Flooding caused by climate change is set to be the biggest threat to the automotive supply chain in 2025

Everstream Analytics has identified the top five risks threatening the automotive supply chain in 2025, with flooding and climate change topping the list. 

The supply chain risk management firm said that even nations with the most sophisticated weather warning systems and infrastructure could be caught off guard by flash-flooding events and storms.

Everstream said that companies will be upended by even more frequent small-scale events and larger-scale storms, such as Hurricane Helene which hit the US last September. The hurricane landed on the Florida coastline on September 26 before moving through Georgia, South Carolina, North Carolina, Virginia and Tennessee. It affected parts suppliers in the region causing OEMs to lose several days of production. GM was forced to close its Arlington (Texas) and Flint (Michigan) assembly plants because of supply chain issues. VW was also forced to suspend production at its Chattanooga plant (Tennessee) because of a parts supply problem caused by the storm.

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In May, devastating floods also hit the state of Rio Grande do Sul in Brazil, halting production at ten automotive manufacturers and a large network of suppliers. It resulted in more than 160 fatalities and the worst flooding the country has seen for 80 years, and OEMs including GM, VW and Stellantis were affected.

Everstream’s meteorologists said the origin of this increasing flooding trend lies in global ocean temperatures, which have been rising for the past 50 years and were at their highest level in hundreds of years in 2024. All indications, according to the firm, point to ocean temperatures rising further this year and beyond.

“We recommend evaluating overall flood risk in both your operational area and that of your suppliers,” said Everstream’s meteorologists in the firm’s report. “This evaluation should include a review of area infrastructure, egress routes, and waterways.”

Political upheaval and destabilising international political and economic relations were the second biggest risk to the supply chain identified by Everstream. The company said that in 2025, it will be “impossible to avoid conflict and its impact on sourcing, manufacturing and logistics”.

The incoming US administration’s proposed tariffs are set to pose significant risk to the global automotive supply chain. “The key here is understanding multi-tier supply sources by country so that when news breaks, you can make sourcing adjustments while your competitors are still figuring out exposure and impact,” the report said. “Depending on a company’s risk tolerance and specific supplier cost and performance dynamics, some companies will preemptively make adjustments. That said, with such a degree of uncertainty, in many cases it’s better to prepare now than to start sourcing.”