A Crain’s Detroit Business article, “How EVs changed automaker-supplier contracts,” discusses how the electric vehicle volume bust has changed the way parts manufacturers negotiate with automakers.
Many automotive suppliers were left with stranded capital and big holes in their budgets after investing in EV programs that did not pan out. Michael Brady, executive partner of Warner Norcross + Judd LLP’s Detroit office and co-chair of the firm’s Automotive Industry Group said that while production volume guarantees are still virtually nonexistent, some automakers are granting other concessions not typically seen in contracts.
“The standard OEM position is we don’t guarantee any volumes, but based on the supplier, based on the business relationship and the leverage the supplier may have, they may get other concessions that help them recover capital expenditures if volumes don’t reach a certain level,” Brady said.
Crain’s Detroit Business subscribers can read the complete story here.
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