 2035 target be lowered to 90%. The remaining 10% would be offset through low-emission steel produced in the EU or through synthetic fuels and biofuels. The Commission says explicitly that plug-in hybrids, range extenders, mild hybrids and combustion-engine cars could still have a place after 2035. The proposal has not been adopted. Until it is, the 100% target remains the one in force.

Negotiations continue. On 16 October 2026, France and Germany announced a joint position: a 90% reduction without offsetting the remaining 10%, tied to “Made in Europe” requirements (70% of components, excluding the battery, produced in Europe). This is a national position, not law. According to press reports, the vote in the European Parliament plenary is scheduled for 23 November 2026, after which Parliament and Council must reach a common text.

For a plant, the practical conclusion is that the combustion engine does not disappear overnight in 2035, but volumes on parts tied strictly to it will fall anyway, because the sales mix is shifting towards electric and hybrid ahead of any deadline.

Part families that decline

A fully electric car has no internal combustion engine, no exhaust system, no fuel tank and fuel delivery system, no conventional stepped gearbox, no cooling system for a combustion engine and no injection. That means fewer orders for:

• engine castings and machined parts (cylinder heads, blocks, shafts, connecting rods, pistons, housings)
• exhaust components, catalytic converters, particulate filters, silencers
• gears, shafts and housings for gearboxes, clutches
• fuel pumps, lines and tanks, injectors
• belts, timing chains, gaskets and hoses specific to the combustion engine

Hybrids keep much of these parts, at lower volumes per model. If the 90% proposal passes, some lines will run longer than expected two years ago, but on shorter series and with more price pressure.

Part families that grow

Electrification brings new parts, or existing parts with different requirements:

• battery housings and frames, in extruded or cast aluminium or in steel, with strict sealing and welding requirements
• thermal management: cooling plates, heat exchangers, battery pumps and pipework, cabin heat pump
• high-voltage cables and connectors, copper and aluminium busbars, shielded harnesses
• power electronics: inverters, on-board chargers, DC-DC converters, with SMT assembly and electrical testing
• lightweight body and chassis structures, where every kilogram removed offsets the weight of the battery
• electric motors, with winding, laminations and magnets

Carmakers ask many of these from suppliers who already have the process and the certifications. For a battery housing, presses and welding cells are the easy part. The customer will ask you to demonstrate leak tightness, technical cleanliness and traceability on every unit.

Pressure on volumes and prices

Suppliers of combustion-engine parts face a declining curve: the same lines, fewer parts, a demand for annual price reductions. Fixed cost per part rises, and paying back a new machine on a project that ends in a few years becomes hard to justify.

On the electric side volumes grow, but not evenly and not always in line with the customer’s forecasts. Actual volumes on an EV project can end up far from what was announced at nomination. A plant investing in a dedicated line on the basis of an announced volume must negotiate clauses for the case where the volume does not come.

What a plant can do now

The first step is a portfolio review by part number. For each important part: which powertrain type it depends on (combustion only, combustion and hybrid, any), when the project ends, what margin it carries and how much of turnover it represents. Done honestly, this table shows how many years you have until part of your capacity is left without work.

The second step is a list of processes and skills that transfer. Precision CNC machining, aluminium die casting, welding, stamping, plastic injection and dimensional inspection are also used for EV parts, with different tolerances and different cleanliness requirements. Gear machining for gearboxes has a counterpart in reduction gears for electric motors, with stricter noise requirements. What does not transfer easily is high-voltage competence, electrical testing and work with batteries, where you need trained people and new safety rules.

The third is diversification outside automotive. The same processes serve agricultural and construction machinery, railways, household appliances, energy equipment (inverters, transformers, storage) or the defence industry. Qualification cycles are different and volumes smaller and more varied, but demand does not depend on the CO2 calendar for cars.

The fourth is customer concentration risk. A plant with more than half its turnover on a single carmaker or a single platform depends on that customer’s electrification decisions. It is worth putting into the budget, for the next two to three years, a target of quoting to new customers, even at small volumes.

What is still unknown

The final text of the 2035 rules does not exist. It is not known whether the target stays at 100%, drops to 90% with offsetting or to 90% without offsetting, or what “Made in Europe” rules will be attached to it. It is also not known how fast sales of electric cars will grow in Europe, which depends on prices, national subsidies and charging infrastructure.

If you have been through this, the discussion continues in the Production & Operations group.