Automakers Face Factory Closures Amid Rising EV Competition

Several European and North American car factories may face closures or sales in 2025 as automakers struggle with overcapacity, emissions regulations, and increasing price competition, according to a Gartner (NYSE:IT) report. High-cost regions are most at risk as companies adapt to growing market pressures.

The dominance of Chinese electric vehicle (EV) manufacturers, driven by advancements in software and electrification, is expected to rise. To address trade barriers, Chinese brands might acquire existing factories or establish new ones in cost-effective European regions or free-trade zones like Turkey and Morocco.

Gartner VP Analyst Pedro Pacheco highlighted the intensifying pressure on automakers, likening it to a "pressure cooker" pushing them toward pragmatic decisions. Europe’s auto industry is falling behind on its 2030 and 2035 EV goals, according to Luc Chatel of the French car lobby PFA, who warned of an artificial reduction in combustion vehicle sales to boost EV adoption.

Meanwhile, Bosch CEO Stefan Hartung urged the European Union to reconsider imposing fines on companies that fail to meet 2025 CO2 emission targets, emphasizing potential disruptions. Despite these challenges, Gartner forecasts a 17% growth in global EV shipments, including buses, cars, and trucks, in 2025. By 2030, over 50% of marketed vehicle models are expected to be electric.

To accelerate the transition, legacy automakers may adopt software from EV startups, enhance research centers in tech hubs, or form partnerships for self-funded EV ventures. The evolving landscape signals a pivotal shift for the global automotive industry, with technology and electrification reshaping its future.