The global automotive industry is in one of its most turbulent periods in decades. A volatile mix of geopolitical tensions, sweeping tariffs, and a sharp rise in supplier bankruptcies is reshaping the landscape, putting even leading automakers at risk.
Beneath all the disruption, one truth has become undeniable: supply chain resilience hinges on the financial health of suppliers.
Take Marelli for example. Marelli is a critical supplier to the largest automotive companies in the world, and since its collapse, those companies are racing to fill the gaps. Marelli’s CEO, David Slump, pointed to long-term supply chain issues starting from the Covid-19 pandemic as a reason they were especially vulnerable to the tariffs imposed in early 2025.
Marelli is a cautionary tale of how poor financial health can turn external pressures, such as tariffs, into existential threats. This isn’t an isolated event. Wolfspeed, a semiconductor supplier to major automotive players, was recently spotlighted for their financial troubles—now they are facing impending bankruptcy. While RapidRatings has been tracking Wolfspeed’s decline for years, others in the industry were reminded that not even market leaders are immune to a volatile risk landscape and financial instability.
More stories like Marelli and Wolfspeed will make future headlines as the impact of tariffs takes effect on suppliers. RapidRatings assessed the impact of a universal 10% tariff and a 30% China tariff on U.S. companies based on where their global supply chains are located. For public automotive suppliers we saw an average 7.6-point drop in financial health and for private suppliers a 9.5-point drop in financial health. This will only be exacerbated by retaliatory tariffs, as seen with our stress testing that displayed an even steeper plummet in FHR for both private and public automotive companies.
As more suppliers struggle under mounting pressure, automakers are waking up, once again, to the reality that reactive risk management isn’t enough. Majority of suppliers have funneled billions in EV-related technologies and parts. However, the sudden slowdown in demand, combined with tariffs and the emerging risk of China’s rare-earth export restrictions, is throwing electrification timelines into question.
Both EV and gas-powered cars contain components where rare earth materials are critical to their design. Reported by the U.S. Geological survey, China currently controls up to 70% of global rare-earths mining. As China tightens export policy, automakers are forced to stall vehicle production and delay EV rollout plans. Companies are clamoring to avoid factory shutdowns and brainstorm long-term solutions.
Additionally, political winds are shifting. The Trump Administration has signaled plans to eliminate the federal EV tax credit, a move that would raise EV prices and likely dampen consumer demand. For suppliers who have heavily invested in the EV boom, the financial consequences could be severe.
The story of vehicle electrification is no longer one of transformation and innovation, but one of survival.
In this high-stakes environment, automakers can no longer afford to overlook supplier financial health. Identifying fragile suppliers before they fail is key to preventing disruptions, stalled assembly lines, and lost revenue.
Our Financial Health Ratings offer accurate insights into supplier stability, especially for private companies that are least visible. Just like blind spot detection helps drivers avoid unseen hazards, RapidRatings helps companies see the hidden financial risks lurking within global supply chains.
Whether it’s tariff shocks, geopolitical unrest, or material shortages, our FHR reports empower automakers to act proactively, reduce risk, and protect profit margins in an uncertain world.
