Analysis Europe's Suppliers in a Dilemma

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European automotive suppliers are in crisis. While a Berylls survey captures the mood, a Deloitte risk analysis provides the hard facts. Both studies reveal the same dilemma.

The transformation of the automotive industry is hitting suppliers with full force. Two recent studies - the "E-Mobility Supplier Survey 2025" by Berylls by Alix Partners and the "Supplier Risk Monitor 2025/2026" by Deloitte - paint an alarming picture of the industry. While Berylls captures the sentiment of 49 European suppliers, Deloitte analyzes 776 global companies based on their key financial figures. The results complement each other - and reveal a fundamental paradox.

According to Berylls, only 48% of the suppliers surveyed still rate e-mobility positively - down from 77% in 2023. At the same time, 71% remain heavily dependent on the combustion engine business and generate more than a quarter of their sales with combustion engine components. The Deloitte analysis confirms this imbalance with objective risk figures: All 19 component clusters examined show a higher risk than in 2023, with the minimum value of the so-called risk score rising from 1.0 to 2.25. According to the study, traditional suppliers are particularly affected: seats, frames and combustion engines lead the risk ranking. "The risk scores for frames and seats are 4.63 and 4.61 on a scale up to 5," says the Deloitte report. The combustion engine follows with 4.45.

These clusters are suffering from declining volumes, commoditization and limited opportunities for differentiation.

E-Mobility: Invested, But Not Profitable

The core problem: many suppliers have invested massively in e-mobility, but are generating neither turnover nor profit. According to Berylls, only 50% of the companies surveyed still expect sales growth from e-mobility (2023: 75%). BEV-focused suppliers report EBIT margins of between minus 7.2% and minus 4.6%. By comparison, the top 100 suppliers achieve between 5.2 and 5.9 percent.

Deloitte quantifies the financial imbalance: 15 percent of the companies analyzed are in a critical zone, with EBIT margins below five percent and net debt exceeding three times EBITDA. Only 48% are still considered financially sound (2023: 56%). "Many suppliers no longer have a financial buffer," warns Deloitte. The ability to repay debt is dramatically restricted.

Six Challenges at the Same Time

Deloitte identifies six interrelated challenges that are increasing the pressure on suppliers:

• Stagnating production volumes: The global market volume has only been growing at a CAGR of 0.2% since 2023. No significant increase is expected for 2025 and 2026.
• Constant forecast cuts: The repeated forecast revisions since 2021 have made financial and capacity planning much more difficult.
• Chinese competitive pressure: Chinese OEMs are gaining market share. Their production share will rise to 24 percent by 2026.
• E-mobility gap: Chinese and US OEMs increased their BEV share by over 20 percentage points between 2019 and 2024. German manufacturers have reached 11.5 percent - other European OEMs are lagging even further behind.
• Europe's locational disadvantages: High energy costs, regulatory complexity and lengthy approval procedures are a burden on competitiveness.
• Limited financial resilience: Rising capital costs, inflationary pressure and high investment requirements for e-mobility are putting suppliers under pressure.

Platform Delays Exacerbate the Situation

The Berylls study shows that European OEMs are delaying BEV platforms by an average of 119 to 150 days. Chinese manufacturers, on the other hand, accelerate in some cases - by minus 8 to plus 20 days. These delays have a double impact on suppliers: investments are amortized later, while at the same time the combustion engine business collapses.

Development

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The cost structure exacerbates the problem. Battery costs in China are already below 80 dollars per kilowatt hour. In Europe, less than 100 dollars is not expected until 2026. "European suppliers are struggling with structural cost disadvantages," says Deloitte. High energy and labor costs as well as regulatory requirements limit price flexibility.

Consolidation as a Way Out?

Both studies expect a massive market shakeout. According to Berylls, 92% of suppliers expect consolidation - more than half of them in the next two to three years. The main reasons cited by those surveyed are declining production volumes and a slower transition to e-mobility.

Deloitte confirms: M&A activities are concentrated in clusters close to combustion engines. Consolidation dominates there - buyers and target companies come from the same component cluster. In contrast, e-drive suppliers have the highest rate of diversification deals. Investors outside the cluster are specifically buying into these future technologies. The EBIT multiples reflect this difference in attractiveness: Buyers pay a median of 21 times the EBIT for new drivetrain components. For traditional technology, the factor is eight. "The highest valuations are achieved in the e-mobility sector," confirms Deloitte. Strong growth prospects and strategic relevance for electrification justify the premiums.

The Paradox of Overestimating Oneself

The paradox is that despite all the warning signs, 90% of the suppliers surveyed by Berylls consider themselves to be strategically well positioned. This self-assessment is in stark contrast to the objective risk figures.

Deloitte also warns: "Risk scores have risen across the industry. Many companies underestimate the urgency of structural adjustments." The Deloitte analysis distinguishes between four risk quadrants - from "Keep on going" (low internal and external risks) to "Fight the fires" (high risks at both levels). Combustion engines, fuel systems, exhaust systems, axles, seats and frames land in the most critical quadrant. These suppliers must simultaneously remedy internal weaknesses and adapt to external market changes.

Three-Stage Program Required

Deloitte recommends a graduated package of measures:

• Stage 1 - Increasing efficiency: Every supplier must optimize cost structures, reduce working capital and restructure balance sheets. Scenario-based planning helps to counter uncertainties.
• Stage 2 - Turnaround: Companies in a critical situation must adjust production footprints, reduce employee capacities and enter into cooperation agreements with other suppliers. Sale and leaseback of non-core assets can create liquidity.
• Stage 3 - Restructuring: If there is an acute risk of insolvency, price negotiations with OEMs, alternative sources of financing and, in extreme cases, an orderly market exit are necessary. At the same time, the course must be set: from mass production, system integration and vertical diversification to niche strategies or a controlled exit from shrinking segments.

Europe at Risk of Being Left Behind

The Berylls study shows: Regulatory uncertainty is a massive burden on suppliers. The EU adjustment of December 2025 - 90 instead of 100 percent CO₂ reduction by 2035 - came too late and does little to change the fundamental uncertainty. At the same time, the USA is increasing the pressure with tariffs and protective measures.

"Europe must improve the framework conditions if it wants to remain competitive," warns Deloitte. A reduction in bureaucracy, lower energy costs and faster approval procedures are urgently needed. Otherwise there is a risk of production and expertise migrating.

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The studies make it clear that European automotive suppliers are facing the biggest transformation in their history. Without decisive action - both at company and political level - many are threatened with extinction. Time is running out for adjustments.

About the Studies

Berylls by Alix Partners "E-Mobility Supplier Survey 2025": Survey of 49 European automotive suppliers on sentiment, strategies and expectations in e-mobility 

Deloitte "Supplier Risk Monitor 2025/2026": Analysis of 776 global automotive suppliers based on 25 risk indicators in six categories across 19 component clusters