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LEADERSHIP NUGGET
Tariffs Hit Automakers Unevenly: Expansion, Retrenchment, and Supply Risk
Tariffs on steel, aluminum, and potentially auto parts are reshaping U.S. automotive investment. Some automakers are doubling down with billion-dollar expansions, while others are canceling projects or pulling back from EV commitments. For procurement leaders, the key is not whether there is expansion, but where, by whom, and under what conditions supply will tighten or loosen.
EXEC SNAPSHOT - U.S. Automotive Capacity Moves
Ford: $2B to overhaul its Louisville, KY plant for EVs, adopting a new “assembly tree” production method. CEO Jim Farley warns tariffs add ~$2B to costs, limiting further U.S. investment (AP News, 2025; Yahoo Finance, 2025).
GM: $4B across Michigan, Kansas, and Tennessee plants to balance EV and ICE vehicles; also $760M to retool the Toledo facility for propulsion systems (Reuters, 2025a; GM Newsroom, 2025).
Stellantis: $10B investment plan across U.S. facilities, reopening shuttered plants and expanding Jeep/Dodge capacity (Reuters, 2025b).
Mercedes-Benz: Expanding Tuscaloosa, AL operations with a new model line by 2027 (Reuters, 2025c).
Volvo: Adding hybrid production in Ridgeville, SC, ensuring flexibility against full EV reliance (Autoweek, 2025).
Honda: Shuttering the Acura ZDX EV (assembled in the U.S.) due to demand shifts; longer-term target of 90% of U.S. sales built locally (Reuters, 2025d).
Battery Projects: Freyr canceled a $2.5B Georgia plant; Kore Power abandoned Arizona plans (Motorbiscuit, 2025).
Supply Shock: Fire at Novelis aluminum plant in Kentucky disrupted Ford and Toyota supply chains (Wall Street Journal, 2025).
TABLE - U.S. Automotive Capacity Moves (as of October 2025)
Automaker / Supplier | Location | Investment / Action | Strategic Note |
|---|---|---|---|
Ford | Louisville, KY | $2B EV overhaul, new “assembly tree” method | EV pickup by 2027; tariffs add ~$2B costs (AP News, 2025; Yahoo Finance, 2025) |
GM | MI, KS, TN; Toledo, OH | $4B in plants + $760M retooling | Hybrid ICE + EV strategy; propulsion retool (Reuters, 2025a; GM Newsroom, 2025) |
Stellantis | Multiple U.S. plants | $10B expansion plan | Jeep/Dodge growth; rehiring (Reuters, 2025b) |
Mercedes-Benz | Tuscaloosa, AL | New model by 2027 | Hedging against trade risk (Reuters, 2025c) |
Volvo | Ridgeville, SC | Adding hybrid production | Strategic hedge vs. EV-only (Autoweek, 2025) |
Honda | U.S. plants; GM JV | Ends Acura ZDX EV; targets 90% U.S.-local prod | Pullback from EV niche (Reuters, 2025d) |
Freyr (Battery) | Georgia (canceled) | $2.5B project scrapped | EV financing slowdown (Motorbiscuit, 2025) |
Kore Power | Arizona (canceled) | Plant canceled | Weak demand + capital strain (Motorbiscuit, 2025) |
Novelis (Supplier) | Kentucky | Plant fire disruption | Exposed fragility of Tier-2 network (Wall Street Journal, 2025) |
DEEP DIVE - Implications for Procurement
Capacity expansion is uneven: While Ford, GM, Stellantis, and Mercedes-Benz are expanding, EV-specialists like Freyr and Kore Power are canceling projects. Procurement leaders should expect selective opportunity: some bid cycles for machinery and logistics will grow, while others shrink.
Supplier concentration risk: The Novelis fire shows how one Tier-2 plant can disrupt global automakers. Supply chain teams must build redundancy for metals, castings, and specialty components.
Labor pressure: With U.S. jobless rates at 4.2% (BLS, 2025), major expansions will strain labor pools in Kentucky, Tennessee, and South Carolina — tightening wage negotiations and supplier costs.
Tariff volatility: If tariffs expand to auto parts (under Section 232/301), costs will rise further across imports. Procurement teams must scenario-plan around supplier relocation and cost pass-throughs (Supply Chain Dive, 2025).
KPI DASHBOARD - Economic Signals
Metric | Latest Data | Why It Matters |
|---|---|---|
US Manufacturing PMI | 47.8 in Sept 2025 (ISM, 2025) | Contraction signals supplier caution |
EU Manufacturing PMI | 46.0 in Sept 2025 (S&P Global, 2025) | Soft demand; more concessions possible |
US Jobless Rate | 4.2% Sept 2025 (BLS, 2025) | Tight labor markets, wage pressure |
EU Inflation | 3.0% Sept 2025 (Eurostat, 2025) | Persistent inflation drives cost pass-through |
World Container Index | $1,562/FEU, Oct 3 (Drewry, 2025) | Freight still pressured by Red Sea detours |
COMMODITY CORNER - Metals & Energy (as of October 8, 2025, 00:41 Pacific Time)
Nickel (LME official cash, OCT 7 2025): USD 15,310/ton (London Metal Exchange, 2025)
Nickel (LME official 3-month-contract): USD 15,489/ton (London Metal Exchange, 2025)
U.S. Midwest HRC (TradingView, CRU Index, COMEX-HRC1!): USD 805/short ton (TradingView, 2025)
Natural Gas (Henry Hub Futures): USD 3.511/MMBtu (Investing.com, 2025a)
Oil (Brent, LCOZ5): USD 66.01/barrel (Investing.com, 2025b)
INNOVATION OF THE WEEK - Robotics in Plant Assembly
Ford’s new “assembly tree” concept redefines vehicle production by splitting lines into modular front, rear, and battery systems. This approach cuts assembly time, improves worker ergonomics, and could become a blueprint for other OEMs facing tariff-driven margin pressure (Ford, 2025).
LEADERSHIP QUESTIONS
Have we mapped which of our Tier-1 and Tier-2 suppliers are exposed to tariff-sensitive components (steel, aluminum, parts imports)?
Do our sourcing contracts assign responsibility for tariff-driven cost pass-throughs?
Are we tracking which OEMs are expanding versus canceling U.S. investments - and adjusting bid strategies accordingly?
Have we assessed labor cost exposure in hotspots like Kentucky, Tennessee, and South Carolina, where OEM expansions will tighten the job market?
Are we building redundancy for critical inputs (e.g., aluminum, propulsion units) in case of supplier disruptions like the Novelis fire?
ProcWee™ 3-Minute Diagnostic
Tick one box per line to assess your team’s tariff & capacity readiness:
Critical Capability | Fully Confident | Not Sure | No Time/Resource |
|---|---|---|---|
Tariff exposure mapped across key suppliers | ☐ | ☐ | ☐ |
Contract clauses cover tariff cost pass-throughs | ☐ | ☐ | ☐ |
Supplier bids aligned with OEM expansion hotspots | ☐ | ☐ | ☐ |
Labor cost risk monitored in expanding U.S. hubs | ☐ | ☐ | ☐ |
Backup sources identified for metals & key inputs | ☐ | ☐ | ☐ |
ONE-LINE VERDICT
Automaker capacity in the U.S. is splitting into two camps: legacy OEMs investing heavily despite tariffs, and EV-specialists retreating. Procurement leaders must plan for both — opportunity and disruption in equal measure.
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Sources
AP News. (2025, October 1). Ford to invest $2 billion in Louisville plant conversion. Retrieved from https://apnews.com/article/bde8fee4209176be186e6b4f91252dd2
Yahoo Finance. (2025, October 1). Ford CEO: Tariffs add $2 billion costs, prevent more U.S. investment. Retrieved from https://finance.yahoo.com/news/ford-ceo-says-2-billion-in-tariff-costs-prevents-more-us-investments-213035044.html
Reuters. (2025a, June 10). General Motors investing $4 billion in 3 U.S. facilities. Retrieved from https://www.reuters.com/business/autos-transportation/general-motors-investing-3-us-facilities-production-gas-electric-vehicles-2025-06-10/
GM Newsroom. (2025, June 11). GM expands U.S. plant capacity for ICE & EVs. Retrieved from https://news.gm.com/home.detail.html/Pages/news/us/en/2025/jun/0611-plants.html
Reuters. (2025b, October 4). Stellantis planning $10 billion U.S. investment. Retrieved from https://www.reuters.com/business/autos-transportation/automaker-stellantis-planning-10-billion-us-investments-bloomberg-news-reports-2025-10-04/
Reuters. (2025c, May 1). Mercedes expands U.S. plant in Tuscaloosa. Retrieved from https://www.reuters.com/business/autos-transportation/mercedes-details-plans-us-production-investments-alabama-2025-05-01/
Autoweek. (2025, September 28). Volvo to add hybrid production in South Carolina. Retrieved from https://www.autoweek.com/news/a68059353/volvo-new-hybrid-model-south-carolina-2030/
Reuters. (2025d, September 24). Honda to discontinue Acura ZDX EV. Retrieved from https://www.reuters.com/business/autos-transportation/honda-discontinue-acura-ev-assembled-by-gm-us-2025-09-24/
Motorbiscuit. (2025, September 29). Battery plant projects canceled in U.S. Retrieved from https://www.motorbiscuit.com/car-centered-american-factories-canceled-2025/
Wall Street Journal. (2025, October 2). Ford, Toyota supply hit by Novelis plant fire. Retrieved from https://www.wsj.com/business/autos/ford-toyota-aluminum-factory-fire-b806cb2f
BLS. (2025, September). U.S. unemployment rate. Retrieved from https://www.bls.gov/
S&P Global. (2025, September). EU manufacturing PMI. Retrieved from https://www.spglobal.com/
ISM. (2025, September). U.S. Manufacturing PMI. Retrieved from https://www.ismworld.org/
Eurostat. (2025, September). EU Inflation. Retrieved from https://ec.europa.eu/eurostat/
Drewry. (2025, October 3). World Container Index. Retrieved from https://www.drewry.co.uk/supply-chain-advisors/supply-chain-expertise/world-container-index
London Metal Exchange (LME). (2025, October 8). Nickel prices. Retrieved from https://www.lme.com/en/metals/non-ferrous/lme-nickel
TradingView. (2025, October 7). U.S. Midwest HRC Steel. Retrieved from https://www.tradingview.com/symbols/COMEX-HRC1!/
Investing.com. (2025a, October 7). Natural Gas Futures. Retrieved from https://www.investing.com/commodities/natural-gas
Investing.com. (2025b, October 7). Brent Oil Futures. Retrieved from https://www.investing.com/commodities/brent-oil
Ford. (2025, October). Assembly tree production system overview. Retrieved from https://www.fromtheroad.ford.com