Electrification, Upgrading, and Policy Demands in the Italian Automotive Supply Chain: Evidence from the 2024–2025 Supplier Survey

Abstract:

Vehicle electrification is restructuring capabilities, product portfolios, employment, financing, and policy demands across Italy’s extended automotive supply chain. This paper quantifies those shifts and documents firms’ strategic responses.
Drawing on two consecutive national supplier surveys, the 2024 wave covered 397 firms out of 2,142 (response rate 18.5%) and the 2025 wave 448 firms (response rate 20.4%), ensuring broad coverage of Tier‑1/2/3 suppliers, aftermarket, and infrastructure players.
Innovation activity is widespread but uneven. In 2025, 45.5% of firms report product innovation (representing 70.6% of automotive turnover) and 65.4% report process innovation (86.1% of turnover). Current portfolios remain anchored in invariant components (59%), with ICE components (28%), EV components (8%), and small shares in engineering/design (3%) and software
Firms mostly foresee no portfolio impact (45.0%) or an adaptation path (26.6%) over the next three years; 2.1% expect a radical change, while 8.3% anticipate exiting the automotive chain (only 1.8% of turnover).
Employment effects hinge on strategy: EV‑only investors anticipate +1.8% headcount, with growth in R&D and IT, while production roles contract; non‑investors foresee declines. Financing relies chiefly on internal liquidity (~59.4%), followed by bank credit (~29.9%) and public grants (~8.6%); roughly 40.6% of funding is external.
Policy priorities in 2025 concentrate on lower energy costs (3.8), bureaucracy simplification (3.6), limiting Asian supplier penetration (3.5), and supporting internationalization (3.3)—with EV demand and charging infrastructure rated lower than in 2024.
Electrification is catalyzing selective upgrading (not wholesale transformation), with positive employment effects where firms commit to EV trajectories. Effective public support targeted at energy costs, administrative simplification, skills, and market access can accelerate capability building while mitigating exit from the value chain.