Navigating the Great Automotive Transition

The global automotive industry is undergoing one of the most profound transformations in its history. Manufacturers are simultaneously managing the transition to electrification, the rise of software-defined and increasingly autonomous vehicles, intensifying competition from Chinese automakers, evolving trade policies and tariffs, and the need to build more resilient supply chains. At the same time, consumer demand remains uncertain, regulatory frameworks continue to evolve, and significant capital investment is required across batteries, charging infrastructure, artificial intelligence, and next-generation mobility technologies. 

Guido Van Hauwermeiren was appointed Vice Chairman of the Automotive & Mobility sector earlier this year after leading Societe Generale's investment banking and advisory business in the Americas, where he developed strong ties to some of the world's largest auto firms. We asked him about the industry's challenge navigating a complex transition in which technology, energy, geopolitics, and economics are increasingly intertwined. 

The automotive industry is facing electrification, automation, rising Chinese competition, tariffs and uncertain consumer demand all at once. What is the central challenge for automakers today?

The central challenge is that the automotive industry is being asked to reinvent almost every part of its business model at the same time. Electrification alone would be a generational transformation. But it is happening alongside a shift toward software-defined vehicles, artificial intelligence, autonomous driving, new ownership models, new battery supply chains and a much more complicated geopolitical environment. 

What makes this moment particularly difficult is that the industry cannot simply move in a straight line from internal combustion engines to electric vehicles. Consumer adoption is uneven across regions. Charging infrastructure remains insufficient in many markets. Regulation continues to evolve. And the economics of EVs are still challenging for many manufacturers because batteries, software platforms and new production systems require very large upfront investment before returns are fully visible. 

This is why we describe the sector as being at a crossroads. The opportunity is enormous, but execution is increasingly complex. We say that the entire concept of mobility is changing, from how vehicles are powered to how consumers own, finance and use them. That creates new value pools, but also new risks. The winners will be companies that can manage the transition with discipline: protecting their existing profitability, investing in the right technologies, building resilient supply chains and remaining flexible enough to adjust as the market develops. 

Electrification remains the biggest visible change in the sector, but demand has not moved in a perfectly linear way. How should automakers think about the EV transition now?

They need to think about electrification as a structural trend, but not a simple one. The direction of travel is clear: electric vehicles are becoming a much larger share of the global auto market. The International Energy Agency has estimated that electric cars represented one in four new car sales globally in 2025 and could reach around 28% of new car sales in 2026. That is a significant milestone. EVs are no longer a niche product. 

But the pace differs widely depending on the market. China is moving very quickly, Europe is shaped heavily by regulation and emissions targets, and the US remains more mixed, with consumer demand tied closely to affordability, charging access, policy incentives and model availability. That means global automakers need regional strategies rather than a single global playbook. 

From a financing and strategic perspective, the EV transition is also about the entire value chain. It is not enough to design attractive electric vehicles. The industry needs battery gigafactories, access to critical minerals, charging infrastructure, grid capacity, software systems, recycling capabilities and new forms of consumer finance. Our industry experts have emphasized that hundreds of billions of euros are being invested across this value chain and that risk allocation will be critical as these new ecosystems are built. That is exactly where banks can help: by understanding the industrial plan, the supply chain, the policy framework and the financing structure as one connected picture. 

Personally I am not convinced the world ends up fully electric, and I think that is a healthy thing to say out loud. There will likely remain room for other energy sources and powertrains alongside battery electric, depending on geography, use case and how the technology evolves. I'd also argue EVs need to win on the merits of the driving experience itself — performance, range, refinement — and not rely solely on price positioning or cabin technology like multiple displays. Interior tech is a nice-to-have; it shouldn't be the primary case for the car. 

More broadly, the industry cannot lose sight of the consumer, who ultimately decides what gets bought regardless of what any strategy or regulation intends. I think that perspective got underweighted at points in this transition. Some regulatory frameworks pushed OEMs toward investment decisions ahead of where consumer demand actually was, and we have since seen the consequences in the multibillion-dollar writedowns several manufacturers have had to take. It is a useful reminder that policy can shape the direction of an industry, but it cannot substitute for demand. 

Chinese automakers have become much more formidable, particularly in EVs. How is that reshaping the competitive landscape?

China has become central to the global automotive story. It is not only the world's largest auto market; it is now one of the most important sources of EV innovation, manufacturing scale and cost competitiveness. Recent Societe Generale analysis described EVs as the primary growth driver for China's auto sector, noting that plug-in hybrids and battery electric vehicles together accounted for six in ten new cars sold in China, while Chinese EV exports more than doubled. 

There are several reasons for this. Chinese manufacturers benefit from a highly developed battery supply chain, strong domestic competition, rapid product cycles and a consumer base that is very receptive to digital features. Players like BYD, Geely and CATL have moved from domestic champions to genuinely global competitors in vehicles and batteries alike, and that shift has happened faster than most incumbents anticipated. 

For incumbent automakers in Europe, the US, Japan and Korea, this raises the competitive bar. It is not only a question of price. Chinese manufacturers are increasingly strong in battery technology, charging speed, in-car digital experiences and speed to market. 

I would add that China is not just the biggest competitive dynamic facing our clients — it is also the biggest coverage opportunity facing banks like ours. Across the industry, coverage of the Chinese automotive and battery supply chain tends to sit across on- and offshore teams, product lines and regional desks, and there is real value in connecting those more consistently. BYD, Geely, CATL and the broader supply chain are becoming counterparties, competitors and partners to virtually every client we cover elsewhere, so integrated coverage of that ecosystem is increasingly central to serving the sector well. 

The strategic response for automakers will likely include more local production, more partnerships, more regional supply chains and greater focus on cost competitiveness. But this should not be seen only as a threat. It is also accelerating innovation across the entire sector. 

How can Societe Generale support automotive and mobility companies as a strategic advisor and banking partner during this transition?

The automotive transition requires exactly the kind of integrated approach that Societe Generale can bring to clients. This is not a sector where a company only needs one product or one financing solution. Automakers and suppliers may need strategic advisory, acquisition financing, debt capital markets access, equity capital markets support, project finance for battery or charging infrastructure, commodity hedging, foreign exchange solutions, working capital, securitization, leasing expertise and risk management across multiple regions. 

Our advantage is that we understand the industry as a value chain. Societe Generale has pointed out that the automotive ecosystem now stretches from gigafactories and critical minerals to charging infrastructure, fleet leasing, consumer finance, in-car technology and local regulation. That breadth matters because clients are not making isolated decisions. A decision about battery sourcing affects capital expenditure, geopolitics, supply-chain resilience, pricing, margins, sustainability objectives and financing needs. 

We also have a distinctive position because mobility touches several areas where the Group has deep expertise. Through its history in automotive finance, leasing and fleet management, as well as its global investment banking, advisory, project finance and markets capabilities, Societe Generale can help clients connect strategy with execution. Our Corporate and Investment Bank, together with Ayvens and our Car Finance and Lease business, gives us a genuinely differentiated ecosystem across fleet, leasing and consumer finance.  

Ultimately, our role is to help clients navigate complexity. The automotive industry is moving from a relatively stable industrial model to a more dynamic ecosystem shaped by energy, software, regulation and geopolitics. Companies that manage this well will not simply survive the transition; they will define the next era of mobility. The banks that manage their own internal coordination well will be the ones that get to help them do it.