Delay and Extend and Rescope

Suppliers are learning several new and unwelcome lessons as the dynamics surrounding U.S. light vehicle trade and emissions legislation quickly shifts.

July 14, 2025

Michael Robinet

Suppliers are learning several new and unwelcome lessons as the dynamics surrounding U.S. light vehicle trade and emissions legislation quickly shifts. Two major issues are at play here. As the industry continues to feel the impact of reduced or eliminated battery electric vehicle incentives in several North American and European jurisdictions and governments are retrenching on light vehicle emissions legislation – OEMs are questioning the size of the near- and mid-term market. Similarly, as of this writing, the saga surrounding future vehicle and parts tariffs between the U.S. and its major automotive trading partners continues. This unfortunate combination has driven OEMs to delay, extend and rescope future product programs. This jams a stick in the financial spokes of the supply base.

Some context is in order. Like clockwork, in the highly competitive global light vehicle market, our industry was trained to expect a regular cadence for product renewals and product cycles. The combination of strong competition, emissions and safety regulations driving a constant stream of innovative technologies, and the need to improve fuel economy led the industry to adopt a regimented product cycle for most light vehicle segments. OEMs and suppliers alike assumed a 2.5-5-7.5-10-year cadence for future product revisions. This outlined that once an all-new vehicle was launched, one should expect a mid-cycle enhancement (MCE) at year 2.5 and a major revision at year 5. At year 7.5 another mid-cycle enhancement, then an all-new structure would follow for year 10. This sequence allowed for a healthy dose of new technology and styling to attract new/repeat customers and improve efficiency and an ever-stringent regulatory environment. While some vehicles strayed from this timing, most OEMs adopted it.

This brings us to the present. The aforementioned EV adoption slowdown that’s dogging several markets, combined with the trade-driven malaise, is causing most OEMs to rethink the approach. Several new EV programs are delayed or rescoped as OEMs rethink the size of the market and want to conserve capital for the future. Simultaneously, many ICE and hybrid programs are extended to fill the void, especially as regulations are relaxed and many OEMs are still on the right side of regulations.

The impact on the supply base is significant. Suppliers planning on replacing components they build at the 5-year mark (a major action) are now being asked to extend sourcing for a couple of extra years. Many times, this is unwelcome news as the supplier usually desires to replace the component with new, differentiating technology at an improved margin. These same suppliers are likely building the product as efficiently as possible after a half-decade run and the thought of building the same old part for a couple more years is not optimal.

When programs are delayed or extended, the impact can be worse. A supplier expecting to start production during a particular month may find that, despite all the preparation and capital outlay, production requirements can be delayed by a couple of months or rescoped out to a couple of years. Sitting on underutilized capital and people resources is not a recipe for financial success.

While one hopes that some normalcy descends upon the supply base in 2026, all industry players will be happy to place these delays, extensions and rescopes in the rearview mirror.