Several non-Chinese automakers have retreated from ambitious 2025 targets after a bruising first quarter, as slowing battery electric vehicle (BEV) demand and escalating trade barriers forced widespread guidance suspensions and production cuts.
German carmaker Mercedes-Benz Group led the pullback, withdrawing its full-year outlook today after US tariffs and weakening Chinese sales drove a 41pc drop in first-quarter earnings before interest and tax (Ebit) to €2.3bn ($2.5bn). Chief financial officer Harald Wilhelm warned that US import tariffs could erase 3 percentage points from automakers' profit margins, compounding pressure from delayed BEV adoption.
Automaker Stellantis also suspended its 2025 guidance today, reporting a 9pc year-on-year drop in first-quarter sales and a 14pc fall in revenue owing to extended North American holiday shutdowns and disruptions as it electrifies more of its fleet.
The firm halted production of Chinese partner Leapmotor's T03 BEV in Poland, citing EU tariffs on Chinese-made EVs, illustrating how trade barriers are impacting western joint ventures with Chinese automakers.
Germany's Volkswagen Group has maintained its 2025 outlook but warned that margins would hit the lower end of its 5.5-6.5pc target after first-quarter pre-tax earnings slid by 40pc. The company faces two key challenges — falling demand in China, with a 17pc drop in first-quarter overall car sales in China, and underutilisation of capacity at its European BEV plants.
VW Group's chief financial officer Arno Antlitz also acknowledged today that the company has cut its headcount in Germany by about 7,000 since late 2023 on a cost-cutting drive, and that its unchanged guidance does not reflect any impact from US tariffs.
US automakers Ford and General Motors (GM) are similarly exposed. Back in February, Ford forecast a net loss of $5.5bn on its EV and software operations for 2025, roughly in line with 2024. This is in spite of an 82pc year-on-year jump in BEV sales in the first quarter — attributed to Tesla's drop in popularity and significant discounts on BEV models.
GM suspended its guidance on Tuesday and halted share buybacks after a 6.6pc profit decline — fearing tariff spillovers in the face of a rare $45mn profit in China — despite a 94pc increase in first-quarter EV sales to 31,887 units.
Better performing automakers also face a strain. German BMW's first-quarter BEV deliveries rose by 28pc globally, but overall sales fell by 1.4pc as a dip in China of 17.2pc offset gains elsewhere.
South Korean automaker Hyundai Group's operating profit rose by 2pc year on year to $2.52bn in January-March, but global sales edged down by 0.6pc, bolstered only by US sales rising by 11pc as consumers rushed to buy vehicles ahead of car tariffs.
Tariffs and EU CO2 targets add to pressure
Automakers' guidance suspensions also reflect deeper structural pressures as trade barriers on cars and newly announced export controls on some heavy rare earth elements such as dysprosium and terbium are rocking carefully calibrated supply chains.
European automakers rely on Chinese battery materials and US-bound exports, leaving them exposed on two counts.
At the same time, the EU's 2025 CO2 rules — requiring a 15pc cut in fleet emissions from 2021 levels — are forcing carmakers to sell BEVs at a loss, according to industry body the European Automobile Manufacturers' Association, although clean energy think-tank Transport & Environment disputes this. BEV sales so far this year have risen owing to these targets, despite profitability issues, with a 28pc rise across Europe in the first quarter.
Chinese-owned carmakers have faced fewer constraints, although they have retreated from selling BEVs into Europe (see graph) after tariffs imposed on Chinese-made EVs last year.
Chinese automaker BYD's first-quarter BEV sales surged by 39pc to 416,000 units — beating rival Tesla's 332,000 units — aided by domestic subsidies and tariff-absorbing strategies such as hybrid exports and European production.
And China's Geely's Holding Group delivered 483,372 EVs — up by 83pc on the year — making up 49pc of its overall sales, while China's state-owned SAIC delivered 433,000 units, up by 33pc on the year, using the UK assembly of its MG brand to bypass trade barriers.
Sweden's Volvo has withdrawn its guidance for 2025 and 2026 after a 59pc drop in first-quarter operating profits, prompting an 18bn kronor ($1.8bn) cost-cutting programme.
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