Litigation

1. Defend EV battery claims with technical rigor: Battery fire litigation blends product defect, failure-to-warn, and economic loss theories. Root-cause analysis, pack design documentation, and thermal management data are critical to defense.
2. Clarify tariff allocation in supply contracts: Price adjustment clauses, surcharges, and cost-bearing provisions must explicitly address tariff volatility. Ambiguous terms invite disputes when duties spike or change retroactively.
3. Anticipate data-sharing class actions: The FTC’s consent order template will be cited as the de facto standard in civil litigation. Review telematics practices now to identify exposure before plaintiffs’ lawyers do.

Litigation priorities beyond supply chain disputes reveal product failures and regulatory enforcement spillover. While autonomous and ADAS product liability (47%) has declined 15 percentage points from 62% last year, it remains the second-highest concern. Have these cases evolved from novel legal territory to routine occurrences with established defense strategies?

Concern over connected vehicle data privacy and cybersecurity class actions (41%) has declined 15 percentage points from 56% last year, mirroring a trend in which data privacy has shifted from feared litigation to active regulatory enforcement. The FTC's consent order against GM provides a roadmap that plaintiffs’ lawyers will cite in civil suits.

EV battery fire and thermal runaway litigation (39%) has emerged as a major concern, while EV range and performance litigation registers just 15%, down 12 percentage points from 27% last year. This split suggests improved disclosure practices have reduced performance litigation while battery safety remains a persistent threat combining product defect, failure-to-warn, and economic loss theories.

Employment litigation tied to layoffs (10%) registers minimal concern despite industry restructuring, suggesting robust WARN Act compliance or that this exposure is overshadowed by larger threats. Counterfeit parts disputes (13%) remain modest, possibly because enforcement occurs through customs seizures and administrative proceedings rather than traditional litigation.

Supply chain litigation commands 61% concern, its scope expanding dramatically beyond warranty recovery to encompass tariff allocation disputes, supplier insolvency claims, and termination battles triggered by cost shocks that existing contracts never contemplated.

The litigation breaks into three categories. Tariff allocation disputes proliferate as companies argue over whether existing contracts allow pass-through of duties imposed after signing. When 25% tariffs are implemented and subsequently challenged, questions arise about which party can claim refunds and whether contract language contemplated such policy shifts. Companies simultaneously comply with duties under protest while litigating their validity.

Supplier insolvency and termination disputes increase as Tier 2 and Tier 3 suppliers face margin pressure from unabsorbable tariffs. OEMs terminating relationships with distressed suppliers encounter claims over tooling ownership, minimum purchase commitments, and early termination penalties. These cases involve disputes about whether performance failures justify termination or whether OEM actions—volume reductions, delayed payments, forced price concessions—caused the supplier’s distress.

Warranty and recall indemnification battles intensify as component quality issues trigger expensive recalls. When battery modules pose a fire risk and require recalls of tens of thousands of vehicles, disputes arise over whether supplier indemnity covers full costs, including customer notification, dealer reimbursement, and diminished-value claims. Suppliers argue OEM design specifications contributed to failures, while OEMs point to component defects as the root cause.

The common thread is contractual ambiguity meeting unforeseen circumstances. Agreements drafted when tariffs were stable lack guidance for scenarios in which duties double overnight or when force majeure is invoked due to tariff-driven cost increases. Business relationships that functioned for years could be dissolving into expensive litigation over losses neither party anticipated.