#2-6 NorthAmerica and European OEM Electrification Strategy and Mega-suppliers

European OEMs and mega-suppliers are undergoing intensive strategic readjustments in response to the historical transformation of the automotive industry towards electrification and autonomous driving1. This is particularly driven by the uncertainties posed by market realities, charging infrastructure challenges, and especially US policy fluctuations1. Over the next decade (2025-2035), European OEMs are expected to make the following adjustments to navigate this complex environment1.Adjustments to European OEM Electrification Strategies1European OEMs are shifting from an initially perceived linear strategy towards a pure BEV (Battery Electric Vehicle) future to a more realistic and flexible approach1.1.Emphasis on Powertrain Flexibility and Re-evaluation of Hybrid Technology1◦In response to slower-than-anticipated BEV adoption progress and policy uncertainties (particularly in the US), many OEMs are re-evaluating the role of hybrid vehicles (PHEVs, MHVs) and incorporating them into their strategies1. Hybrids are positioned as a crucial strategic hedge against regions with underdeveloped charging infrastructure and situations where BEV-specific investments face headwinds due to policy changes1.◦BMW consistently maintains a "technological openness" approach, including BEV, PHEV, ICE, and FCEV, emphasizing the limitations of focusing solely on EV technology1.◦Stellantis is strengthening its "multi-energy" strategy, incorporating PHEVs and MHVs into its product portfolio in addition to BEVs1.◦Mercedes-Benz is suggesting a shift towards a portfolio structure where customers can choose powertrains across models, including a "slight increase in the proportion of ICE models"1.◦Volvo Cars continues to invest in hybrid models, positioning them as a "bridge to a fully electric future"1.2.Evolution of New Platform Strategies1◦OEMs are developing and deploying flexible new platforms that are either BEV-specific or multi-energy capable1.◦Stellantis's STLA platform was designed from the outset for comprehensive multi-energy compatibility, supporting ICE, PHEV, MHV, and BEV1.◦BMW is investing heavily in the BEV-specific "Neue Klasse" platform while maintaining multi-energy production capabilities on existing platforms1.◦Mercedes-Benz shows an approach of separating platforms for luxury segment EVs and ICE/hybrid models1.3.Continued Focus on Battery Technology and Supply Chains1◦OEMs are simultaneously pursuing battery cost reduction (e.g., adoption of LFP batteries) and performance improvement (R&D into high-energy density NMC and solid-state batteries)1.◦Investment in localization of battery production (gigafactory construction) in key regions (North America, Europe) is accelerating in response to geopolitical risks and tariffs (especially US tariffs on Chinese batteries)1. This also aims to meet local sourcing requirements like those in the IRA1.4.Specific Responses to US Policy Uncertainty1◦The risk of US policy changes (alterations to EV mandates, subsidies, tariffs) is causing significant uncertainty for European OEMs' US market strategies1, demanding flexibility in investment decisions and production plans1.◦BMW temporarily halted production of some EVs imported into the US from Germany, citing tariff uncertainty1.◦Stellantis states its US BEV sales target is "assuming favorable public policy," indicating sensitivity to policy shifts1.◦Should regulations diverge at the US state level, European OEMs may adopt a bifurcated strategy, concentrating BEV offerings in states with strict "ZEV regulations" while offering a diverse range of powertrains, including hybrids, in other states1.

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