Annual Report

2025

Saving More Lives

2

This is Autoliv

Year in Brief

...............................................

04

CEO Message

..........................................

06

Financial Summary

...................................

10

Sustainability Highlights

...........................

11

Autoliv Inside

............................................

12

New Safety Solutions Powering Growth

....

14

Important Launches

..................................

16

Annual Report

2025

Training Center in Aguascalientes, Mexico

Testlab in Bengaluru, India

3

Perform and Transform

Creating Growth

........................................

20

Driving Profitability

....................................

22

Shareholder Value

....................................

24

Automation and AI Solutions Driving

Productivity and Quality

............................

26

Asia a Major Growth Engine

......................

28

Board of Directors

....................................

30

Executive Management Team

.................

31

Locations and Capabilities

.......................

32

Contacts and Calendar

............................

33

Multi-Year Summary

.................................

34

Form 10-K

................................................

35

FORWARD-LOOKING STATEMENTS

Except for historical information, matters discussed in the annual report are forward-looking statements and are based on management’s estimates, assumptions

and projections. Actual results could vary materially. Please review the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and

Results of Operations” sections in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2025, and subsequent SEC filings, for

factors that could affect the Company’s performance and cause results to differ materially from management’s expectations. The information in this report reflected

management’s estimates, assumptions and projections as of January 30, 2026. Autoliv has not made updates since then and makes no representation, express

or implied, that the information is still current or complete. The Company is under no obligation to update any part of this document.

This report includes content supplied by S&P Global. Copyright © Light Vehicle Production Forecast, January 2026. All rights reserved.

Cover:

Photographed in a major roundabout in central Brașov, Romania, this image represents the intersection of people, mobility, and safety, connecting the city

center’s main traffic arteries.

Airbag production in Ogden, USA

Autoliv is the Official Automotive Safety

Awareness Partner of ABB FIA Formula E

4

The World’s Leading

Automotive Safety Supplier

Our Vision

Saving

More Lives

Our Mission

Providing World-Class

Life-Saving Solutions for

Mobility and Society

Autoliv is the clear worldwide leader in automotive safety

systems. At Autoliv, we challenge and redefine the standards

of mobility safety to sustainably deliver leading solutions.

We supply protective systems, such as airbags, seatbelts,

and steering wheels, for more than 1,400 vehicle models,

delivering to all major vehicle manufacturers in the world.

Autonomous driving, connected cars and electric vehicles

are changing the automotive industry. Our superior global

footprint and RD&E capabilities make us well-positioned

to adapt to the new business opportunities this transforma-

tion brings. By leveraging our technological expertise and

operational capabilities, we are also exploring new growth

opportunities, such as safety for commercial vehicles and

electrical safety solutions including pyro safety switches.

/ This is Autoliv

5

AMERICAS

32

%

EUROPE

29

%

ASIA

20

%

CHINA

19

%

Share of Global Sales 2025

$10.8b

net sales

10.3%

adj. operating margin*

44%

market share

$1.2b

operating cash flow

$589m

shareholder returns

64,000

associates worldwide

40,000

Our products saved approximately:

lives

600,000

Our products reduced around:

injuries

Key Figures 2025

*) Non-GAAP Performance Measures. See “Non-GAAP Performance Measures” section in the Form 10-K filed with the SEC.

/ This is Autoliv

To succeed, we must

perform and transform

while delivering on

today’s commitments and

preparing for tomorrow’s

opportunities”

6

Shaping a Safer,

Sustainable Future

Together

We continued to navigate a rapidly evolving automotive

landscape in 2025 with resilience and flexibility. Our teams

delivered strong results by staying true to our priorities:

customer centricity, operational excellence, and innovation,

with dedication to quality in all respects.

Our strategy is built on anticipating and leveraging op-

portunities that come with change. We collaborate closely

with regulators, our customers, and research institutes to

develop life-saving solutions to shape future standards.

Market development

In 2025, global Light Vehicle Production (LVP) returned to its

long-term growth trend with a 4% increase, exceeding ex-

pectations earlier in the year despite geopolitical challenges.

The automotive industry continued to evolve, particularly in

China, where Chinese vehicle brands expanded rapidly both

at home and in export markets. Rising incomes and stricter

regulations also fueled demand for advanced safety fea-

tures, exemplified by India, where safety content per vehicle

grew by close to 20% in 2025.

According to S&P Global, the global automotive in-

dustry is projected to grow steadily through 2030 with LVP

increasing about 1% annually on average to reach close to 95

million units. Electrification will accelerate, with battery elec

-

tric vehicles expected to represent almost a third of global LVP

by 2030. Autonomous technologies are also set to expand

rapidly, reshaping mobility and business models. At the

same time, the industry is expected to continue its transition

towards software-defined vehicle platforms, localized supply

chains, and new revenue streams, driven by evolving con-

sumer preferences.

Financial performance and shareholder value creation

2025 was a strong year for Autoliv. We delivered solid organic

sales and improved profitability, despite tariffs and geopoliti

-

cal challenges. Our ability to adapt quickly and stay close to

our customers made a difference. Thanks to our close col

-

laboration with customers, we successfully managed the im-

pact of new US tariffs and secured compensation for nearly

all related costs.

We’ve seen record sales and earnings, driven by success-

ful product launches, cost reductions, and improved operatio-

nal efficiency. Our adjusted operating margin* reached 10.3%,

and our return on capital employed climbed to over 26%.

Our organic sales grew faster than LVP across all regions

except China, where vehicles with lower safety content from

Chinese Original Equipment Manufacturers (OEM) saw sig

-

nificant growth. This is a segment where we traditionally have

had a lower market share. Our investments in our Chinese op-

erations and engineering capabilities have led to many new

customer partnerships and regulatory collaborations. Conse-

quently, our sales to Chinese OEMs increased by 23%, sur

-

passing their LVP growth rate.

We continue to focus on shareholder returns. In 2025,

operating cash flow set a new record, and we have continued

to invest in the business while returning significant value to

our shareholders.

We paid a dividend of $3.12 per share, an increase of 14%

compared to the previous year, and repurchased shares for

$351 million. During the year, to remain a shareholder friend-

ly company, we launched a new share repurchase program

through the end of 2029, with the ambition of average annual

share purchases of $300-500 million.

The automotive industry is rapidly transforming. Several trends are shaping the

industry such as autonomous technologies, electrification, advancement of safety

ratings, and a growing emphasis on equity in safety. These developments reflect

society’s growing demand for safer mobility as well as ongoing technical innovation.

*) Non-GAAP Performance Measures. See “Non-GAAP Performance Measures” section in the Form 10-K filed with the SEC.

7

These results reflect the strength of our team, our strategy

and our strong execution as well as our commitment to val-

ue creation. We remain focused on delivering sustainable

growth and maintaining a strong financial foundation.

Optimizing efficiency and quality across the value chain

In 2025, we made significant progress in strengthening our

entire value chain by driving profitable and capital-efficient

growth through end-to-end operational excellence. Our

product development process is designed to ensure the

highest quality and that every solution we deliver is robust,

scalable, and seamlessly integrated into our customers’ sys-

tems. We’ve reduced variation through standardized work,

enabling consistent, high-quality performance across our

operations. This approach has helped us regain productivity

momentum, with direct labor efficiency meeting our updated

target of over 8% annually.

Automation and digitalization play a central role in this

transformation. In 2025, we accelerated the deployment

of flexible automation across our sites, including the rollout

of modular airbag assembly lines. Digitalization is now fully

embedded in our production system, supported by AI-driven

inspection technologies that enhance quality and reduce var

-

iability. Our teams are empowered with real-time feedback

and smarter tools, enabling faster learning and better results.

Our global industrial footprint remains a competitive

advantage. It gives us the flexibility to respond to regional

sourcing shifts, inflationary pressures, and tariff impacts to

ensure we deliver value efficiently and consistently.

Growing need for safety innovations

During the year, we advanced smarter, more adaptive safety

solutions and strengthened our role in shaping global safety

standards.

Safety ratings and regulations are evolving across the

globe to cover more real-life scenarios. These changes are

increasing safety content per vehicle and driving demand

for innovative solutions that meet stricter and more diverse

requirements.

We’ve accelerated our work in virtual testing, which

is transforming how crash tests are evaluated. By using

Human Body Models (HBM), we can simulate real-life crash

scenarios with greater precision, accounting for diverse

occupant sizes, seating positions, and restraint interactions.

This approach is becoming a standard in global rating pro-

tocols and regulations, and Autoliv is actively engaged in

shaping these frameworks. Virtual testing also offers greater

possibilities to implement an increased number of evalua-

tions, which will also drive content growth.

Another example of our leadership in advancing safe-

ty regulations is our strategic partnership with CATARC,

China’s leading automotive research and standards organ-

ization. This collaboration gives Autoliv the opportunity to

support shaping how safety standards are set in China, the

world’s largest automotive market. It allows us to raise vehi-

cle safety expectations in China, as well as support vehicle

manufacturers as

they expand globally.

As the automotive industry evolves rapidly, our ability to

develop world-leading safety technologies depends on

Repurchased over 13 million shares

in the past five years, corresponding

to ~15% of outstanding shares

/ This is Autoliv

Shareholder Returns

US$ (millions)

Share repurchase

0

100

200

300

400

500

600

700

800

2025

2024

2023

2022

2021

Dividend

strong research and development capabilities. With 13 tech-

nical centers across the globe, Autoliv continues to invest in

expanding its innovation footprint. One example is the sec-

ond tech center currently under construction in China. This

new facility will play a critical role in advancing automotive

safety technologies. It will further support our growing part-

nerships with Chinese vehicle manufacturers, serving their

needs both domestically and as they expand globally.

As autonomous driving and new interior concepts evolve,

there is an increased demand for new innovative solutions. In

response to this Autoliv, launched Omni Safety™, the world’s

first proven safety solution for protecting occupants in re

-

clined seating positions while driving.

Sustainability is integrated into everything we do

At Autoliv, sustainability is fundamental to our vision of Sav-

ing More Lives. It shapes our decisions and actions every

day. Our sustainability framework is based on four focus ar-

eas with broad ambitions and near-term targets aligned with

the UN Sustainable Development Goals and guided by the

principles of the UN Global Compact.

When it comes to climate and circularity, we made signif-

icant progress during the year. Renewable electricity usage

rose to 40% in 2025 and we signed two 12-year virtual power

purchase Agreements in Europe. We continued our efforts to

increase the amount of low carbon materials in Autoliv prod-

ucts, including recycled content, and to work with suppliers

with capacity building programs on greenhouse gas emis-

sions tracking and target setting.

These actions support our long-term ambition: carbon neu-

trality in our own operations by 2030 and net-zero emissions

across our supply chain by 2040.

Perform while transforming

As I look ahead, I am confident in our capability to deliver

sustainable value through innovation, operational excel-

lence, and strong partnerships. Effective customer engage

-

ment will continue to be at the heart of our approach, ensur-

ing we understand and anticipate the industry’s future needs.

By accelerating growth initiatives and reducing product and

process complexity, we will sharpen our competitive

edge while remaining agile in a rapidly evolving industry.

Our leading position and strong performance in Asia, es-

pecially China and India, are instrumental to our continued

progress. Together with our ability to improve profitability

even in a low-growth environment, as shown in recent years,

we have a solid foundation for continued attractive share-

holder returns and a clear path towards our 12% adjusted

operating margin* target.

To succeed, we must perform and transform while deliv-

ering on today’s commitments and preparing for tomorrow’s

opportunities. I strongly believe in our shared purpose and

determination. Through collaboration and collective effort by

Team Autoliv, we are turning ambitions into achievements,

always guided by our vision of Saving More Lives.

Mikael Bratt

President & CEO

Autoliv Inc.

Together with our ability to improve profitability even

in a low-growth environment, as shown in recent years,

we have a solid foundation for continued attractive

shareholder returns and a clear path towards our

12% adjusted operating margin* target”

*) Non-GAAP Performance Measures. See “Non-GAAP Performance Measures” section in the Form 10-K filed with the SEC.

9

Sustainability

Highlights

Sustainability is integrated into everything we do and

is an important driver for market differentiation and

stakeholder value creation. In 2025, we made signifi

-

cant progress on several key metrics and targets in

our focus areas. Further information on our perfor-

mance is available in our 2025 Sustainability Report

(to be published in March 2026).

Sustainability

integrated into

everything

we do

Our commitment:

We make mobility safer for all by staying at the forefront of research,

innovation and technology, with a relentless focus on quality.

Long-term ambition:

•

100,000 lives saved annually

Our commitment:

We provide a safe, healthy and inclusive workplace for all, respecting labor

rights and continuously enhancing the employee experience.

Long-term ambitions:

•

Lowest Recordable Incident Rate among automotive suppliers

•

Employee experience in the top quartile of the automotive industry

•

Create positive social impact across our supply chain through

engagement and risk-based due diligence

Our commitment:

We support the industry’s green transition and minimize our own

environmental impact, focusing on greenhouse gas emissions

reduction, resource efficiency and circularity.

Long-term ambitions:

•

Carbon neutrality in own operations by

2030

•

Net-zero emissions across the supply chain by 2040

Our commitment:

We do business in a responsible manner through strong corporate governance,

and by fostering a culture of leading with integrity and speaking up.

Long-term ambitions:

•

Leading with Integrity and Speaking Up fully embedded in our culture

•

Compliance framework rooted in Autoliv’s strategy,

shaping industry best practice

Saving More Lives

A Safe and Inclusive Workplace

Climate and Circularity

Business Integrity

Building a Sustainable Value Chain

Sustainability cuts across our entire value chain. Through risk-based human rights and environmental due diligence and close collaboration

with suppliers and partners, we create shared value and mitigate negative social and environmental impacts.

Recordable incident rate

Share of renewable electricity

Energy intensity

Greenhouse gas emissions

from own operations

(Scope 1+2)

Based on our extensive research into real-life crashes,

we develop and engineer automotive safety solutions to

save more lives and prevent injuries on the roads.

/ This is Autoliv

Driver and

Passenger Airbag

Protect the driver and front

passenger in frontal crashes

Cyclist-Pedestrian

Protection Airbag

Protects pedestrians

or cyclists outside the

vehicle in a collision

Center Airbag

Reduces head

injuries in side-

impact crashes

Active Hood Lifter

Raises the hood during

a collision to help reduce

injury to pedestrians

Knee Airbag

Deploys below the

dashboard to protect

knees in a crash

Pyro Safety Switch

Instantly cut a vehicle’s

high-voltage power during

a crash for safety

Products and Solutions

Autoliv Inside

12

Airbags

Airbags are critical for reducing severe injuries in

crashes, with driver airbags lowering fatalities in frontal

collisions by approximately 25% (for belted drivers)

and reducing serious head injuries by over 60%. Side

curtain airbags reduce the head injuries by half, and

side airbags reduce chest injuries by 25%. Autoliv

offers a wide range of airbags for protecting not only

passengers inside the vehicle but also people outside,

such as cyclists and pedestrians.

Steering Wheels

The steering wheel is an integral part of the vehicle’s

safety system. Modern steering wheels incorporate

advanced electronics, sensors, and driver monitoring

technologies, ensuring both control and protection.

These systems are engineered to meet stringent

safety standards while enabling seamless integration

with automated driving features.

Seatbelts

Keep you

safely restrained

in your seat to

prevent serious

injury during

a crash

Side Curtain

Airbags

Deploy along

the windows to

shield occupants’

heads during a

side impact

Rear

Curtain

Airbag

Protects rear

passengers’

heads in a rear

or side impact

Steering Wheel

Integrating controls

of various vehicle

functions along with

the driver airbag

Belt in Seat

Integrated into the

seat to improve

comfort and crash

protection

Side Airbags

Deploy from the

seat or door to

protect during a

side-impact crash

Seatbelts

Seatbelts is the primary life-saving device and can

reduce fatalities by as much as 45%. Today’s seat-

belt systems are highly sophisticated, with a variety

of advanced functionalities such as pretensioners

that tighten the seatbelt in the event of a collision. To

further improve safety, pre-pretensioners tightens the

seatbelt before a likely collision as a precaution.

13

New Safety

Solutions

Powering

Growth

Autoliv’s core light vehicle products - seatbelts,

airbags and steering wheels - remain the foundation

for the company. To complement this strong base and

support our future growth ambition, we are expanding

our focus to meet safety needs in adjacent areas.

Autoliv’s Mobility Safety Solutions targets high-potential

safety opportunities in other mobility forms, such as com-

mercial vehicles, motorcycles and bikes, as well as electri-

cal safety. We are also introducing advanced functionalities,

initially for our light vehicle customers, such as seat-centric

solutions, Human Body Models for virtual testing, and adap-

tive safety for personalized protection.

These innovations strengthen our position in next-

generation mobility and autonomous driving. By expand-

ing our proven expertise into these emerging adjacencies,

Autoliv aims to diversify its revenue streams. The markets

for identified adjacent areas are expected to grow substan-

tially the coming decade.

Mobility Safety Solutions

Electrical safety solutions

As electrification accelerates across mobility and society,

electrical safety is becoming increasingly critical. Autoliv

delivers fast-acting safety devices that cuts the high-voltage

energy during crashes or electrical faults, preventing fires,

short circuits, and electrical shocks. Our Pyro Safety Switch-

es and related solutions perform reliably under demanding

conditions and are primarily used in electric vehicles, but we

also supply them to industries outside the automotive sector.

We are scaling this business by leveraging our industrial ca-

pabilities, safety expertise, and cost-efficient manufacturing

to meet growing demand.

Commercial vehicle safety

Commercial vehicles have distinct safety challenges due

to their size and operating conditions. Autoliv meets these

needs with customized solutions, including airbags, seat

-

belts, steering wheels, and electrical safety components.

Our technologies are tailored for trucks, buses, and off-

highway vehicles.

Motorcycle and bike safety

There is significant potential for growth in the market for

motorcycle and bike safety solutions. Autoliv is committed

to enhancing rider protection, focusing on the most severe

injuries. We offer two complementary sets of solutions;

On-Motorcycle Safety Solutions, such as integrated airbags,

and On-Rider Safety Solutions, including airbag vests and

jackets.

Components for safety solutions

Autoliv’s component technologies extend our leadership in

safety beyond traditional automotive applications. Building

on decades of expertise, we deliver inflators, cushions and

advanced pyrotechnic solutions, initiators, gas generators,

and pyro-actuated mechanisms, that provide fast, compact,

and reliable activation. Our component portfolio is a stra-

tegic enabler for growth. We primarily offer our products to

the automotive industry, while also supporting various other

industries.

/ This is Autoliv

14

New Functionalities

and Products

Safety for new flexible seating

Seat-centric solutions integrate restraint systems directly

into the seat structure, enabling protection across a wide

range of seating orientations, including reclined and rotated

positions. Omni Safety™ exemplifies this approach by ad

-

dressing risks in reclined seats through advanced seatbelt

and airbag integration. These innovations provide greater

interior design flexibility while ensuring superior occupant

protection in autonomous and next-generation vehicles.

Virtual testing

Virtual testing uses advanced simulations to evaluate crash

scenarios without physical prototypes. This approach accel-

erates development, reduces costs, and enables thousands

of tests in a fraction of the time. From a safety perspective,

virtual testing improves injury prediction accuracy, supports

optimization of restraint systems for diverse occupants, and

enables analysis of complex crash conditions that are diffi

-

cult to replicate physically. As regulations and consumer rat-

ing programs increasingly adopt virtual methods, Autoliv is

leading the way by leveraging new technology and predictive

models to deliver safer vehicles and protect all road users.

Human Body Model Safety Suite

Autoliv’s Human Body Model (HBM) Safety Suite is an

integrated virtual safety platform that combines a world-

leading HBM with dedicated software tools to support the

full virtual testing workflow, from simulation to analysis and

decision-making. At its core, the HBM provides a detailed

digital representation of human anatomy, en-

abling more precise injury prediction than

physical crash dummies. Surrounding the

model, the Safety Suite transforms com-

plex simulation data into clear, actionable

insights, improving productivity, consistency,

and confidence in virtual testing. By integrat

-

ing validated models, software, and safety

expertise into a single solution, Autoliv

is helping customers meet evolv-

ing regulatory requirements

while accelerating inno-

vation and setting new

benchmarks

for

occu-

pant protection.

Adaptive safety

Adaptive safety systems go beyond standardized solutions

by dynamically adjusting restraint performance to occupant

characteristics, such as size, weight, and age, as well as

seating position. Leveraging advanced sensing and algo-

rithms, these systems aim to deliver equality in occupant

protection across diverse real-life conditions, enhancing

safety for all demographics.

Cyclist-pedestrian protection airbag

Launched in 2025, Autoliv’s world-first cyclist-pedestrian

protection airbag is designed to enhance the safety of those

outside the vehicle. As the second generation of our pedes-

trian airbag, it covers a larger area to provide increased pro-

tection for cyclists in the event of a collision. Installed on the

exterior of the vehicle, the airbag deploys in milliseconds, of-

fering improved head protection both for pedestrians and for

cyclists whose head positions are higher.

Foldable steering wheel for autonomous driving

In collaboration with Tensor, a leading innovator in person-

al autonomous vehicles, Autoliv has developed the world’s

first foldable steering wheel. It’s designed to meet the evolv

-

ing needs for safety in autonomous vehicles. This innova-

tion enables traditional manual control when required and

seamlessly retracts into the dashboard during autonomous

driving. By merging safety, comfort, and design flexibility, the

foldable steering wheel enhances the user experience by

creating a more open and spacious cabin.

15

Important

Launches

2025

Autoliv has a long history of working with global vehicle manufacturers

and maintains one of the industry’s broadest customer bases, spanning

mass-market, premium, and new automotive brands. As technology

reshapes the industry through connectivity, automation and safety,

collaboration has become increasingly important. Today, Autoliv sup-

plies products and solutions to all major light vehicle manufacturers in

the world. In 2025, we launched over 800 new products, supporting

future growth.

/ This is Autoliv

16

Suzuki e VITARA

Renault 5

Honda Passport

KIA PV5

Changan Avatr 06

Ford Expedition

Deepal

S09

Chery Fengyun A9

Dacia Bigster

Honda Ye P7

Nio Onvo L90

Mercedes

CLA

16

[PLACEHOLDER]

Autoliv is committed to shaping the future of

mobility safety through innovation, sustain-

ability, and operational excellence. We have

reinforced our position as the global leader

in automotive safety and deliver superior

returns. Our strategy focuses on delivering

long-term value for shareholders by driving

profitable growth and resilience in a rapidly

evolving industry.

By leveraging our leadership in airbags, seatbelts, and

steering wheels, and expanding into advanced mobility

safety solutions, we have positioned ourselves at the fore

-

front of automotive safety innovation.

We aim to achieve 4-6% average annual organic sales

growth and to strengthen our margins through disciplined

cost management, efficiency programs, and continuous

improvement initiatives. Financial discipline remains cen-

tral to our approach. We target strong cash conversion* of

80% or more and maintain a conservative leverage ratio* of

1.5x or below, ensuring flexibility and stability.

To enhance shareholder returns, we have launched

a $2.5 billion share repurchase program running through

2029 and increased our dividends, reflecting our confi

-

dence in our growth trajectory.

We need to perform and transform to save more lives

while creating sustainable value for all stakeholders.

On the following pages, we share how our strategy

turns ambition into action

and how we are delivering on our

targets and bringing our vision to life for a safer and sustain-

able future.

Perform

and

Transform

*) Non-GAAP Performance Measures. See “Non-GAAP Performance Measures” section in the Form 10-K filed with the SEC.

18

Creating Growth

in a Dynamic Market

Content per Vehicle

Growth

+1-2%

on average per year over time

Adjacent Growth

Areas

+1-2%

Driving Growth Through

Mobility Safety Solutions

•

Electrical safety

•

Commercial vehicles

•

Motorcycles and bikes

•

Human Body Model/virtual engineering

/ Perform and Transform

Main Growth Drivers

•

Crash test ratings and government

regulations

•

GDP per capita growth

•

Consumer demand and technology

advances, such as adaptive safety and

autonomous driving

Light Vehicle

Production Growth

+1-2%

on average per year over time

What's Fueling the Growth

•

Economic growth

•

Consumer demand

•

Ageing fleets

•

Government incentives

•

Product innovation

beyond 2030, on average per

year over time

20

Growth Target

~ 4-6%

on average per year,

over a 10+ year period

The model on these two pages shows Autoliv’s strategy to achieve an average annual organic

sales growth of 4-6% over a 10+ year period. This will be driven by an increased standard of

living, which will fuel growing demand for light vehicles and increased safety levels.

Pyro Safety Switches

Electrical safety for EVs

2025

2015

Safety Content

per Vehicle

Increasing over time

in all markets

US

Light Vehicle

Production

of living leading to

more light vehicles

Driving Profitability

Across

the Entire Value Chain

Cost-

Efficient

•

Modularization

•

Automation

•

Quality

•

Purchasing

Global Scale

Twice the size of

closest competitor

Global

Footprint

Manufacturing and

Technology Centers

supporting our customers

in 25 countries serving

more than 1,400 vehicle

models for all major

OEMs in the world

/ Perform and Transform

Automation

and Digital

Transformation

•

To increase efficiency, quality, and safety

across global operations

•

We aim to create smart factories that are

inreasingly agile and data-driven to support

world-leading productivity gains

•

Advances in smart and flexible automation

technologies enable an increased pace of

automation. This allows us to better leverage

our scale advantage

•

Reducing costs, time to market and physical

testing through standardized virtual workflows

2025

2024

2023

2022

2021

Old Target: >5%

3%

1%

4%

8%

9%

Updated Target: >8%

Direct Labor Productivity

22

Vertical

Integration

•

Manage critical steps in the supply

chain internally to ensures quality,

reliability, and cost efficiency

•

Deep vertical integration of critical

components such as inflators and

airbag cushions

•

Increasing vertical integration of

electronics for steering wheels

and seatbelts

Strategic

Purchasing

•

Large-scale purchasing

•

Best-cost country sourcing

•

Continuous redesign for

lower cost

•

Supplier cost reduction

commitment

Quality

•

Zero-defect mindset, aiming for

flawless execution in every process.

This is key to securing profitability as

well as new business wins

•

As a result of our quality culture

and processes, we have only been

involved in

~3%

of passive safety

recalls over the last ten years

Q5 means quality in all dimensions

– employees, processes, suppliers,

products, and customers.

Target

Adjusted

Operating

Margin*

~12%

2025

2024

2023

2022

2021

100

~90

Index

Driving

Shareholder Value

Optimizing

Balance Sheet

Autoliv consistently work to optimize its

working capital. Since 2021 we have reduced

trade working capital in relation to annulized

quarterly sales from 16% to below 11%.

Trade Working Capital*

%

Unlocking Liquidity

and Value

Autoliv’s operating cash flow has grown

from around $750 million in 2021 to around

$1.2 billion in 2025, underscoring how its

strong earnings conversion and disciplined

working capital management support

shareholder returns.

Efficient Use of Assets

In 2025, Autoliv invested $420 million to

expand its capacity and advance its safety

technologies, reinforcing its long-term

growth potential while maintaining strong

free cash flow to support shareholder returns.

Operating Cash Flow

US$

(millions)

Capital Expenditures

US$

(millions)

0

5

10

15

2025

2024

2023

2022

2021

0

200

400

600

800

1,000

1,200

1,400

2021

2022

2023

2024

2025

Capex, net

Capex, net in relations to sales

0

100

200

300

400

500

600

2021

2022

2023

2024

2025

0%

1%

2%

3%

4%

5%

6%

/ Perform and Transform

Autoliv optimizes its manufacturing and supply chain, reducing its working capital needs and

improving its free operating cash flow, while driving innovations in safety solutions. These

measures have resulted in higher asset returns and support long-term growth and shareholder

value. Our capital allocation strategy aims at annual share repurchases of $300–$500 million

through 2029, supported by an attractive and growing quarterly dividend.

Driving Value

Through

Efficient Capital

Utilization

Autoliv’s strong return on

capital employed reflects our

ability to generate attractive

returns on invested capital,

signaling disciplined capital

allocation and sustained value

creation for shareholders.

Balanced

Leverage

Strategy

Autoliv has a long-term leverage

ratio target of ≤1.5x. This balanced

financial managements enables

resilience, innovation, and

sustained stakeholder value

creation over time.

Shareholder Returns

US$

(millions)

Leverage Ratio*

Net Debt /EBITDA

Cash Conversion*

%

Return on Capital

Employed

%

Turning

Profit into

Cash

Autoliv consistently delivers

strong cash conversion,

turning a high proportion of its

net income into free operating

cash flow.

Target

0

20

40

60

80

100

2021

2022

2023

2024

2025

0.0

0.5

1.0

1.5

2025

2024

2023

2022

2021

Long-term target

≤ 1.5x

X

0

100

200

300

400

500

600

700

800

2025

2024

2023

2022

2021

0

5

10

15

20

25

30

2021

2022

2023

2024

2025

Use of Cash

Our focused strategy to optimize

the balance sheet and efficient

use of assets supports strong

cash flow that in turn can be

used to fund both investments

for growth and attractive share

-

holder returns.

•

Support long-term growth by

investing in RD&E while keeping

capital expenditures, net < 5%

•

Dividend – maintaining an attractive

and growing dividend

•

Share repurchases of around $300

to $500 million annually through

2029 under a mandate of up to

$2.5 billion

*) Non-GAAP Performance Measures. See “Non-GAAP Performance Measures” section in the Form 10-K filed with the SEC.

Automation and

AI Solutions Driving

Productivity and Quality

/ Perform and Transform

In 2025, Autoliv accelerated its digital

transformation by increasingly scaling

automation and AI solutions that

deliver measurable value. Examples

include AI-powered quality inspections,

predictive analytics for supply chain

management, and flexible automated

assembly lines. These initiatives are

continuing to reduce lead times, min-

imize non-quality costs and improve

efficiency and product reliability across

our global operations.

Our accelerated pace of automation and digitalization

is expected to result in a higher annual contribution to

labor productivity. As a result, we have raised our an

-

nual labor productivity target from 5% to 8%. In both

2024 and 2025, we exceeded this new productivity

target.

A key driver of our progress in automation is our

ability to capitalize on advances in automation tech

-

nology, particularly the increased flexibility of modern

systems. This flexibility allows us to design automated

lines in-house and continuously refine and optimize

them over time, delivering sustained productivity

gains year after year.

These technological advancements also ena

-

ble different products to share the same assembly

line. This brings multiple benefits: higher utilization

as customer volumes fluctuate, reduced floor-space

requirements, and a lower capital cost per unit. Flex

-

ible automated lines not only operate at a higher uti

-

lization rate but also have a longer effective lifetime,

strengthening the overall return on investment.

In effect, this transition towards more flexible au

-

tomation shifts the cost structure from labor to capital

costs. This creates an opportunity to further strength

-

en our competitiveness, as Autoliv is more than twice

as large as its closest competitor, and the potential

for economies of scale lies in capital costs, not labor

costs.

We prioritize scaling what works while exploring new

technologies through controlled pilots with trusted part

-

ners, ensuring every innovation is thoroughly validated

before it is deployed across our plants globally.

One example is our airbag facility in Ogden, USA,

where we aim to reduce the number of passenger

airbag assembly lines by two-thirds through flexible

automation, allowing different product variants to

share an assembly line.

Another example is our ongoing project evaluating

how humanoid robots can drive efficiency within our

production processes, with current focus on improve

-

ing productivity, quality and safety.

Automation and digitalization are more than ef

-

ficiency tools, they are also integral to how we safe

-

guard and enhance safety as well as quality. The

way we combine advanced technology, including AI

solutions, with human expertise is key for success

-

ful automation with enhanced quality effects. Quality

specialists stay closely involved by training, checking,

and improving the automated solution.

26

Autoliv facility in Ogden, USA

27

/ Perform and Transform

Road in Bengaluru, India

28

Asia a Major

Growth Engine

Over the past decade, Asia has seen

substantial growth of its automotive

industry, driven by expanding middle

classes, rapid urbanization, and surging

consumer demand – especially in

China. The Asia region now produces

more than half of the world’s light

vehicles. Economic growth is driving not

only vehicle production but also higher

safety content per vehicle, as seen in

India where rising incomes and stricter

regulations are boosting demand for

more safety features.

Accelerating sales in China through strategic part-

nerships and RD&E investments

Autoliv’s China growth strategy is built on our strong

sales development performance with Chinese OEMs,

strategic partnerships and joint ventures, and a grow

-

ing innovation infrastructure. This positions Autoliv for

sustained expansion in the world’s largest automotive

market. In 2025, sales to Chinese OEMs soared by

23%, significantly surpassing their LVP growth – driven

by a wave of new product launches.

To support this growth, Autoliv is opening a state-

of-the-art tech center in Wuhan, China in 2026. The

facility will drive next-generation innovations in oc

-

cupant protection and system integration, reinforc

-

ing Autoliv’s commitment to safety leadership and

supporting our Chinese customers’ future success.

Autoliv is also expanding its presence in China through

partnerships with Chinese OEMs, industry organiza

-

tions and key suppliers. In 2025, Autoliv and CATARC,

the leading research institute for setting standards in

China's automotive sector, signed a strategic agree

-

ment to jointly advance automotive safety standards

and innovation in China and beyond.

Autoliv’s strong foothold with leading Chinese ve

-

hicle manufacturers is not only driving growth in China

but also opening doors globally.

As Chinese automak

-

ers accelerate their international expansion, Autoliv is

winning new business by leveraging these deep part

-

nerships and delivering world-class safety solutions

wherever they go.

Leveraging India’s automotive boom and rising

demand for safer vehicles

Autoliv is rapidly expanding its business in India,

securing our market leadership. With safety content

in vehicles increasing by around 20% annually for the

past two years, driven by a regulatory focus and rising

consumer demand for safety, India now represents 5%

of Autoliv’s global sales, a more than doubling in just

two years.

Autoliv India operates five manufacturing plants, a

technical center, and a global virtual engineering hub,

with more than 6,000 associates in total. To further

strengthen its footprint, Autoliv recently opened a new

inflator plant, the first in India, to meet growing demand

for airbags from both Indian and other Asian vehicle

manufacturers for the domestic market as well as for

exports.

29

1. Jan Carlson

Chairman since 2014.

Director since 2007.

2. Mikael Bratt

President and CEO of Autoliv Inc.

Director since 2018.

3. Laurie Brlas

Director since 2020. Member of

the Audit, Risk, and Compliance

Committee and the Nominating

and Corporate Governance

Committee.

4. Leif Johansson

Director since 2016. Chair of

the Nominating and Corporate

Governance Committee. Member

of the Leadership Development

and Compensation Committee.

5. Franz-Josef Kortüm

Director since 2014. Member of

the Nominating and Corporate

Governance Committee.

6. Frédéric Lissalde

Director since 2020. Chair of

the Leadership Development

and Compensation Committee.

Member of the Nominating and

Corporate Governance Committee.

7. Xiaozhi Liu

Director since 2011. Member of

the Leadership Development and

Compensation Committee.

8. Gustav Lundgren

Director since 2022. Member of

the Audit, Risk, and Compliance

Committee.

9. Martin Lundstedt

Director since 2021. Member of

the Leadership Development and

Compensation Committee.

10. Thaddeus “Ted” Senko

Director since 2018. Chair of the

Audit, Risk, and Compliance

Committee.

11. Adriana Karaboutis

Director since 2024. Member of

the Audit, Risk, and Compliance

Committee.

Board

of

Directors

1

3

4

2

6

8

7

5

9

10

11

The Board of Directors, meeting in New York, USA

30

1. Mikael Bratt

President and CEO.

2. Fredrik Westin*

Executive Vice President,

Finance and Chief

Financial Officer.

3. Petra Albuschus

Executive Vice President,

Human Resources & Sustainability.

4. Kevin Fox

President, Autoliv Americas.

5. Magnus Jarlegren

President, Autoliv Europe.

6. Fabien Dumont

Executive Vice President,

Chief Technology Officer.

7. Jonas Jademyr

Executive Vice President, Quality

and Program Management.

8. Colin Naughton

President, Autoliv Asia.

9. Anthony Nellis

Executive Vice President,

Legal Affairs; General

Counsel & Secretary.

10. Staffan Olsson

Executive Vice President,

Operations.

11. Christian Swahn

Executive Vice President,

Supply Chain Management.

12. Sng Yih

President, Autoliv China.

Executive

Management Team

Autoliv’s crash test center in South Korea is visited by the

Executive Management Team, and in front of the team, a

crash test dummy takes center stage.

*) Until March 31, 2026

1

9

6

4

12

11

3

8

2

7

10

5

31

Locations

and

Capabilities

1) Defined as a best-cost country. 2) Includes weaving and sewing of textile cushions

and seatbelt webbing, inflators, and components for airbag and seatbelt products.

Location

Tech Center

Production

Other

2)

Sales Support

Employees

Headquartered in Stockholm, Sweden

Incorporated in Delaware, United States

BRAZIL

1)

1,300









CANADA

512



CHINA

1)

8,470













ESTONIA

1)

725





FRANCE

1,338









GERMANY

402





HUNGARY

1)

1,472



INDIA

1)

6,140













INDONESIA

1)

181







JAPAN

1,909











MALAYSIA

1)







MEXICO

1)

13,298











PHILIPPINES

1)

1,145



POLAND

1)

2,092







ROMANIA

1)

8,650













SOUTH AFRICA

1)

233





SOUTH KOREA

468









SPAIN

431





SWEDEN

509







SWITZERLAND

51



THAILAND

1)

4,289









TUNISIA

1)

4,524



TURKEY

1)

2,214











USA

3,686









VIETNAM

1)

171



AUTOLIV, INC.

Visiting address:

Klarabergsviadukten 70, Section D,

5th Floor, Stockholm, Sweden

Postal address:

P.O. Box 70381, SE-107 24 Stockholm, Sweden

Tel: +46 (0)8 587 20 600

www.autoliv.com

CONTACT OUR BOARD

Autoliv, Inc.

P.O. Box 70381, SE-107 24 Stockholm, Sweden

Tel: +46 (0)8 587 20 600

E-mail: legalaffairs@autoliv.com

The Board, individual directors and the committees

of the Board can be contacted using the address

above. Contact can be made anonymously and

communication with individual directors is not

screened. The relevant chair receives all such

communication after it has been determined that

the content contains a message to said chair.

STOCK TRANSFER AGENT AND REGISTRAR

www.computershare.com

INVESTOR REQUESTS

Autoliv, Inc.,

P.O. Box 70381, SE-107 24, Stockholm, Sweden

Tel: +46 (0)8 587 20 600

E-mail: ir@autoliv.com

2026 PRELIMINARY CALENDAR

April 17, Financial Report Q1

May 7, Annual Shareholders Meeting

July 17, Financial Report Q2

October 23, Financial Report Q3

Concept and Design: PCG

Contacts

and

Calendar

33

(US$ millions, except per share data, unaudited)

2025

2024

2023

2022

2021

Sales and Income

Net sales

$10,82

$10,39

$10,48

$8,84

$8,23

Airbags, Steering Wheels and Other

1)

7,302

7,023

7,055

5,807

5,380

Seatbelt Products and Other

1)

3,513

3,367

3,420

3,035

2,850

Operating income

1,088

979

690

659

675

Net income attributable to controlling interest

735

646

488

423

435

Earnings per share – basic

2)

9.59

8.06

5.74

4.86

4.97

Earnings per share – diluted

2)

9.55

8.04

5.72

4.85

4.96

Gross margin

3)

19.2%

18.5%

17.4%

15.8%

18.4%

S,G&A in relation to sales

(5.3)%

(5.1)%

(4.8)%

(4.9)%

(5.3)%

RD&E net in relation to sales

(3.8)%

(3.8)%

(4.1)%

(4.4)%

(4.7)%

Operating margin

4)

10.1%

9.4%

6.6%

7.5%

8.2%

Adjusted operating margin

5,6)

10.3%

9.7%

8.8%

6.8%

8.3%

Balance Sheet

Trade working capital

6,7)

1,221

1,115

1,232

1,183

1,332

Trade working capital in relation to sales

8)

10.8%

10.7%

11.2%

12.7%

15.7%

Receivables outstanding in relation to sales

9)

19.8%

19.0%

20.0%

20.4%

20.0%

Inventory outstanding in relation to sales

10)

8.8%

8.8%

9.2%

10.4%

9.2%

Payables outstanding in relation to sales

11)

17.8%

17.2%

18.0%

18.1%

13.5%

Total equity

2,582

2,285

2,570

2,626

2,648

Total parent shareholders’ equity per share

34.43

29.26

30.93

30.30

30.10

Current assets excluding cash

3,497

3,153

3,475

3,119

2,705

Property, plant and equipment, net

2,419

2,239

2,192

1,960

1,855

Goodwill and Intangible assets

1,386

1,375

1,385

1,382

1,395

Capital employed

4,148

3,840

3,937

3,810

3,700

Net debt

6)

1,566

1,554

1,367

1,184

1,052

Total assets

8,644

7,804

8,332

7,717

7,537

Long-term debt

1,734

1,522

1,324

1,054

1,662

Return on capital employed

12)

26.4%

25.0%

17.7%

17.5%

18.3%

Return on total equity

13)

30.0%

27.2%

19.0%

16.3%

17.1%

Total equity ratio

30%

29%

31%

34%

35%

Cash flow and other data

Operating cash flow

1,157

1,059

982

713

754

Depreciation and amortization

407

387

378

363

394

Capital expenditures, net

423

563

569

485

454

Capital expenditures, net in relation to sales

3.9%

5.4%

5.4%

5.5%

5.5%

Free operating cash flow

6,14)

734

497

414

228

300

Cash conversion

6,15)

100%

77%

85%

54%

69%

Direct shareholder return

16)

590

771

577

339

165

Cash dividends paid per share

3.12

2.74

2.66

2.58

1.88

Number of shares outstanding (millions)

17)

74.7

77.7

82.6

86.2

87.5

Number of employees, December 31

58,000

59,500

62,900

61,700

55,900

1)

Including Corporate sales.

2)

Net of treasury shares.

3)

Gross profit relative to sales.

4)

Operating income relative to sales.

5)

Excluding effects from capacity alignments, antitrust related matters and for FY

2023 the Andrews litigation settlement.

6)

Non-GAAP measure, for reconciliation see tables above.

7)

Outstanding receivables and outstanding inventory less outstanding payables.

8)

Outstanding receivables

and outstanding inventory less outstanding payables relative to annualized fourth quarter sales.

9)

Outstanding receivables relative to annualized fourth quarter sales.

10)

Outstanding inventory relative to

annualized fourth quarter sales.

11)

Outstanding payables relative to annualized fourth quarter sales.

12)

Operating income and income from equity method investments, relative to average capital employed.

13)

Income relative to total equity.

14)

Operating cash flow less Capital expenditures, net.

15)

Free operating cash flow relative to Net income.

16)

Dividends paid and Shares repurchased.

17)

At year end, excluding

dilution and net of treasury shares.

Multi-Year

Summary

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2025

or

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

_________

to _________

Commission file number: 001-12933

AUTOLIV, INC.

(Exact name of registrant as specified in its charter)

Delaware

51-0378542

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

Klarabergsviadukten 70, Section D5,

Box 70381,

SE-107 24

Stockholm, Sweden

(Zip Code)

(Address of principal executive offices)

+46 8 587 20 600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

Trading Symbol(s):

Name of each exchange on which registered:

Common Stock (par value $1.00 per share)

ALV

New York Stock Exchange

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes

☒

No

☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes

☐

No

☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934

during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing

requirements for the past 90 days.

Yes:

☒

No:

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of

Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such

files).

Yes:

☒

No:

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an

emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth

company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new

or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal

control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262 (b)) by the registered public accounting firm that

prepared or issued its audit report.

☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the

filing reflect the correction of an error to previously issued financial statements.

☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation

received by any of the registrant’s executive

officers

during the relevant recovery period pursuant to §240.10D-1(b).

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes:

☐

No:

☒

The aggregate market value of the voting and non-voting common equity of Autoliv, Inc. held by non-affiliates as of the last business day of the second

fiscal quarter of 2025 amounted to $8,595 million.

Number of shares of Common Stock outstanding as of February 11, 2026: 74,706,513.

Auditor Firm Id: 1433

Auditor Name: Ernst & Young AB

Auditor Location: Stockholm, Sweden

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive Proxy Statement for the annual stockholders’ meeting to be held on May 7, 2026, to be dated on or around March

25, 2026 (the “2026 Proxy Statement”), are incorporated by reference into Part III of this Annual Report on Form 10-K. The 2026 Proxy Statement will be

filed with the U.S. Securities and Exchange Commission within 120 days after December 31, 2025.

1

AUTOLIV, INC.

Index

PART I

Item 1.

Business

3

Item 1A.

Risk Factors

10

Item 1B.

Unresolved Staff Comments

22

Item 1C.

Cybersecurity

23

Item 2.

Properties

25

Item 3.

Legal Proceedings

28

Item 4.

Mine Safety Disclosures

28

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

29

Item 6.

[Reserved]

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

31

Item 7A.

Quantitative and Qualitative Disclosures about Market Risk

51

Item 8.

Financial Statements and Supplementary Data

53

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

89

Item 9A.

Controls and Procedures

89

Item 9B.

Other Information

90

PART III

Item 10.

Directors, Executive Officers and Corporate Governance

91

Item 11.

Executive Compensation

91

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

91

Item 13.

Certain Relationships and Related Transactions, and Director Independence

91

Item 14.

Principal Accountant Fees and Services

91

PART IV

Item 15.

Exhibit and Financial Statement Schedules

92

2

NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains statements that are not historical facts but rather forward-looking statements within the

meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include those that address activities,

events or developments that Autoliv, Inc. (“Autoliv,” the “Company” or “we”) or its management believes or anticipates may occur in the

future. All forward-looking statements are based upon our current expectations, various assumptions and/or data available from third

parties. Our expectations and assumptions are expressed in good faith and we believe there is a reasonable basis for them. However,

there can be no assurance that such forward-looking statements will materialize or prove to be correct as forward-looking statements

are inherently subject to known and unknown risks, uncertainties and other factors which may cause actual future results, performance

or achievements to differ materially from the future results, performance or achievements expressed in or implied by such forward-

looking statements.

In some cases, you can identify these statements by forward-looking words such as “estimates,” “expects,” “anticipates,” “projects,”

“plans,” “intends,” “believes,” “may,” “likely,” “might,” “would,” “should,” “could,” or the negative of these terms and other comparable

terminology, although not all forward-looking statements contain such words.

Because these forward-looking statements involve risks and uncertainties, the outcome could differ materially from those set out in the

forward-looking statements for a variety of reasons, including without limitation: general global and regional economic conditions,

including the impact of inflation; changes in light vehicle production; fluctuation in vehicle production schedules for which the Company

is a supplier; global supply chain disruptions, including port, transportation, and distribution delays or interruptions; supply chain

disruptions and component shortages specific to the automotive industry or the Company; potential changes to beneficial free trade

agreements and regulations, such as the United States-Mexico-Canada Agreement; changes in geopolitical and other economic and

political conditions or developments, including inflation, changes in trade policies, tariff regimes, and other developments in and by

countries in which we do business that could materially impact supply chains, margins, access to capital, or overall business

performance; political stability or geopolitical conflicts; changes in general industry or market conditions, including regional economic

growth or decline; changes in and the successful execution of our capacity alignment, restructuring, cost reduction, and efficiency

initiatives and the market reaction thereto; loss of business from increased competition; volatility or increases in raw material, fuel, and

energy costs; changes in consumer and customer preferences for end products; loss of customers or sales; legislative or regulatory

changes; customer bankruptcies, consolidations or restructuring or divestiture of customer brands; unfavorable fluctuations in

currencies or interest rates among the various jurisdictions in which we operate; market acceptance of our new products; costs or

difficulties related to the integration of any new or acquired businesses and technologies; continued uncertainty in pricing and other

negotiations with customers, including inflation and tariff compensations; successful integration of acquisitions and operations of joint

ventures; successful implementation of strategic partnerships and collaborations; our ability to be awarded new business; product

liability, warranty and recall claims and investigations and other litigation, civil judgments or financial penalties and customer reactions

thereto; higher expenses for our pension and other postretirement benefits, including higher funding needs for our pension plans; work

stoppages or other labor issues; possible adverse results of pending or future litigation or infringement claims, and the availability of

insurance with respect to such matters; our ability to protect our intellectual property rights; negative impacts of antitrust investigations

or other governmental investigations and associated litigation relating to the conduct of our business; tax assessments or results of tax

audits by governmental authorities and changes in our effective tax rate; dependence on key personnel; our ability to meet our

sustainability targets, goals and commitments; dependence on and relationships with customers and suppliers; the conditions

necessary to hit our financial targets; and other risks and uncertainties identified in Item 1A -“Risk Factors” of this Annual Report on

Form 10-K, Item 1A, and Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this

Annual Report.

For any forward-looking statements contained in this or any other document, we claim the protection of the safe harbor for forward-

looking statements contained in the Private Securities Litigation Reform Act of 1995, and we assume no obligation to update publicly or

revise any forward-looking statements in light of new information or future events, except as required by law.

3

PART I

Item 1. Business

General

Autoliv, Inc. (“Autoliv”, the “Company” or “we”) is a Delaware corporation with its principal executive offices in Stockholm, Sweden

where it currently employs approximately 113 people. The Company functions as a holding corporation and owns two principal

subsidiaries, Autoliv AB and Autoliv ASP, Inc. The Company's fiscal year ends on December 31.

range of product offerings.

Passive safety systems are primarily meant to improve safety for occupants in a vehicle. Passive safety systems include modules and

components for frontal-impact airbag protection systems, side-impact airbag protection systems, pedestrian protection systems,

steering wheels, inflator technologies, battery cut-off switches and seatbelts.

To expand its product offerings, the Company formed Mobility Safety Solutions. By combining its core competence and industry

experience, the Company also develops and manufactures mobility safety solutions such as passive safety systems for commercial

vehicles, battery cut-off switches, and safety solutions for riders of motorcycles and bikes.

The Company has 62 production facilities in 23 countries and its customers include the world’s largest car manufacturers. The

Company’s sales in 2025 were $10.8 billion, approximately 68% of which consisted of airbag and steering wheel products and

approximately 32% of which consisted of seatbelt products. The Company's business is conducted in the following geographical

regions: The Americas, Europe, China, and Asia, excluding China.

On December 31, 2025, the Company had approximately 64,300 personnel worldwide, with 10% being temporary personnel.

Additional information required by this Item 1 regarding developments in the Company’s business during 2025 is contained under Item

7 in this Annual Report.

Reportable Segment

The Company has one reportable segment based on the way the Company evaluates its financial performance and manages its

operations. The Company's business is comprised of passive safety products – principally airbags (including steering wheels and

inflators) and seatbelts. For more information regarding the Company’s segment reporting, see Note 1, Basis of Presentation, to the

Consolidated Financial Statements in this Annual Report.

Products, Market, and Competition

Products

Providing life-saving solutions is a key priority as the world population grows and develops. However, population expansion in growth

markets and the rise of megacities creates new complexities. To meet this challenge, the Company develops safety solutions for both

mobility and society that work in real life situations.

The Company's passive safety systems such as seatbelts and airbags substantially

mitigate human consequences of traffic accidents.

The airbag module is designed to inflate extremely rapidly and then quickly deflate during a collision or impact. It consists of the

container, an airbag cushion, and an inflator. The purpose of the airbag is to provide the occupants a cushioning and restraint during a

crash event to prevent any impact or impact-caused injuries between the occupant and the interior of the vehicle.

Seatbelts can reduce the overall risk of serious injuries in frontal crashes by as much as 60% due to advanced seatbelt technologies

such as pretensioners and load limiters.

The Company also manufactures steering wheels that are crafted to ensure they meet safety requirements and are functional as well

as stylish.

Market and Competition

Consumer research clearly shows that consumers want safe vehicles, and several significant trends are likely to positively influence

overall safety content per vehicle. These include:

1) Society becoming increasingly focused on Vision Zero and its goal of reducing traffic fatalities and their associated costs;

2) Demographic trends of increased urbanization, aging driver populations, and increased safety focus in growth markets;

3) Evolving government regulations and test rating systems to improve the safety of vehicles in various markets, such as the

updated European New Car Assessment Program (Euro NCAP), China NCAP, and USNCAP; and

4) The trend towards autonomous vehicles may lead to roomier interiors that may require more advanced passive safety

systems.

The automotive passive safety market is driven by two primary factors: light vehicle production (LVP) and content per vehicle (CPV).

4

The first growth driver, LVP, has increased at an average annual growth rate of around 1.9% since the start of Autoliv in 1997 despite

persistent headwinds in Europe and North America. According to S&P Global, LVP is forecasted to grow to close to 92 million by 2028

from just over 90 million in 2025, due to growing demand and export in medium- and low-income markets.

Unlike LVP, where Autoliv can only aim to be on the best-selling platforms, Autoliv can influence CPV more directly by continuously

developing and introducing new technologies with higher value-added features. Over the long term, this increases average safety CPV

and has caused the Company's markets to grow faster than the LVP.

Since 1997, the Company’s sales compound annual growth rate (CAGR) for passive safety has been around 5% compared to the

market rate of around 2.8% which includes an LVP growth of around 1.9%. The Company's outperformance is a result of a steady flow

of new passive safety technologies, strong focus on quality and a superior global footprint both in products and engineering. This has

enabled Autoliv to increase its global market share in passive safety from 27% in 1997 to around 44% in 2025.

In high-income markets (Western Europe, North America, Japan, and South Korea) the average CPV is around $350. CPV growth in

these regions mainly comes from new safety systems such as active seatbelts, knee airbags, and front-center airbags along with

improved protection for pedestrians and rear-seat occupants like bag-in-belt or more advanced seatbelts.

In medium- and low-income markets (all markets other than the high-income markets mentioned above), the Company sees great

opportunities for CPV growth from more airbags and advanced seatbelt products. The average CPV in these markets is around $210,

which is almost $140 less than in the high-income markets.

As a result of higher installation rates of airbags, more advanced seatbelt products, and more complex steering wheels, CPV is

expected to increase at a similar pace in both high-income and medium- and low-income markets over the next three years.

In the next three years, almost all LVP growth is expected to come in medium- and low-income regions with lower CPV, leading to a

dilution of the average global CPV. Despite this negative regional LVP mix effect, the annual passive safety market (seatbelts and

airbags, including steering wheels), is expected to grow from around $24 billion in 2025 to almost $26 billion over the next three years,

based on the current macro-economic outlook and the Company's internal market intelligence and estimates.

In seatbelts, Autoliv has a global market share of around 45%, primarily due to being the technology leader with several important

innovations such as pretensioners and active seatbelts. The Company's strong market position is also a reflection of its superior global

footprint. Seatbelts are the primary life-saving safety product globally and are also an important requirement in low-end vehicles in the

medium- and low-income markets. This provides the Company with an excellent opportunity to benefit from the expected growth in this

segment of the market.

Autoliv holds a leading position in both airbags and steering wheels, with a combined market shares of around 44%. The market for

airbags and steering wheels is expected to grow primarily due to increasing installation rates of inflatable curtains, side airbags, knee

airbags, and front

‑

center airbags, as well as rising demand for higher

‑

value steering wheels with leather and additional integrated

functions.

The Company's ability to consistently outperform market growth is rooted in a steady flow of new safety technologies, a strong focus on

quality, and a superior production and engineering footprint.

The Company's competitors

Autoliv is the clear market leader in passive safety components and systems for the automotive industry with an estimated global

market share of around 44%.

ZF AG, one of the Company's largest competitors, is a global leader in drive-line and chassis technology as well as in passive safety

technologies and is one of the largest global automotive suppliers.

Another large competitor is Joyson Safety Systems (JSS), a subsidiary of Ningbo Joyson Electronic Corp. JSS is the result of the

merger between Key Safety Systems (KSS) and Takata Corporation after KSS acquired Takata in 2018.

In Japan, Brazil, South Korea, and China, there are a number of local suppliers that have close ties with the domestic vehicle

manufacturers. For example, Toyota uses “keiretsu” (in-house) suppliers Tokai Rika for seatbelts and Toyoda Gosei for airbags and

steering wheels. These suppliers generally receive most of the Toyota business in Japan, in the same way, Mobis, a major supplier to

Hyundai/Kia in South Korea, generally receives a significant part of their business. Also BYD Auto., Ltd. (BYD) has a high degree of

vertical integration, with a large proportion of in-house sourcing of products and systems. This includes passive safety systems, which

is supplied by its subsidiary FinDreams Technology. Autoliv supplies components, especially inflators, to FinDreams Technology.

Other competitors include Nihon Plast and Ashimori in Japan, Yanfeng and Jinheng in China, Samsong in South Korea, and Chris

Cintos de Seguranca in South America. Collectively, these competitors account for the majority of the remaining market share in

passive safety.

Additional information concerning the Company's products, markets and competition is included in the “Risks and Risk Management”

section under Item 7 of this Annual Report.

5

Manufacturing and Production

See “Item 2. Properties” for a description of Autoliv’s principal properties. The component factories manufacture inflators, propellant,

initiators, textile cushions, webbing, pressed steel parts, springs, and over molded steel parts used in seatbelt and airbag assembly and

steering wheels. The assembly factories source components from a number of parties, including Autoliv’s own component factories,

and assemble complete restraint systems for “just-in-time” delivery to customers. The products manufactured by Autoliv’s consolidated

subsidiaries in 2025 consisted of 143 million complete seatbelt systems (of which 100 million were fitted with pretensioners), 143 million

side airbags (including curtain airbags and front center airbags), 61 million frontal airbags and 21 million steering wheels.

Autoliv’s “just-in-time” delivery system is designed to accommodate the specific requirements of each customer for low levels of

inventory and rapid stock delivery service. “Just-in-time” deliveries require final assembly or, at least, distribution centers in geographic

areas close to customers to facilitate rapid delivery. The fact that the major automobile manufacturers are continually expanding their

production activities into more countries and require the same or similar safety systems as those produced in Europe, Japan, or the

U.S. increases the importance for suppliers to have assembly capacity in several countries. Consolidation among the Company's

customers also supports this trend.

Autoliv’s assembly operations generally are not constrained by capacity considerations unless there is a disruption in the supply of raw

materials and components. When dramatic shifts in LVP occur, Autoliv can generally adjust capacity in response to any changes in

demand within a few days by adding or removing work shifts and within a few months by adding or removing standardized production

and assembly lines. Most of Autoliv’s assembly factories can make sufficient space available to accommodate additional production

lines to satisfy foreseeable increases in capacity. As a result, Autoliv can usually adjust its manufacturing capacity faster than its

customers can adjust their capacity as a result of fluctuations in the general demand for vehicles or in the demand for a specific vehicle

model, provided that customers promptly notify Autoliv when they become aware of such changes in demand. However, these types of

adjustments can be costly and can impact Autoliv's operating margin.

When significant volatility in LVP occurs, as we saw in 2022 and 2023 due to supply disruptions, or when there is a shift in regional

LVP, the capacity adjustments can take more time and be more costly. During 2025 the volatility of LVP improved, although it is still

more volatile than prior to the COVID-19 pandemic. Additionally, when there is significant demand for a given product due to a major

recall of a competitor’s product, like certain of the Company's customers have experienced, capacity adjustments may take time.

The Company could experience disruption in its supply or delivery chain, which could cause one or more of its customers to halt or

delay production. For more information, see Item 1A – “Risk Factors” in this Annual Report.

Quality Management

Autoliv believes that superior quality is a prerequisite to being considered a leading global supplier of automotive safety systems and is

key to the Company's financial performance, because quality excellence is critical for winning new orders, preventing recalls, and

maintaining low scrap rates. Autoliv has for many years emphasized a “zero-defect” proactive quality policy and continues to strive to

improve its working methods. Autoliv’s products are expected to always meet performance expectations and be delivered to its

customers at the right times and in the right amounts. The Company believes its continued quality improvements further enhance the

Company's reputation among its customers, employees, and governmental authorities.

Although quality has always been paramount in the automotive industry, especially for safety products, automobile manufacturers have

become increasingly focused on quality with even less tolerance for any deviations. This intensified focus on quality is partially due to

an increase in the number of vehicle recalls for a variety of reasons (not just safety), including a few high-profile vehicle recalls. This

trend is likely to continue as automobile manufacturers introduce even stricter quality requirements and regulating agencies and other

authorities increase the level of scrutiny given to vehicle safety issues. The Company has not been immune to the recalls that have

been impacting the automotive industry.

The Company continues to drive its quality initiative called “Q5,” which was initiated in 2010. It is an integral part of the Company's

strategy of shaping a proactive quality culture of zero defects. It is called “Q5” because it addresses quality in five dimensions: products,

customers, growth, behavior, and suppliers. The goal of Q5 is to firmly tie together quality with value within all of the Company's

processes and for all of its employees, thereby leading to the best value for its customers. Since 2010, the Company has continually

focused on this quality initiative to provide additional skills training to more employees and suppliers. These activities have significantly

improved the Company's quality performance.

In the Company's pursuit of quality excellence, the Company developed a chain of four “defense lines” to deal with potential quality

issues. The defense lines are: 1) robust product designs, 2) flawless components from suppliers and the Company's own in-house

component companies, 3) manufacturing flawless products with a system for verifying that the Company's products conform with

specifications, and 4) an advanced traceability system in the event of a recall.

The Company's pursuit of quality excellence extends from the earliest phases of product development to the proper disposal of a

product following many years of use in a vehicle. Autoliv’s comprehensive Autoliv Product Development System (“APS”) includes

several key check points during the process of developing new products that are designed to ensure that such products are well-built

and have no hidden defects. Through this process, the Company works closely with its suppliers and customers to set clear standards

that help to ensure robust component design and lowest cost for function in order to proactively prevent problems and ensure the

Company delivers only the best designs to the market.

6

The APS, based on the goals of improving quality and efficiency, is at the core of Autoliv’s manufacturing philosophy. APS integrates

essential quality elements, such as mistake proofing, statistical process control and operator involvement, into the manufacturing

processes so all Autoliv associates are aware of and understand the critical connection between themselves and the Company's

lifesaving products. This “zero-defect” principle extends beyond Autoliv to the entire supplier base. All of the Company's suppliers must

accept the strict quality standards in the global Autoliv Supplier Manual, which defines the Company's quality requirements and focuses

on preventing bad parts from being produced by its suppliers and helps eliminate defective intermediate products in the Company's

assembly lines as early as possible. In addition, Autoliv’s One Product One Process (“1P1P”) initiative is its strategy for developing and

managing standardization of both core products and customer-specific features, leading not only to improved quality, but also greater

cost efficiency and more efficient supply chain management.

IATF 16949:2016 is one of the automotive industry’s most widely used international standards for quality management. All Autoliv

facilities that ship products to OEMs are regularly certified according to the International Automotive Task Force (IATF) standards.

Environmental and Safety Regulations

For information on how environmental and safety regulations impact the Company's business, see “Risk Factors – ‘Our business may

be adversely affected by laws or regulations, including environmental, occupational health and safety, and other governmental

regulations’, “Global climate change could negatively affect our business”, “Our goals, targets, and ambitions related to sustainability

and emissions reduction, and our public statements and disclosures regarding them, may, from time to time, result in additional

considerations or expectations and expose us to risks” and “Our business may be adversely affected by changes in automotive safety

regulations or concerns that drive further regulation of the automobile safety market”” in Item 1A and “Risks and Risk Management” in

Item 7 of this Annual Report.

Raw Materials

Direct material cost represents approximately 54% of the Company's net sales in 2025. The Company mainly purchases manufactured

components and raw materials for its operations. The Company takes several actions to manage the raw material fluctuations, such as

competitive sourcing and looking for alternative materials. The Company is also taking necessary actions to gradually implement raw

materials with a lower carbon emission footprint.

For information on the sources and availability of raw materials, see "Operational Risks - Component costs" in Item 7 and “Risk Factors

– Changes in the source, cost, availability of and regulations pertaining to raw materials and components may adversely affect our profit

margins” in Item 1A of this Annual Report.

Intellectual Property

The Company has developed a considerable amount of proprietary technology related to automotive safety systems and relies on many

patents to protect such technology. The Company's intellectual property plays an important role in maintaining its competitive position in

a number of the markets the Company serves. For information on the Company's use of intellectual property and its importance to the

Company, see “Risk Factors – If our patents are declared invalid or our technology infringes on the proprietary rights of others, our

ability to compete may be impaired” in Item 1A of this Annual Report.

Backlog

The Company has frame contracts with automobile manufacturers and such contracts are typically entered into up to three years before

the start of production of the relevant car model or platform and provide for a term covering the life of such car model or platform

including service parts after a vehicle model is no longer produced. These contracts, however, do not typically provide minimum

quantities, firm prices, or exclusivity but instead permit the automobile manufacturer to resource the relevant products at given intervals

(or at any time) from other suppliers. We sometimes refer to this backlog as our order intake or order book. For more information about

order intake see “Risk Factors – The cyclical nature of automotive sales and production can adversely affect our business, operating

results, and financial condition. Our business is directly related to LVP in the global market and by our customers, and automotive sales

and LVP are the most important drivers for our sales” in Item 1A of this Annual Report.

7

Dependence on Customers

In 2025, the Company's top five customers represented around 44% of its consolidated net sales and the Company's top ten customers

represented around 70% of its consolidated net sales. This reflects the concentration of manufacturers in the automotive industry. In

2025 the Company's five largest customers accounted for around 40% of global LVP and the ten largest customers for around 56% of

global LVP. A delivery contract is typically for the lifetime of a vehicle model, which is normally between five and seven years depending

on customer platform sourcing preferences and strategies.

For information on the Company's dependence on customers, see “Risk Factors – Our business could be materially and adversely

affected if we lost any of our largest customers, lose business from any of our largest customers,

or if any of such customers are

unable to pay their invoices” in Item 1A of this Annual Report, and “Dependence on Customers” under the section “Strategic Risks” in

Item 7 of this Annual Report, and Note 21, Segment Information, to the Consolidated Financial Statements

Customer sales trends

Asian OEMs have steadily become increasingly important, mainly driven by growth with Japanese and Chinese OEMs. As a group

Asian OEMs represented around 48% of the Company's consolidated net sales in 2025, of which Japanese OEMs accounted for

almost two thirds. This is a result of the Company's stronger market position based on its local presence in Japan. As a group the

Chinese OEMs accounted for around 8% of the Company's consolidated net sales in 2025, with Geely representing more than 2% of

the Company's consolidated net sales. European based brands accounted for 30% of the Company's consolidated net sales in 2025.

The U.S. based OEMs (including Chrysler and new EV manufactures) accounted for 20% of the Company's global sales in 2025.

Globally,

the Company's strongest growing customers from 2024 to 2025 were Stellantis, followed by Suzuki, Toyota and Chery .

Research, Development and Engineering , net (R,D&E)

During 2025, gross expenditures for R,D&E amounted to $616 million compared to $612 million in 2024. Of these amounts, $202

million in 2025 and $214 million in 2024 were related to customer-funded engineering projects and crash tests reimbursed by the

customers. Net of this income, R,D&E expenditures in 2025 was $413 million compared to $398 million in 2024. Of the gross R,D&E

expense in 2025, 79% was for projects and programs where the Company has customer orders, typically related to vehicle models in

development. The remaining 21% was mainly for new innovations, products and standardizations that may yield benefits over time.

No single customer project accounted for more than 2% of Autoliv’s total gross R,D&E spending during 2025. To support Autoliv’s

product portfolio, additional expertise is brought in-house via technology partnerships and licensing agreements.

Regulatory Costs

The fitting of seatbelts in most types of motor vehicles is mandatory in almost all countries and many countries have strict laws

regarding the use of seatbelts while in vehicles. In addition, most developed countries require that seats in intercity buses and

commercial vehicles be fitted with seatbelts. In the U.S., federal legislation requires frontal airbags on the driver-side and the

passenger-side of all new passenger cars, sport utility vehicles, pickup trucks, and vans.

For information concerning the material effects on the Company's business relating to its compliance with government safety

regulations, see “Risk Factors – ‘Our business may be adversely affected by laws or regulations, including environmental, occupational

health and safety, and other governmental regulations’ and ‘Our business may be adversely affected by changes in automotive safety

regulations or concerns that drive further regulation of the automobile safety market’” in Item 1A of this Annual Report and in Item 7

under the section “Risks and Risk Management” of this Annual Report.

Climate change

The Company is committed to operating its business in an environmentally sustainable manner, meaning developing and producing

products in a resource efficient way while limiting the Company's environmental impact in the most material areas of greenhouse gas

emissions, energy use, waste, and water. With particular emphasis on climate action, the Company actively engages with its

customers, suppliers, and others to drive sustainable mobility.

In June 2021, the Company launched an updated climate strategy including new long-term climate ambitions:

•

Carbon neutrality in own operations by 2030, and

•

Net-zero emissions across our supply chain by 2040

These industry-leading climate ambitions are aligned with a 1.5°C trajectory and should position the Company as the supplier of choice

for the most climate-focused customers, helping to ensure the Company's competitiveness now and in the future. In addition to these

ambitions, the Company adopted Science Based Targets (SBTs) for 2030 covering its own operations as well as the supply chain. The

targets were approved in January 2022 and are available at the SBTi website.

For more information about how climate change impacts the Company's business, see "Risk Factors – Global climate change could

negatively affect our business” in Item 1A of this Annual Report.

8

Human Capital Management

The Company's drive for excellence is what makes Autoliv the world’s leading supplier of automotive safety systems. From the earliest

stages of product development to sales and design to the final delivery of the finished product, Autoliv's employees are driven by the

Company's mission to Save More Lives.

The successful execution of the Company's strategies relies on its ability to shape a quality and performance-oriented culture, and to

adapt quickly to sudden shifts in circumstances, such as supply chain disruptions and geopolitical instability. As the Company moves

forward, its workforce including both employees and temporary personnel, strives to respond with agility to new opportunities for growth

and improvement while delivering excellence to its customers. The Company builds a winning team by focusing on creating a work

environment that attracts, retains, and engages its employees.

The table below shows the Company's total workforce as of December 31, 2025, and 2024.

2025

2024

Total workforce

64,300

65,200

Whereof:

Direct workforce in manufacturing

47,300

48,000

Indirect workforce

17,000

17,200

Temporary workforce

10

%

9

%

Of the Company’s total workforce as of December 31, 2025, 29% (2024: 30%) is located in the Americas, 22% (2024: 19%) in Asia

(excluding China), 14% (2024: 14%) in China, and 35% (2024: 37%) in Europe (including South Africa, Tunisia and Turkey).

Talent Attraction, Development, and Retention

The Company believes that attraction, development, and retention of talent is essential to its success. The Company offers an inclusive

work environment where its employees are challenged and achieve great things together. The Company seeks individuals who hold

varied experiences and viewpoints to create a workplace that allows each employee to do their best work and drive the Company's

collective success. The Company's workforce reflects the diversity of the countries and cultures in which it operates.

Supporting the development of the employees is essential in a highly competitive and rapidly changing environment. An important

cornerstone of each employee’s growth is the ongoing dialogue between the team member and manager, which is summarized during

an annual Performance and Development Dialogue (PDD). During the year, 100% of targeted employees conducted a PDD with their

managers. To provide opportunities for professional and personal growth of the employees, the Company has a multitude of

development channels, including technical and specialist career paths, international assignments, and other such programs.

The Company provides market-based competitive compensation through its salary, annual incentive, and long-term incentive programs

and benefits packages that promote employee well-being across all aspects of their lives.

Health and Safety

The Company is committed to providing a zero-injury work environment that promotes the health, safety, and welfare of its employees.

Autoliv’s production facilities implement the Company's health and safety management system, which drives continuous improvement

in health and safety, supported by the Company's leadership. Execution of the system is monitored through internal and external ISO

45001 occupational health and safety management system audits. At the end of 2025, 70% of the Company's production facilities were

certified to the ISO 45001 standard.

Labor Relations

The Company offers fair terms and conditions of employment. The Company's overall purpose, Code of Conduct, talent development

strategies, and employment policies support the principles in the United Nations Universal Declaration of Human Rights, and the

International Labor Organization’s Fundamental Principles and Labor Standards.

The Company considers its relationship with its employees to be good. While there have been a small number of minor labor disputes

historically, such disputes have not had a significant or lasting impact on the Company's relationship with its employees, and customer

perception of its employee practices or its business results. Around 60% of the Company’s workforce outside the United States is

covered by a collective bargaining agreement.

Major unions in Europe to which some of the Company's employees belong include: IG Metall in Germany; Unite the union in the United

Kingdom; Confédération Générale des Travailleurs (CGT), Confédération Française Démocratique du Travail (CFDT), Confédération

Française de l’Encadrement Confédération Générale des cadres (CFE-CGC), Force Ouvrière (FO), Confédération Française des

Travailleurs Chrétiens (CFTC), Solidaires, Unitaires, Démocratiques (SUD) and Conféderation Autonome du Travail (CAT) in France;

Union General de Trabajadores (UGT), Union Sindical Obrera (USO), Comisiones Obereras (CCOO) and Confederacion General de

Trabajadores (CGT) in Spain; IF Metall, Unionen, Sveriges Ingenjörer and Ledarna in Sweden; Industriaal- ja Metallitöötajate

Ametiühingute

Liit (IMTAL) in Estonia; Vasas Szakszervezeti

Szövetség

(Hungarian

Metallworkers‘

Federation) in Hungary;

Samorzadny

NiezalezĪny

Zwiazek Zawodowy Pracownikow and Zakladowa Organizacja

Związkowa

NSZZ Solidarnosc in Poland;

National Union of Metal Workers South Africa (NUMSA) in South Africa; Union Générale des Travailleurs Tunisiens (UGTT) and Union

des travailleurs Tunisians (UTT) in Tunisia, and Türk Metal Sendikasi in Turkey.

9

In addition, the Company’s employees in other regions are represented by the following unions:

Unifor in Canada;

Sindicato de

Jornaleros y Obreros Industriales y de la Industria Maquiladora de

H. Matamoros,

Tamaulipas (CTM); Sindicato Nacional de

Trabajadores de la Industria Metalúrgica y Similares, Federación Valle

de Toluca;

Sindicato Nacional “Nueva Cultura Laboral”

de Trabajadores

de

la Fabricación, Manufactura, Ensamble

de Autopartes Mecánicas Eléctricas

y Componentes

de la Industria

Automotriz (CROC);

Sindicato Nacional de Trabajadores de la

Industria Arnesera,

Eléctrica, Automotriz y Aeronáutica de la República

Mexicana; Sindicato

Industrial de Trabajadores de la Transformación Construcción Automotriz Agropecuaria Plásticos y de la Industria

en General, del Comercio y Servicios Similares, Anexos y Conexos del Estado de Querétaro

“Angel Castillo Reséndiz" and Sindicato

Nacional de Trabajadores

de la

Industria de Autopartes en General y/o Similares, Conexos y sus Servicios de la República Mexicana

(CTM) in Mexico; Sindicato

dos Metalúrgicos de Taubaté

e Região and Sindicato

dos Trabalhadores nas Indústrias Metalúrgicas,

Mecânicas e

de

Material Elétrico de Pernambuco in Brazil;

Autoliv India Employees Association, Bangalore & Mysore in India; Quang

Yen Union in Vietnam; Korean Metal Workers Union (FKTU) in South Korea; Autoliv Japan Roudou Kumiai in Japan, and All-China

Federation of Trade Unions in China.

In many European countries, Canada, Mexico, Brazil and South Korea, wages, salaries and general working conditions are negotiated

with local unions and/or are subject to centrally negotiated collective bargaining agreements. The terms of the Company's various

agreements with unions typically range between one to three years. Some of the Company's subsidiaries in Europe, Canada, Mexico,

Brazil and South Korea must negotiate with the applicable local unions with respect to important changes in operations, working and

employment conditions. Twice a year, members of the Company’s management conduct a meeting with the European Works Council

(EWC) to provide employee representatives with important information about the Company and a forum for the exchange of ideas and

opinions. In many Asia Pacific countries, the central or regional governments provide guidance each year for salary adjustments or

statutory minimum wage for workers. The Company's employees may join associations in accordance with local legislation and rules,

although the level of unionization varies significantly throughout its operations.

Available Information

The Company files or furnishes with the United States Securities and Exchange Commission (the “SEC”) periodic reports and

amendments thereto, which include annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy

statements, and other information. Such reports, amendments, proxy statements, and other information are made available free of

charge on the Company's corporate website at

www.autoliv.com

and are available as soon as reasonably practicable after they are

electronically filed with the SEC. The Company's Corporate Governance Guidelines, committee charters, code of conduct, and other

documents governing the Company are also available on its corporate website at www.autoliv.com. The SEC maintains an internet site

that contains reports, proxy statements and other information at www.sec.gov. Hard copies of the above-mentioned documents can be

obtained free of charge by contacting the Company at: Autoliv, Inc., P.O. Box 70381, SE-107 24, Stockholm, Sweden.

10

Item 1A. Risk Factors

Our business, operating results, cash flows, and financial condition may be impacted by a number of factors. A discussion of the risks

associated with these material risk factors is included below.

RISKS RELATED TO OUR INDUSTRY

The cyclical nature of automotive sales and production can adversely affect our business, operating results, and financial

condition. Our business is directly related to LVP in the global market and by our customers, and automotive sales and LVP

are the most important drivers for our sales

Automotive sales and production are highly cyclical and can be affected by general or regional economic or industry conditions, the

level of consumer demand, recalls and other safety issues, labor relations issues, technological changes, fuel prices and availability,

vehicle safety regulations and other regulatory requirements, governmental initiatives, trade agreements, political volatility (especially in

energy producing countries and growth markets), changes in interest rate levels and credit availability, and other factors. Some regions

around the world may at various times be more particularly impacted by these factors than other regions. Economic declines that result

in a significant reduction in automotive sales and production by our customers have in the past had, and may in the future have, a

material adverse effect on our business, operating results, and financial condition. Our sales are also affected by the inventory levels of

our customers, which we cannot predict. Customers may choose to increase or reduce inventory levels at any time, and new inventory

levels may not align with historical trends. These fluctuations can add variability to customer call-offs, our production schedules, and

order intake, potentially impacting our revenues and financial condition. Uncertainty regarding inventory levels may be further impacted

by consumer financing programs initiated or terminated by our customers or governments, as such changes can influence the timing of

sales. Changes in automotive sales and LVP and/or customers’ inventory levels will have an impact on our financial targets, earnings

guidance, and estimates. In addition, we base our growth projections in part on business awards, or order intake, made by our

customers. However, actual production orders from our customers may not approximate the awarded business or our estimated order

intake. Any significant reduction in automotive sales and/or LVP by our customers, whether due to general economic conditions or any

other factors relevant to sales or LVP, could have a material adverse effect on our business, operating results, and financial condition.

Growth rates in safety CPV, which can be impacted by changes in consumer trends, political decisions, crash test ratings and

safety regulations could affect our results in the future

We estimate that the average global content of passive safety systems per light vehicle in 2025 was close to $270. Vehicles produced

in different markets may have various passive safety content values. For example, in high-income markets, light vehicles have an

average passive safety content value of approximately $350 per vehicle, whereas in growth markets, such as China and India, the

average passive safety content value is approximately $210 and $140 per vehicle, respectively. Due to the concentration of the majority

of the growth in global LVP over time in growth markets, our operating results may be impacted if the passive safety CPV remains low

and if the penetration of automotive safety systems does not increase in these regions. As passive safety CPV is also an indicator of

our sales development, should these trends continue, the average value of passive safety systems per vehicle could decline.

We operate in a highly competitive market

The market for passive safety systems is highly competitive, and we face competition from a number of other companies that produce

and sell similar products. Among other factors, our products compete on the basis of price, quality, manufacturing and distribution

capability, design and performance, technological innovation, delivery, and service. Some of our competitors are subsidiaries (or

divisions, units or similar) of larger companies with greater financial and other resources than us. Some of our competitors may also

have “preferred status” as a result of special relationships or ownership interests with certain customers. Our ability to compete

successfully depends, in large part, on our success in continuing to innovate and manufacture products that have commercial success

with our customer and end-consumers, differentiating our products from those of our competitors, continuing to deliver quality products

in the time frames required by our customers, and maintaining best-cost production. We continue to invest in technology and

innovation, which we believe are critical to our long-term growth. Our ability to maintain and improve existing products, while

successfully developing and introducing distinctive new and enhanced products that anticipate changing customer and consumer

preferences and capitalize upon emerging technologies will be a significant factor in our ability to remain competitive. We may not be

able to effectively implement new technology-driven products and services or be successful in marketing such products and services. In

addition, our implementation of certain new technologies, such as those related to artificial intelligence, automation and algorithms, may

have unintended consequences due to any limitations or failure to use them effectively. If we are unsuccessful or are less successful

than our competitors in predicting the course of market development, developing innovative products, processes, and/or use of

materials or adapting to new technologies or evolving regulatory, industry or customer requirements, we may be placed at a competitive

disadvantage. Given the competitive nature of our business, the number of awards we are awarded relative to our peers may decrease

over time and our past order intake is not an indicator of future levels or order intake. Additionally, OEMs rigorously evaluate our

products and performance against competitors on the basis of quality, reliability, cost-effectiveness, and the overall competitive

landscape. If any OEM customer determines that using a competitor's product would yield better financial results or would help maintain

supply chain resilience, it may result in loss in business and could affect our ability to be competitive and may decrease our current

market share. The inability to compete successfully could have a material adverse effect on our business, operating results, and

financial condition.

The discontinuation, lack of commercial success, or loss of business with respect to a particular vehicle model for which we

are a significant supplier could reduce our sales and harm our business

A number of our customer contracts generally require us to supply a customer’s annual requirements for a particular vehicle model and

assembly facilities, rather than to manufacture a specific quantity of products. Such contracts range from one year to the life of the

model, which is generally four to seven years. These contracts are often subject to renegotiation, sometimes as frequently as annually,

which may affect product pricing, and generally may be terminated by our customers at any time. Therefore, the discontinuation of, the

11

loss of business with respect to, or a lack of commercial success of a particular vehicle model or brand for which we are a significant

supplier could reduce our sales and harm our business, operating results, cash flows, and financial condition.

We continue to expand our product offerings beyond light passenger vehicles to include other mobility safety solutions. If we

are not successful in expanding our product offerings, or if it takes longer or costs more than expected, it could harm our

business

We continue to expand our product offerings to focus on mobility safety solutions. Because mobility safety product offerings are still in

the development stages, it is difficult for us to anticipate the level of sales they may generate. The expansion of our product offering will

require us to invest time and resources to develop innovative products, such as wearables and two-wheeler passive safety products,

that keep pace with continuing changes in industry standards and to reach new customers who have rapidly changing preferences. Our

product offerings might not receive customer acceptance if customer preferences shift to other products, and our future success

depends in part on our ability to anticipate and respond to these changes. If we are not successful in expanding our product offerings or

if it takes longer or costs more than expected, it could negatively impact our operating results, financial condition, competitive position,

and future business prospects.

RISKS RELATED TO OUR BUSINESS

We may incur material losses and costs as a result of product liability, warranty, and recall claims that may be brought

against us or our customers

We face risks related to product liability claims, warranty claims, and recalls if any of our products are, or are alleged to be defective, fail

to perform as expected, or result, or are alleged to result, in bodily injury and/or property damage. We may not be able to anticipate all

potential performance or reliability issues that could arise after our products are released to the market. Additionally, increasing

regulations and reporting requirements regarding potentially defective products, particularly in the U.S., may increase the possibility that

we become involved in additional product liability or recall investigations or claims. See “–Risks Related to Government Regulations

and Taxes–Our business may be adversely affected by changes in automotive safety regulations or concerns that drive further

regulation of the automobile safety market”.

Although we currently carry product liability and product recall insurance in excess of our self-insured amounts, there can be no

assurance that such insurance will provide adequate coverage against potential claims, that such insurance will be available or

continue to be available in the appropriate markets, or that we will be able to obtain such insurance on acceptable terms in the future.

The cost of this insurance has risen in recent years and our self-insured amounts have increased as well. Although we have invested

and will continue to invest in our engineering, design, and quality infrastructure, we cannot give any assurance that our products will be

free suffer from defects or other deficiencies or that we will not experience material warranty claims or product recalls. In the future, we

could incur material warranty or product liability losses and significant costs to process and defend these claims. A successful claim

brought against us in excess of available insurance coverage, if any, or a requirement to participate in any product recall, could have a

material adverse effect on our operating results, cash flows, and financial condition.

Future recalls could result in costs not covered by insurance in excess of our self-insurance amounts, additional government inquiries,

litigation, reputational harm, and diversion of management’s attention. The main variables affecting recall costs include: the number of

vehicles ultimately determined to be affected, the cost per vehicle associated with the recall, the determination of proportionate

responsibility among the customer, us, and any relevant sub-suppliers, and actual insurance recoveries. Each vehicle manufacturer has

its own practices regarding product recalls and other product liability actions relating to its suppliers, and the performance and remedial

requirements vary between jurisdictions. Due to recall activity in the automotive industry over the past decade, some vehicle

manufacturers have become increasingly sensitive to recall risks. Government regulators have also become more focused on potential

recall risks and recall rates, as demonstrated by the U.S. National Highway Traffic Safety Administration's (“NHTSA”) investigation of

the ARC inflators. If NHTSA proceeds with any recalls of ARC inflators, such a recall could have a material impact on our business,

operating results, and financial condition. As suppliers become more integrally involved in the vehicle design process and assume more

of the vehicle assembly functions, vehicle manufacturers are increasingly looking to their suppliers for contribution when faced with

recalls and product liability claims. Product recalls in our industry, even when they do not involve our products, can harm the

reputations of our customers, competitors, and us, particularly if those recalls cause consumers to question the safety or reliability of

products similar to ours. In addition, with global platforms and procedures, vehicle manufacturers are increasingly evaluating our quality

performance on a global basis; any one or more quality, warranty or other recall issue(s) (including issues affecting few units and/or

having a small financial impact) may cause a vehicle manufacturer to implement measures that may have a severe impact on our

operations, such as a global, temporary or prolonged suspension of new orders. In addition, as our products more frequently use global

designs and are based on or utilize the same or similar parts, components or solutions, there is a risk that the number of vehicles

affected globally by a failure or defect will increase significantly with a corresponding increase in our costs. A warranty, recall or product

liability claim brought against us in excess of available insurance may have a material adverse effect on our business. Vehicle

manufacturers are also increasingly requiring their suppliers to guarantee or warrant their products and bear repair and replacement

costs of such products under new vehicle warranties. A vehicle manufacturer may attempt to hold us responsible for some or the entire

repair or replacement costs of defective products under new vehicle warranties when the product supplied did not perform as

represented. Accordingly, future warranty claims by our customers may be material. However, the final amounts determined to be due

could differ materially from our recorded warranty estimates, and our business, operating results, cash flows, and financial condition

may be materially impacted as a result. In addition, as we adopt new technologies, we face an inherent risk of exposure to the claims of

others that we have allegedly violated their intellectual property rights. We cannot assure you that we will not experience any material

warranty, product liability or intellectual property claim losses in the future, or that we will not incur significant costs to defend against

such claims. See “–Risks Related to Intellectual Property–If our patents are declared invalid or our technology infringes on the

proprietary rights of others, our ability to compete may be impaired”.

12

Escalating pricing pressures from our customers may adversely affect our business

The automotive industry continues to experience aggressive pricing pressure from customers. This trend is partly attributable to the

major automobile manufacturers’ strong purchasing power. As with other automotive component manufacturers, we are often expected

to quote fixed prices or are forced to accept prices with annual price reduction commitments for long-term sales arrangements or

discounted reimbursements for engineering work. Price reductions have impacted our sales and profit margins and are expected to

continue to do so in the future. While we in the past received inflation related pricing concessions from most of our customers, there is

no guarantee that this will occur in the future. Our future profitability will depend upon, among other things, our ability to continuously

reduce our cost per unit and maintain our cost structure, enabling us to remain cost-competitive. Our profitability is also influenced by

our success in designing and marketing technological improvements in automotive safety systems, which helps us offset price

reductions by our customers. If we are unable to offset continued price reductions through improved operating efficiencies and reduced

expenditures, these price reductions may have a material adverse effect on our business, operating results, cash flows, and financial

condition.

We could experience disruption in our supply or delivery chain, which could cause one or more of our customers to halt or

delay production

We, as with other component manufactures in the automotive industry, ship our products to customer vehicle assembly facilities

throughout the world on a “just-in-time” basis for our customers to maintain low inventory levels. Our suppliers (external suppliers as

well as our own production sites) use a similar method in providing raw materials to us. However, this “just-in-time” method makes the

logistics supply chain in our industry very complex and vulnerable to disruption. Disruptions in our supply chain may result for many

reasons, including closures of one of our own or one of our suppliers’ facilities or critical manufacturing lines due to strikes or other

labor disputes, mechanical failures, electrical outages, fires, explosions, critical pollution levels, critical health and safety and other

working conditions issues (including epidemics and pandemics), natural disasters, war, geopolitical and economic instability, political

upheaval, as well as logistical complications due to labor disruptions, weather or natural disasters, acts of terrorism or violence,

mechanical failures, cybersecurity events, and legislation or regulation regarding the transport of hazardous goods. Inflation and pricing

pressures have also negatively impacted companies in our supply chain. Additionally, we may experience disruptions if there are newly

imposed trade restrictions or delays in customs processing, including if we are unable to obtain government authorization to export or

import certain materials, including materials that may be viewed as dangerous such as the propellant used for our inflators. See "–Risks

Related to Internal Operations–Tariffs, sanctions, and geopolitical conflicts may disrupt our multi-tier automotive supply chain, constrain

access to critical components, and adversely affect our production capabilities and financial performance." As we continue to expand in

growth markets, the risk of such disruptions is heightened. The unavailability of even a single small subcomponent necessary to

manufacture one of our products, for whatever reason, could force us to cease production of that product, possibly for a prolonged

period. Similarly, a potential quality issue could force us to halt deliveries while we validate the products. Even when products are ready

to be shipped, or have been shipped, delays may arise before they reach our customer. Also, similar difficulties for other suppliers may

force our customers to halt production, which may in turn impact our sales shipments to such customers. When we fail to deliver timely,

we may have to absorb our own costs for identifying and resolving the ultimate problem as well as expeditiously producing and shipping

replacement components or products. Generally, we must also carry the costs associated with “catching up,” such as overtime and

premium freight. If we are the cause of a customer being forced to halt production, the customer may seek to recoup all of its losses

and expenses from us. These losses and expenses could be very significant and may include consequential losses such as lost profits.

Where a customer halts production because of another supplier failing to deliver on time, we may not be fully compensated, if at all.

Thus, any such supply chain disruptions could severely impact our operations and/or those of our customers and force us to halt

production for prolonged periods of time which could expose us to material claims for compensation and have a material adverse effect

on our business, operating results, and financial condition.

Adverse developments affecting our suppliers could harm our profitability

Any significant disruption in our supplier relationships, particularly relationships with single-source suppliers, could harm our profitability.

Furthermore, some of our suppliers may not be able to sufficiently manage the currency commodity cost volatility and/or sharply

changing volumes while still performing as we expect. For example, recalls or field actions from our customers can stress the capacity

of our supply chain and may inhibit our ability to timely deliver order volumes. We may incur costs as we try to make contingency plans

to manage the risks for delivery delays, production delays, production issues or delivery of non-conforming products by our suppliers.

Changes in the source, cost, availability of and regulations pertaining to raw materials and components may adversely affect

our profit margins

Our business uses a broad range of raw materials and components in the manufacture of our products, nearly all of which are generally

available from a number of qualified suppliers. Our industry may be affected from time to time by limited supplies or price fluctuations of

certain key components and materials. Strong worldwide demand for certain raw materials has had a significant impact on prices and

short-term availability in recent years. Such price increases have materially increased, and could continue to materially increase, our

operating costs and materially and adversely affect our profit margins, as direct material costs amounted to approximately 54% of our

net sales in 2025, of which approximately half represents raw material costs. Commercial negotiations with our customers and suppliers

may not always offset all of the adverse impact of higher raw material, energy, labor, logistics, and commodity costs, including those

resulting from tariffs and trade restrictions (including retaliatory tariffs). These negotiations may also not be successful in the future.

Even where we are able to pass price increases on to our customers, there may be (i) a delay before we can do so, requiring us to

absorb the cost increase in the interim, and (ii) a negative impact on our relationships with such customers and suppliers, which may

limit our ability to secure future awards from customers and or obtain acceptable supplies from suppliers. In addition, no assurance can

be given that the magnitude or duration of current or

future cost increases will not have a larger adverse impact on our profitability or

consolidated financial position than currently anticipated. Furthermore, if raw material costs decrease, the price for our products may

also decrease, as such prices are often indexed to the raw material costs. Additionally, various government regulators require

companies that manufacture products containing certain minerals and their derivatives that are known as “conflict minerals”, originating

from the Democratic Republic of Congo or adjoining countries to perform due diligence and report the source of such materials. There

are significant resources associated with complying with these requirements, including diligence efforts to determine the sources of

conflict minerals used in our products and potential changes to our processes or supplies as a consequence of such diligence efforts.

As there may be only a limited number of suppliers able to offer certified “conflict free” conflict minerals, there can be no assurance that

13

we will be able to obtain necessary conflict free minerals from such suppliers in sufficient quantities or at competitive prices. We may

face reputational challenges if we determine that certain of our products contain minerals not determined to be conflict free or if we are

unable to sufficiently verify the origins for all minerals used in our products through the procedures we may implement. Furthermore,

our customers are increasingly requiring us to track sustainable sources of certain raw materials, which also requires additional

diligence efforts and there can be no assurance that we will be able to obtain these materials in a cost-efficient and sustainable manner.

Accordingly, these rules and customer requirements may adversely affect our business, operating results, cash flows, and financial

condition.

Our business could be materially and adversely affected if we lose any of our largest customers, lose business from any of

our largest customers, or if any such customers are unable to pay their invoices

We are dependent on a few large customers with strong purchasing power. This is the result of customer consolidation in the last few

decades. In 2025, our top five customers represented around 44% of our consolidated sales, and our largest customer contract

accounted for around 2% of our consolidated sales. Although business with any given customer is typically split into several contracts

(either on the basis of one contract per vehicle model or on a broader platform basis), the loss of business from any of our major

customers (whether by lower overall demand for vehicles, cancellation of existing contracts or the failure to award us new business)

could have a material adverse effect on our business, operating results, and financial condition. Additionally, supply chain disruptions

experienced by our customers could result in, among others, decreased demand and production or aggressive renegotiation of supplier

contracts, all of which could have a material adverse effect on our business, operating results, and financial condition. Similarly, further

consolidation of our customers in the future could make us more reliant upon a smaller group of customers for a significant portion of

our consolidated sales and negatively impact our bargaining power when contracting with such customers. Customers may put us on a

“new business hold,” which would limit our ability to quote or be awarded all or part of their future vehicle contracts if quality or other

issues arise in the vehicles for which we were a supplier. This could have a significant negative impact on our order intake. Such new

business holds range in length and scope and are generally accompanied by a certain set of remedial conditions that must be met

before we are eligible to bid for new business. Meeting any such conditions within the prescribed timeframe may require additional

Company resources. A failure to satisfy any such conditions may have a material adverse impact on our operating results and financial

condition in the long term. There is a risk that one or more of our major customers may be unable to pay our invoices as they become

due or that a customer will simply refuse to make such payments given its financial difficulties. If a major customer enters into

bankruptcy proceedings or similar proceedings whereby contractual commitments are subject to stay of execution and the possibility of

legal or other modification, or if a major customer otherwise successfully procures protection against us legally enforcing its obligations,

it is likely, absent special relief such as having a “preferred status”, that we will be forced to record a substantial loss. Additional

information concerning our major customers is included in Note 21, Segment Information, to the Consolidated Financial Statements in

this Annual Report.

Our inability to effectively manage the timing, quality, and costs of new program launches could adversely affect our

business, operating results, cash flows, and financial condition

To compete effectively in the automotive supply industry, we must be able to launch new products that meet our customers’ timing,

performance, and quality standards. At times, we face an uneven number of launches, and some launches, for various reasons, may

have shortened launch lead times. We cannot provide assurance that we will be able to install and certify the equipment needed to

produce products for new programs in time for the start of production, or that transitioning our manufacturing facilities and resources to

full production for such new programs will not impact production rates or other operational efficiency measures at our facilities. In

addition, we cannot provide assurance that our customers will execute on schedule the launch of their new product programs, for which

we might supply products. As a Tier 1 supplier, we must effectively coordinate the activities of numerous suppliers in order to launch

programs successfully. Given the complexity of new program launches, particularly those involving new and innovative technologies,

we may experience difficulties managing product quality, timeliness and associated costs. In addition, new program launches require a

significant ramp-up of costs; however, sales related to these programs generally depend on the timing and success of new vehicle

introductions by our customers. Our inability to effectively manage the timing, quality and costs of these new program launches could

adversely affect our business, operating results, cash flows, and financial condition.

Changes in our product mix may impact our operating results and financial condition

We sell products that have varying profit margins. Our financial performance can be impacted depending on the mix of products we sell

during a given period. Our earnings guidance, estimates, and financial targets assume a certain product sales mix as well as a

geographic sales mix as many of the growth markets have a lower CPV. If actual results vary significantly from this projected product

and geographic mix of sales, our operating results and financial condition could be negatively impacted.

We are involved from time to time in legal proceedings and our business may suffer as a result of adverse outcomes of

current or future legal proceedings

We are, from time to time, involved in litigation, regulatory proceedings, and commercial or contractual disputes that may be significant.

These matters may include, without limitation, disputes with our suppliers and customers, intellectual property claims, shareholder

litigation, government investigations, class action lawsuits, personal injury claims, product liability claims, environmental issues,

antitrust, customs and VAT disputes, employment, and tax issues. In such matters, government agencies or private parties may seek to

recover from us very large, indeterminate amounts in penalties or monetary damages (including, in some cases, treble or punitive

damages) or seek to limit our operations in some way. The possibility exists that claims may be asserted against us and their

magnitude may remain unknown for long periods of time. For example, we are currently in the early stages of a dispute with the

Mexican tax authorities in relation to various issues dealing with certain manufacturing activities that occur in Mexico. An adverse result

in this or other similar disputes could have a materially negative impact on our operating results and financial condition. These types of

lawsuits could require a significant amount of management’s time and attention and a substantial legal liability or adverse regulatory

outcome and the substantial expenses to defend the litigation or regulatory proceedings may have a material adverse effect on our

14

customer relationships, business prospects, reputation, operating results, cash flows, and financial condition. No assurances can be

given that such proceedings and claims will not have a material adverse impact on our profitability and consolidated financial position or

that our established reserves or our available insurance will mitigate such impact.

We are and may be in the future subject to civil antitrust litigation that could negatively impact our business

We have previously been the subject of an investigation by the European Commission (“EC”) regarding possible anti-competitive

behavior among certain suppliers to the automotive vehicle industry that was resolved in 2019. We are subject to a civil antitrust lawsuit

in Germany filed by a customer with respect to allegations over a decade ago and may be subject to such civil antitrust lawsuits in the

future in countries that permit such civil claims, including lawsuits or other actions by our customers. These types of lawsuits require

significant management time and attention and could result in significant expenses. Any unfavorable outcomes of such lawsuits could

have a material adverse impact on our customer relationships, business prospects, reputation, operating results, cash flows, and

financial condition, and our insurance may not mitigate such impact. See Note 19, Contingent Liabilities, to the Consolidated Financial

Statements in this Annual Report.

Work stoppages, slow-downs or other labor issues at our customers’ facilities or at our facilities could adversely affect our

business, operating results, and financial condition

Because the automotive industry relies heavily on “just-in-time” delivery of components during the assembly and manufacture of

vehicles, a work stoppage or slow-down at one or more of our facilities could have a material adverse effect on our business. Similarly,

if any of our customers were to experience a work stoppage or slow-down, that customer may halt or limit the purchase of our products.

Similarly, a work stoppage or slow-down at another supplier could interrupt production at one of our customers’ facilities which would

have the same effect. Furthermore, geopolitical instability or conflicts could displace workers or trigger the migration of workers, causing

labor shortages in critical areas, which could further disrupt operations. Labor shortages could also increase wages as multiple

companies and facilities compete for a shrinking pool of workers. While labor contract negotiations at our facilities historically have

rarely resulted in work stoppages, no assurances can be given that we will be able to negotiate acceptable contracts with these unions

or that our failure to do so will not result in work stoppages. A work stoppage or other labor disruption at one or more of our facilities or

our customers’ facilities could cause us to shut down production facilities supplying these products, which could have a material

adverse effect on our business, operating results, and financial condition.

Our ability to operate our company effectively could be impaired if we fail to attract and retain executive officers and other key

personnel

Our ability to operate our business and implement our strategies effectively depends, in part, on the efforts of our executive officers and

other key employees. Our future success will depend on, among other factors, our ability to attract, develop, and retain other qualified

personnel, particularly engineers and other employees with software and technical expertise. The loss of the services of any of our

executive officers or other key employees or the failure to attract, develop, or retain other qualified personnel could have a material

adverse effect on our business, operating results, and financial condition.

Restructuring, efficiency, and strategic initiatives and capacity alignments are complex and difficult and at any time additional

restructuring steps may be necessary, possibly on short notice and at significant cost

Our restructuring, efficiency, strategic initiatives and capacity alignments include efforts to adjust our manufacturing capacity, direct and

indirect labor workforce, and cost structure to meet current and projected operational and market requirements. These efforts include

plant closures, transferring sourcing to best-cost countries, consolidating our supplier base, and standardizing products to reduce

overhead costs and consolidate our operational centers. The successful implementation of our restructuring activities and capacity

alignments involves sourcing, logistics, technology, and employment arrangements. Because these restructuring, efficiency, and

strategic initiatives and capacity alignments can be complex, difficulties or delays in implementation may occur, or the initiatives and

capacity alignments may not be immediately effective, resulting in an adverse material impact on our performance. In addition, there is

a risk that inflation, high turnover rates, and increased competition may reduce the efficiencies currently available in best-cost countries

to levels that no longer allow for cost-beneficial restructuring opportunities. Therefore, there can be no assurances that any future

restructurings or capacity alignments will be completed as planned or will achieve the desired results. See Note 13, Restructuring, to

the Consolidated Financial Statements in this Annual Report.

A prolonged recession and/or a downturn in our industry could result in us having insufficient funds to continue our

operations and external financing may not be available to us or available only on materially different terms than what has

historically been available

Our ability to generate cash from our operations is highly dependent on automotive sales and LVP, the global economy, and the

economies of our important markets. If LVP were to remain on low levels for an extended period of time, we would experience a

significantly negative cash flow. Similarly, if cash losses resulting from customer defaults were to rise sharply, we would experience

negative cash flow. Such negative cash flow could result in our having insufficient funds to continue our operations unless we can

procure external financing, which may not be possible. Our access to debt, securitization, or derivative markets around the world at

competitive rates or in sufficient amounts could be affected by credit rating downgrades, market volatility, market disruption, regulatory

requirements, or other factors. Our ability to obtain unsecured funding at a reasonable cost is dependent on our credit ratings or our

perceived creditworthiness. Our current credit rating could be lowered as a result of us experiencing significant negative cash flows,

increasing our indebtedness and leverage, or a dire financial outlook, which may affect our ability to procure financing. We may also for

the same, or other reasons, find it difficult to secure new long-term credit facilities, at reasonable terms, when our principal credit facility

expires in 2029. Further, even our existing unutilized credit facilities may not be available to us as agreed, or only at additional cost, if

participating banks are unable to raise the necessary funds, where, for instance, financial markets are not functioning as expected or

one or more banks in our principal credit facility syndicate were to default. As a result, we cannot assure you that we will continue to

15

have sufficient liquidity to meet our operating needs. In the event that we do not have sufficient external financing, we may be required

to seek additional capital, sell assets, reduce or cut back our operating activities or otherwise alter our business strategy. Information

concerning our credit facilities and other financings is included in Item 7 in this Annual Report in the section headed “Treasury

Activities” and in Note 15, Debt and Credit Agreements, to the Consolidated Financial Statements in this Annual Report.

Our indebtedness may harm our financial condition and operating results

As of December 31, 2025, we have outstanding debt of $2.2 billion. We may incur additional debt for a variety of reasons. Although our

significant credit facilities and debt agreements do not have any financial covenants, our level of indebtedness will have several

important effects on our future operations, including, without limitation: a portion of our cash flows from operations will be dedicated to

the payment of any interest or could be used for amortization required with respect to outstanding indebtedness; increases in our

outstanding indebtedness and leverage will increase our vulnerability to adverse changes in general economic and industry conditions,

as well as to competitive pressure; depending on the levels of our outstanding debt, our ability to obtain additional financing for working

capital, acquisitions, capital expenditures, general corporate and other purposes may be limited; and potential future tightening of the

availability of capital both from financial institutions and the debt markets may have an adverse effect on our ability to access additional

capital.

Governmental restrictions may impact our business adversely

Some of our customers are (or may be) owned by a governmental entity, receive various forms of governmental aid or support, or are

subject to governmental influence in other forms, which may impact us as a supplier to these customers. As a result, they may be

required to partner with local entities or procure components from local suppliers to achieve a specific local content or be subject to

other restrictions regarding localized content or ownership. The nature and form of any such restrictions or protections, whatever their

basis, is very difficult to predict as is their potential impact. However, they are likely to be based on political rather than economical or

operational considerations and may materially impact our business.

Impairment charges relating to our assets, goodwill and other intangible assets could adversely affect our financial

performance

We periodically review the carrying value of our assets, goodwill and other intangible assets for impairment indicators. If one or more of

our customers’ facilities cease production or decrease their production volumes, the assets we carry related to our facilities serving

such customers may decrease in value because we may no longer be able to utilize or realize them as intended. Where such

decreases are significant, such impairments may have a material adverse impact on our financial results. We monitor the various

factors that impact the valuation of our goodwill and other intangible assets, including expected future cash flow levels, global economic

conditions, market price for our stock, and trends with our customers. Impairment of goodwill and other identifiable intangible assets

may result from, among other things, deterioration in our performance and especially the cash flow performance of these goodwill

assets, adverse market conditions and adverse changes in applicable laws or regulations. If there are changes in these circumstances

or the other variables associated with the estimates, judgments and assumptions relating to the valuation of goodwill, when assessing

the valuation of our goodwill items, we may determine that it is appropriate to write down a portion of our goodwill or intangible assets

and record related non-cash impairment charges. In the event that we determine that we are required to write-down a portion of our

goodwill items and other intangible assets and thereby record related non-cash impairment charges, our operating results and financial

condition would be adversely affected.

We face risks related to our defined benefit pension plans and employee benefit plans, including the need for additional

funding as well as higher costs and liabilities

Our defined benefit pension plans and employee benefit plans may require additional funding or give rise to higher related costs and

liabilities which, in some circumstances, could reach material amounts and negatively affect our operating results. We are required to

make certain year-end assumptions regarding our pension plans. Our pension obligations are dependent on several factors, including

factors outside our control such as changes in interest rates, the market performance of the diversified investments underlying the

pension plans, actuarial data and adjustments and an increase in the minimum funding requirements or other regulatory changes

governing the plans. Adverse equity market conditions and volatility in the credit market may have an unfavorable impact on the value

of our pension assets and our future estimated pension liabilities. Internal factors such as an adjustment to the level of benefits

provided under the plans may also lead to an increase in our pension liability. If these or other internal and external risks were to occur,

alone or in combination, our required contributions to the plans and the costs and net liabilities associated with the plans could increase

substantially and have a material effect on our business. Information concerning our benefit plans is included in Note 20, Retirement

Plans, of the Consolidated Financial Statements in this Annual Report.

We may not be able to, or we may decide not to, pay dividends or repurchase shares at a level anticipated by our

shareholders, which could reduce shareholder returns

The extent to which we pay dividends on our common stock and repurchase our common stock in the future is at the discretion of our

Board of Directors and depends upon a number of factors, including our earnings, financial condition, cash and capital needs,

indebtedness and leverage, and general economic or business conditions. No assurance can be given that we will be able to or will

choose to pay any dividends or repurchase any shares in the foreseeable future.

Cybersecurity incidents or other damage to our technology infrastructure could disrupt business operations, result in the

loss of critical and confidential information, and adversely impact our reputation and operating results

We rely extensively on information technology (“IT”) networks and systems, and those of our third-party service providers, and our

global data centers and services provided over the internet to process, transmit and store electronic information, and to manage or

support a variety of business processes or activities across our facilities worldwide. The secure operation of our IT networks and

systems, and those of our third-party service providers, and the proper processing and maintenance of this information are critical to

our business operations. We have been, and likely will continue to be, subject to cyber-attacks. Although we seek to deploy

comprehensive security measures to prevent, detect, address and mitigate these threats, there has been an increased level of activity,

16

and an associated level of sophistication, in cyber-attacks against large multinational companies. Threat actors, including nation state

attackers, could also use artificial intelligence for malicious purposes, increasing the frequency, velocity,

and complexity of their

attacks. The ever-evolving threats mean we and our third-party service providers and vendors must continually evaluate and adapt our

respective systems and processes and overall security environment, as well as those of any companies we acquire. There is no

guarantee that these measures will be fully implemented, complied with, or effective in safeguarding against all data security incidents,

system compromises or misuses of data. Our security measures may be compromised due to human or technological error, employee

malfeasance, system malfunctions or attacks from uncoordinated individuals or from organized threat actors groups using sophisticated

and targeted measures known as advanced persistent threats, directed at us, our products, our customers, our third-party service

providers, and/or other entities with whom we do business. Because techniques used to obtain unauthorized access or to sabotage

systems change frequently and generally are not recognized until they are launched against a target, we may be unable to anticipate

these techniques or to implement adequate preventative measures. Disruptions and attacks on our IT systems or the systems of third

parties storing our data, or employee malfeasance or human or technological error, could result in the unauthorized access,

misappropriation, loss, destruction or corruption of our critical data and confidential or proprietary information, personal information of

our employees, our customers’ confidential information, and/or the improper use of our systems and networks, production downtimes

and both internal and external supply shortages, which could have a material adverse effect on our operating results. Such disruptions

or attacks may also result in the theft of intellectual property or other misappropriation of assets, or otherwise compromise our

confidential or proprietary information and materially disrupt our operations. The potential consequences of a material cybersecurity

incident include reputational damage, damaged customer relationships, loss of revenue, lower order intake in the future, theft of

intellectual property, litigation with third parties, diminution in the value of our investment in research, development and engineering,

diversion of the attention of management away from the operation of our business and increased cybersecurity protection and

remediation costs, legal claims and liability, regulatory scrutiny, sanctions, fines or penalties (which may not be covered by our

insurance policies), negative publicity, release of sensitive and/or confidential information, or increases in operating expenses, which in

turn could adversely affect our competitiveness and operating results. To the extent that any disruption or security incident results in an

unauthorized access, misappropriation, loss, destruction or corruption of our customer’s information, it could affect our relationships

with our customers, create significant expense for us to investigate and remediate any damage, lead to claims against us and ultimately

harm our business, strategy, result of operations, or financial condition. In addition, we may be required to incur significant costs to

protect against damage caused by these disruptions or security incidents in the future. In the event that our systems, or those of our

third-party service providers, are compromised or attacked, we may also suffer an outage, failure, or unavailability of data or information

technology systems, and interruptions to our business operations while such incident or attack is being remedied; this may impact data

or systems operated by us or by our third-party service providers. In addition, as the regulatory environment related to information

security, data collection and use, and privacy becomes increasingly rigorous, with new and constantly changing requirements

applicable to our business, compliance with those requirements could result in additional costs. Furthermore, our technology systems

and those of our third-party service providers are vulnerable to damage or interruption from natural disasters, power loss and

telecommunication failures. We continuously seek to maintain a robust program of information security and controls, however, any

future significant compromise of our data security, whether external or internal, or misuse of customer, associate, supplier or Company

data, could result in significant costs, lost sales, fines, lawsuits, and damage to our reputation.

Increasing reliance on artificial intelligence technologies exposes us to operational, cybersecurity, and intellectual property

risks

We increasingly utilize artificial intelligence (“AI”) and machine

‑

learning technologies across various aspects of our manufacturing

operations, including quality assurance, predictive maintenance, production automation, and supply

‑

chain planning. While these

technologies are intended to improve efficiency and reduce costs, their deployment introduces significant risks that could adversely

affect our business, operating results, and financial condition. AI systems depend on the availability of accurate, comprehensive, and

properly structured data. If the data underlying these systems is incomplete, inconsistent, or of poor quality, AI outputs may be

unreliable, resulting in inaccurate demand forecasts, flawed inventory or production decisions, or erroneous quality

‑

control

assessments. Such outcomes could disrupt manufacturing, increase costs, and reduce our ability to fulfill customer requirements. Our

integration of AI with interconnected operational technology also increases our vulnerability to cybersecurity threats. AI

‑

enabled

systems and Internet

‑

of

‑

Things (“IoT”) devices expand the potential attack surface for threat actors, and certain legacy equipment used

in our facilities may not have been designed with modern cybersecurity protections. A successful cyberattack on an AI-enabled system

could compromise sensitive data, disrupt production processes, damage equipment, or lead to extended downtime.

In addition, the use

of AI tools may require processing confidential and proprietary manufacturing data. If such data is improperly handled, stored, or

transmitted—especially through AI platforms that connect to external networks—there is a heightened risk of inadvertent disclosure or

theft of intellectual property, including proprietary production methods, equipment configurations, and process data. Such exposure

could erode our competitive advantages. If we fail to implement effective AI governance, risk

‑

management protocols, cybersecurity

controls, or compliance processes, we may be unable to mitigate these risks adequately. Further, the legal and regulatory environment

relating to AI is uncertain and rapidly evolving, both in the U.S. and internationally, and includes regulatory schemes targeted

specifically at AI as well as provisions in intellectual property, privacy, consumer protection, employment, and other laws applicable to

the use of AI. These evolving laws and regulations could require changes in our implementation of AI technology and increase

compliance costs and the risk of non-compliance. Any of the foregoing risks, individually or in the aggregate, could materially and

adversely affect our operations, reputation, competitive position, and financial performance.

Third parties that maintain certain of our confidential and proprietary information could experience a cybersecurity incident

We rely on third parties to provide or maintain some of our IT systems, data centers and related services and do not exercise direct

control over these systems. Despite the implementation of security measures at third party locations, these IT systems, data centers

and cloud services are also vulnerable to security incidents or other disruptions. Additionally, we and certain of our third-party

service

providers collect and store personal information in connection with human resources operations and other aspects of our business.

While we obtain assurances that any third parties to whom we provide data will protect this information and, where we deem

appropriate, monitor the protections they employ, there remains a risk that the confidentiality and security of data held by us or by third

parties may be compromised, exposing us to liability.

17

Global climate change could negatively affect our business

Public awareness and concern regarding global climate change may result in more regional and/or national requirements to reduce or

mitigate the effects of greenhouse gas emissions. In addition, our shareholders and customers may, to varying levels, expect us to

reduce our greenhouse gas emissions. Current and any future regulations aimed at mitigating climate change may negatively impact

the prices of raw materials and energy, which could impact demand for our products and adversely affect our operating results and

financial condition. The costs to comply with new or amended laws and violations of these laws, which may result in substantial fines

and penalties, remediation costs, third party damages, or a suspension or cessation of our operations, may be significant. The

manifestations of climate change, such as extreme weather conditions or more frequent extreme weather events, including wildfires,

flooding, water stress and extreme heat, could also disrupt our operations, damage our facilities, disrupt our supply chain, including our

customers or suppliers, impact the availability and cost of materials needed for manufacturing or increase insurance and other

operating costs. As a result, severe weather or a natural disaster that results in a prolonged disruption to our operations, or the

operations of our customers or suppliers, could have a material adverse effect on our business, operating results, cash flows and

financial condition.

Our goals, targets, and ambitions related to sustainability and emissions reduction, and our public statements and

disclosures regarding them, may, from time to time, result in additional considerations or expectations and expose us to risks

We have developed, and will continue to develop and set, goals, targets, ambitions and other objectives related to sustainability

matters, including our net-zero emission targets both for ourselves and our supply chain. Some of these are based on our internal

scenario analysis, which may not prove to be accurate and carries inherent uncertainties. Statements related to these goals, targets,

ambitions and objectives reflect our current plans and do not constitute a guarantee that they will be achieved. Our efforts to research,

establish, accomplish, and accurately report on these goals, targets, and objectives expose us to operational, reputational, financial,

legal, and other risks. Additionally, there can be no assurance that we will be able to secure pricing from our customers that reflects any

increased costs of developing and manufacturing sustainable products. If we are unable to recover these costs, our business, operating

results, cash flows, and financial condition may be adversely affected.

Greenhouse gas emissions, particular emissions that come from individuals and entities up and down the value chain (otherwise known

as Scope 3 emissions), are very difficult to estimate and our estimates may be materially different than actual emissions. The manner in

which we estimate and disclose Scope 3 emissions may differ from other companies and may be different than future regulatory

requirements, and currently, we do not include downstream Scope 3 emissions in our targets and ambitions. If future governmental

regulations require us to modify the basis of our Scope 3 emissions disclosure, our historically disclosed Scope 3 emissions may

change materially. Our ability to achieve any stated goal, target, ambition or objective, including with respect to emissions reduction, is

subject to numerous factors and conditions, some of which are outside of our control.

Our business may face increased interest from investors and other stakeholders related to our sustainability initiatives, including the

goals, targets, and objectives that we announce, and our methodologies and timelines for pursuing them. Failure or perceived failure to

pursue or fulfill such initiatives

could adversely affect our business or reputation, as well as expose us to government enforcement

actions and private litigation.

RISKS RELATED TO INTERNATIONAL OPERATIONS

Our business is exposed to risks inherent in international operations

We currently conduct operations in various countries and jurisdictions, including locating certain of our manufacturing and distribution

facilities internationally, which subjects us to the legal, political, regulatory and social requirements and economic conditions in these

jurisdictions. Some of these countries are considered growth markets and emerging markets. International sales and operations,

especially in growth markets, subject us to certain risks inherent in doing business abroad, including: exposure to local economic

conditions; unexpected changes in laws, regulations, trade, or monetary or fiscal policy, including interest rates, foreign currency

exchange rates, and changes in inflation rates; foreign tax consequences; inability to collect, or delays in collecting, value-added taxes

and/or other receivables associated with remittances and other payments by subsidiaries; exposure to local political turmoil and

challenging labor conditions; changes in general economic and political conditions in countries where we operate, particularly in

emerging markets; expropriation and nationalization; enforcing legal agreements or collecting receivables through foreign legal

systems; wage inflation; currency controls, including lack of liquidity in foreign currency due to governmental restrictions, trade

protection policies and currency controls, which may create difficulty in repatriating profits or making other remittances; compliance with

the requirements of an increasing body of applicable anti-bribery laws; reduced intellectual property protection in various markets;

investment restrictions or requirements; the imposition of tariffs and duties, and the burden of complying with a wide variety of

international and U.S. export control and economic sanctions laws. We are subject to taxation in the U.S. and numerous foreign

jurisdictions. The Organization for Economic Co-operation and Development (“OECD”) continues its base erosion and profit shifting

(“BEPS”) project begun in 2015 with new proposals for a global minimum tax, further development of a coordinated set of rules for

taxation and the allocation of taxing rights between jurisdictions. These proposals, if adopted by countries in which we operate, could

result in changes to tax policies, including transfer pricing policies, which could ultimately impact our tax liabilities.

Changes in tax laws or policies by the U.S. or foreign jurisdictions could result in a higher effective tax rate on our worldwide earnings,

and any such change could have a material adverse effect on our business , operating results, cash flows,

and financial condition.

Our international operations also depend upon trade relations between the countries where we manufacture and sell products and

those countries in which our customers and suppliers have operations.

The current U.S. presidential administration has created

uncertainty about the relationships between the U.S. and certain of its trading partners, including with respect to the trade policies and

agreements, treaties, government regulations, and the tariffs that apply to trade between the U.S. and other nations. For example, in

2025 the U.S. administration imposed tariffs affecting imports to the U.S. from nearly every country by executive action adopted and

modified without predictable timelines, creating increased operational and financial exposure for companies dependent on cross-border

trade. Other countries, including China, responded with retaliatory tariffs or, like the European Union, announced it is considering

retaliatory tariffs.

Changes in national policy, other governmental action related to tariffs or international trade agreements, changes in

18

social, political regulatory, and economic conditions or in laws and policies governing foreign trade, manufacturing, development and

investment in the territories and countries where we currently manufacture and sell products, as well as any resulting negative

sentiments towards us as a result of such changes could depress economic activity, restrict our access to suppliers or customers, and

have a material adverse effect on our business, operating results, cash flows, and financial condition.

Increasing our manufacturing footprint in the growth markets and our business relationships with automotive manufacturers in these

markets are particularly important elements of our strategy. As a result, our exposure to the risks described above may be greater in the

future, and our exposure to risks associated with developing countries, such as the risk of political upheaval and reliability of local

infrastructure, may increase.

It could also impact importing certain foreign-produced vehicles into the U.S. Changes in national policy or

continued uncertainty could depress economic activity and restrict our access to suppliers or customers and have a material adverse

effect on our business, operating results, cash flows, and financial condition.

Additionally, trade restrictions or material increases in

tariffs could impact our targets, earnings guidance, and estimates. The ultimate impact of any tariffs, including any related responses,

are uncertain and will depend on various factors, including the timing of implementation, and the amount, scope, and nature of the

tariffs. Any or all of these actions could adversely affect our business, financial condition and cash flows.

Tariffs, sanctions, and geopolitical conflicts may disrupt our multi

‑

tier automotive supply chain, constrain access to critical

components, and adversely affect our production capabilities and financial performance

Our operations rely on a geographically distributed, multi

‑

tier supply chain structure that makes us acutely sensitive to shifts in global

trade policy, export

‑

control regimes, and geopolitical conflict. Recent U.S. trade actions affecting imports from major automotive

manufacturing hubs—including broad, rapidly shifting tariff frameworks and sector

‑

specific levies—have increased global cost volatility

and introduced uncertainty regarding long

‑

term sourcing strategies. Wide

‑

ranging tariff escalation across key trade partners has

reshaped global trade flows and imposed substantial cost burdens on manufacturers dependent on cross

‑

border supply chains. Such

measures can directly affect our ability to procure components and precision

‑

machined parts at competitive prices. These increased

input costs may not be fully recoverable through pricing, particularly under fixed

‑

price or lifetime

‑

pricing automotive supply agreements.

Semiconductor and sensor sourcing relies heavily on global electronics supply chains, which are increasingly affected by export

controls, entity

‑

list restrictions, and sanctions targeting technology supply routes. Expanding U.S. and international restrictions on

transfers of semiconductors and related technologies—such as licensing requirements for chip exports to certain entities—have already

produced material disruptions and revenue impacts within the broader electronics ecosystem. If our Tier

‑

1 or Tier

‑

2 suppliers lose

access to critical silicon or manufacturing equipment due to export controls or sanctions, we may face prolonged allocation constraints,

extended lead times, or forced redesigns. Military conflicts

routinely create systemic disruptions across global automotive supply

chains. They may block critical choke points, destabilize upstream manufacturing regions, or restrict access to raw materials such as

aluminum, nickel, palladium, and specialized production sourced from conflict

‑

affected areas. A significant proportion of global

enterprises have experienced conflict

‑

driven disruptions, with impacts concentrated in logistics paralysis, supplier instability, and

escalating compliance obligations.

State

‑

based armed conflict is also identified as one of the most immediate global risks to supply

chain continuity, threatening transportation corridors, energy markets, and manufacturing hubs essential to the automotive sector. Many

of these geopolitical and regulatory shocks originate deep within Tier

‑

2, Tier

‑

3, or Tier

‑

N suppliers of rare

‑

earth magnets and critical

minerals. Because sub

‑

tier suppliers are often located in high

‑

risk regions or depend on fragile logistics networks,

disruptions—whether due to conflict, export controls, sanctions, or other regulatory actions—may propagate upstream before detection.

A substantial portion of global supply chain disruptions originate at these deeper tiers, underscoring the structural risk inherent in

automotive supply networks with limited transparency below Tier

‑

1. Any combination of tariff escalation, sanctions, or military conflict

may: reduce availability of critical electronic and mechanical components; necessitate redesigns of products due to unavailable

semiconductors or restricted materials; increase logistics costs through rerouted shipments or loss of air/sea corridors; force production

slowdowns or stoppages at our facilities or those of our OEM customers; require emergency multi

‑

sourcing, localized manufacturing

transitions, or new supplier qualifications that extend program timing. Because automotive supply contracts typically impose strict

delivery, quality, and cost

‑

reduction obligations, disruptions of this nature could materially affect our business, operating results, cash

flows, and financial condition. We may also incur higher safety

‑

stock requirements, expedited freight costs, or capital expenditures to

re

‑

engineer systems or tool new suppliers. As geopolitical conditions evolve, we cannot ensure that our mitigation strategies—including

dual sourcing, buffer inventories, and supplier diversification—will fully offset the operational and financial impacts of these events.

Significant changes in the United States Mexico Canada Agreement ("USMCA") could adversely affect our financial

performance

The U.S., Mexico and Canada entered into the USMCA, a successor to the North American Free Trade Agreement, effective as of July

1, 2020. The USMCA changed the automotive rules of origin that dictate what percentage of an automobile must be built from parts that

originated from countries in the USMCA territory. The rules require that at least 75% of parts be made in North America and that 40-

45% of an automobile must be made by workers earning at least $16 an hour. Reflective of the automotive industry, our vehicle parts

manufacturing facilities in the U.S., Mexico and Canada are highly dependent on duty-free trade amongst the U.S., Mexico, and

Canada. The criticality of USMCA eligibility of products involved in such trade has increased significantly as a result of the exemption

such eligibility currently affords from additional tariffs imposed against Canada and Mexico by executive orders in 2025. The USMCA is

undergoing a joint review in 2026. If the USMCA is terminated, or otherwise substantially amended, it could have a material adverse

impact on our financial performance. The imposition of customs duties on imports into the U.S., Mexico, or Canada could negatively

impact our financial performance.

19

Our foreign operations may subject us to risks relating to laws governing international relations

Due to our global operations, we are subject to many laws governing international relations (including, but not limited to, the Foreign

Corrupt Practices Act, and other anti-bribery regulations in foreign jurisdictions where we do business), which prohibit improper

payments to government officials and restrict where and how we can do business, what information or products we can supply to

certain countries and what information we can provide to governmental authorities. We also export components and products that are

subject to certain U.S. trade regulations, including the U.S. Export Administration Regulations and various economic sanctions

programs administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control. Although we have procedures and

policies in place that should mitigate the risk of violating these laws, there is no guarantee that they will be sufficiently effective. If and

when we acquire new businesses, we may not be able to ensure that the pre-existing controls and procedures meant to prevent

violations of these laws were effective, and violations may occur if we are unable to timely implement corrective and effective controls

and procedures when integrating newly acquired businesses. Any allegations of noncompliance with these laws could harm our

reputation, divert management attention and result in significant expenses, and could therefore materially harm our business, operating

results, and financial condition.

Our business in Asia is subject to aggressive competition and is sensitive to economic, market, and political conditions

We operate in the automotive supply market throughout Asia including the highly competitive markets in China, South Korea, and India.

In each of these markets we face competition from both international and smaller domestic manufacturers. Due to the significance of

the Asian markets for our profit and growth, we are exposed to risks in China, South Korea, and India. We anticipate that additional

competitors, both international and domestic, may seek to enter the Chinese, South Korean, and/or Indian markets resulting in

increased competition. Increased competition may result in lower sales volumes, price reductions, reduced margins and our inability to

gain or hold market share. There have been periods of increased market volatility and moderation in the levels of economic growth in

China, which resulted in periods of lower automotive production growth rates in China than those previously experienced. Our business

in Asia is sensitive to economic and market conditions that drive automotive sales volumes in China, South Korea, and India and may

be impacted if there are reductions in vehicle demand in those markets. If we are unable to maintain our position in the Asian markets,

the pace of growth slows, or vehicle sales in these markets decrease, our business, operating results, and financial condition could be

materially adversely affected.

Global integration may result in additional risks

Because of our efforts to manage costs by integrating our operations globally, we face the additional risk that, should any of the other

risks discussed herein materialize, the negative effects could be more pronounced. For example, while supply delays of a component

have typically only affected a few customer vehicle models, such a delay could now affect several vehicle models of several customers

in several geographic areas. Similarly, any recall or warranty issue we face due to a product defect or failure is now more likely to

involve a larger number of units in several geographic areas.

Our business faces exchange rate risks

As a result of our global presence, a significant portion of our revenues and expenses are denominated in currencies other than the

U.S. dollar. We are therefore subject to foreign currency risks and foreign exchange exposure. Such risks and exposures include:

transaction exposure, which arises because the cost of a product originates in one currency and the product is sold in another currency;

revaluation effects, which arise from valuation of assets denominated in other currencies than the reporting currency of each unit;

translation exposure in the income statement, which arises when the income statements of non-U.S. subsidiaries are translated into

U.S. dollars; translation exposure in the balance sheet, which arises when the balance sheets of non-U.S. subsidiaries are translated

into U.S. dollars; and changes in the reported U.S. dollar amounts of cash flows. We cannot predict exchange rate volatility or the

extent of its impact on our future financial results. We typically denominate foreign transactions in foreign currencies to achieve a

natural hedge. However, a natural hedge cannot be achieved for all our currency flows; therefore, a net transaction exposure remains

within the group. The net exposure can be significant and creates a transaction exposure risk for us. We do not hedge translation

exposure. However, we do engage in foreign exchange rate hedging from time to time related to foreign currency transactions. For

additional information, see Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk - Currency risks.

RISKS RELATED TO ACQUISITIONS

We face risks in connection with acquisitions, joint ventures, partnerships, and other strategic transactions

Our growth has been enhanced through strategic transactions, including acquisitions of businesses, products and technologies,

partnerships, strategic alliances, and joint development agreements that we believe will complement our business. We regularly

evaluate acquisition opportunities, frequently engage in acquisition discussions, conduct due diligence activities in connection with

possible acquisitions, and, where appropriate, engage in acquisition negotiations. We may not be able to successfully identify suitable

acquisition and joint venture candidates or complete transactions on acceptable terms, integrate acquired operations into our existing

operations or expand into new markets. Our failure to identify suitable strategic transactions may restrict our ability to grow our

business. These strategic transactions also involve numerous additional risks to us and our investors, including: risks related to

retaining acquired management and employees; difficulties in integrating acquired technologies, products, operations, services and

personnel with our existing businesses; diversion of our management’s attention from other business concerns; assumption of

contingent liabilities; potential adverse financial impacts, including from the amortization of expenses related to intangible assets and

from potential impairment of goodwill; incurrence of indebtedness; and potential damage to existing customer relationships or lack of

customer acceptance or inability to attract new customers as a result of these transactions. In the future, we may pursue acquisitions of

businesses or products that are complementary to our business but for which we have historically had little or no direct experience.

These transactions can involve significant challenges and risks as well as significant time and resources that may divert management’s

attention from other business activities. If we fail to adequately manage these risks, the acquisitions and other strategic transactions

may not result in revenue growth, operational synergies or service or technology enhancements, which could adversely affect our

financial condition.

20

RISKS RELATED TO INTELLECTUAL PROPERTY

If our patents are declared invalid or our technology infringes on the proprietary rights of others, our ability to compete may

be impaired

We have developed a considerable amount of proprietary technology related to automotive safety systems and rely on a number of

patents to protect such technology. Our intellectual property plays an important role in maintaining our competitive position in a number

of the markets we serve. At present, we hold more than 6,600 patents and patent applications covering a large number of innovations

and product ideas, mainly in the fields of seatbelt and airbag technologies. In addition to our in-house research and development

efforts, we seek to acquire rights to new intellectual property through corporate acquisitions, asset acquisitions, licensing and joint

venture arrangements. Our patents and licenses expire on various dates during the period from 2026 to 2045. We do not expect the

expiration of any single patent or license to have a material adverse effect on our business, operating results and financial condition.

Developments or assertions by or against us relating to intellectual property rights could negatively impact our business. We primarily

protect our innovations with patents and vigorously protect and defend our patents, trademarks and know-how against infringement and

unauthorized use. If we are not able to protect our intellectual property and our proprietary rights and technology, we could lose those

rights and incur substantial costs policing and defending those rights. We also generate license revenue from these patents, which we

may lose if we do not adequately protect our intellectual property and proprietary rights. Our means of protecting our intellectual

property, proprietary rights and technology may not be adequate, and our competitors may independently develop technologies that are

similar or superior to our proprietary technologies, duplicate our technologies, or design around the patents we own or license. In

addition, the laws of some foreign countries do not protect our proprietary rights to as great an extent as the laws of the U.S. and we

may encounter significant problems in protecting and defending our intellectual property rights in certain foreign jurisdictions. This could

make it difficult for us to stop the infringement of our patents or misappropriation of our other intellectual property rights. Proceedings to

enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects

of our business. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate.

We may not be able to protect our proprietary technology and intellectual property rights, which could result in the loss of our

rights or increased costs

Although we believe that our products and technology do not infringe the proprietary rights of others, third parties may assert

infringement claims against us in the future. Additionally, we license proprietary technology, from third parties, which is covered by

patents, and we cannot be certain that any such patents will not be challenged, invalidated, or circumvented. Such licenses may also

be non-exclusive, meaning our competition may also be able to access such technology. Further, we expect to continue to expand our

products and services and expand into new businesses, including through developing new products, acquisitions, joint ventures and

joint development agreements, which could increase our exposure to patent and other intellectual property claims from competitors and

other parties. If claims alleging patent, copyright or trademark infringement are brought against us and are successfully prosecuted

against us, they could result in substantial costs. If a successful claim is made against us and we fail to develop non-infringing

technology, our business, operating results and financial condition could be materially adversely affected. In addition, certain of our

products utilize components that are developed by third parties and licensed to us. If claims alleging patent, copyright or trademark

infringement are brought against such licensors and successfully prosecuted, they could result in substantial costs, and we may not be

able to replace the functions provided by these licensors. Alternate sources for the technology currently licensed to us may not be

available in a timely manner, may not provide the same functions as currently provided or may be more expensive than products

currently used. We may develop proprietary information through our in-house research and development efforts, consulting

arrangements or research collaborations with other entities or organizations. We may seek to protect this proprietary information by

entering into confidentiality agreements or consulting, services or employment agreements that contain non-disclosure and non-use

provisions with our employees, consultants, scientific advisors and other third parties. However, we may fail to enter into the necessary

agreements, and even if entered into, these agreements may be breached or may otherwise fail to prevent disclosure, third-party

infringement or misappropriation of our proprietary information.

We may not be able to respond quickly enough to changes in technology and technological risks and to develop our

intellectual property into commercially viable products

Changes in legislative, regulatory, or industry requirements or in competitive technologies may render certain of our products obsolete

or less attractive to our customers. We currently license certain proprietary technology to third parties and, if such technology becomes

obsolete or less attractive, those licensees could terminate our license agreements, which could adversely affect our operating results.

Our ability to anticipate changes in technology and regulatory standards and to successfully develop and introduce new and enhanced

products on a timely basis will be a significant factor in our ability to remain competitive. We cannot provide assurance that we will be

able to achieve the technological advances that may be necessary for us to remain competitive or that certain of our products will not

become obsolete. We are also subject to the risks generally associated with new product introductions and applications, including lack

of market acceptance, delays in product development and failure of products to operate properly. As part of our business strategy, we

may from time to time seek to acquire businesses or assets that provide us with additional intellectual property. We may experience

problems integrating acquired technologies into our existing technologies and products, and such acquired intellectual property may be

subject to known or contingent liabilities such as infringement claims.

21

Some of our products and technologies may use “open source” software, which may restrict how we use or distribute our

products or require that we release the source code of certain products subject to those licenses

Some of our products and technologies may incorporate software licensed under so-called “open source” licenses. In addition to risks

related to license requirements, usage of open source software can lead to greater risks than use of third-party commercial software, as

open source licensors generally do not provide warranties or controls on origin of the software. Additionally, open source licenses

typically require that source code subject to the license be made available to the public and that any modifications or derivative works to

open source software continue to be licensed under open source licenses. These open source licenses typically mandate that

proprietary software, when combined in specific ways with open source software, become subject to the open source license. If we

combine our proprietary software in such ways with open source software, we could be required to release the source code of our

proprietary software. We take steps to ensure that our proprietary software is not combined with, and does not incorporate, open source

software in ways that would require our proprietary software to be subject to an open source license. However, few courts have

interpreted open source licenses; therefore, the way these licenses may be interpreted and enforced is subject to some uncertainty.

RISKS RELATED TO GOVERNMENT REGULATIONS AND TAXES

Our business may be adversely affected by laws or regulations, including environmental, occupational health and safety, and

other governmental regulations

We are subject to various federal, state, local and foreign laws and regulations, including those related to environmental, occupational

health and safety, financial, and other requirements. We cannot predict the substance or impact of pending or future legislation or

regulations, or the application thereof. The introduction of new laws or regulations, changes in existing laws or regulations, or

changes

in their interpretations, could increase the costs of doing business for us, our customers, or our suppliers, or restrict our actions and

adversely affect our business, operating results, cash flows, and financial condition. Our operations are subject to environmental and

safety laws and regulations governing, among other things, emissions to air, discharges to waters and the generation, handling,

storage, transportation, treatment and disposal of waste and other materials. Operating automotive parts manufacturing facilities entails

risks in these areas, and we cannot assure that we will not incur material costs or liabilities as a result. Additionally, environmental laws,

regulations, and permits and the enforcement thereof change frequently and have tended to become increasingly stringent over time,

which may necessitate substantial capital expenditures or operating costs or require changes of production processes. Although we

have no known pending material environmental issues, there is no assurance that we will not be adversely impacted by environmental

costs, liabilities, or claims in the future, whether under existing laws and regulations or those adopted or imposed in the future. Our

costs, liabilities, and obligations relating to environmental matters may have a material adverse effect on our business, operating

results, cash flows, and financial condition. Our facilities in the U.S. are subject to regulation by the Occupational Safety and Health

Administration (“OSHA”), which oversees the protection of worker health and safety. In addition, the OSHA hazard communication

standard requires us to maintain information about hazardous materials used or produced in our operations and to provide this

information to employees, state and local governmental authorities and residents. We are also subject to occupational safety

regulations in other countries. Our failure to comply with government occupational safety regulations, including OSHA requirements, or

general industry standards relating to employee health and safety, recordkeeping, or monitoring occupational exposure to regulated

substances could expose us to liability, enforcement actions, fines and penalties, and could have a material adverse effect on our

business, operating results, cash flows, and financial condition. Although we employ safety procedures in the design and operation of

our facilities, there is a risk that an accident or injury to one of our employees could occur in one of our facilities. Any accident or injury

to our employees could result in litigation, manufacturing delays and harm to our reputation, which could negatively affect our business,

operating results, and financial condition.

Our business may be adversely affected by changes in automotive safety regulations or concerns that drive further regulation

of the automobile safety market

Government vehicle safety regulations are a key driver in our business. Historically, these regulations have imposed increasingly

stringent safety requirements for vehicles. Such regulations have a positive impact on driver awareness and acceptance of automotive

safety products and technology. More stringent safety regulations often require vehicles to include more safety CPV and more

advanced safety products, which has been a driver of growth in our business. However, these regulations are subject to change based

on a number of factors outside our control, including new scientific or medical data, adverse publicity regarding the industry recalls and

safety risks associated with airbags or seatbelts (for example, risks to children and small adults), domestic and foreign political

developments or considerations, and litigation relating to our products and our competitors’ products. Changes in government

regulations in response to these and other factors could have a severe impact on our business. Although we believe that safety will

continue to be a regulatory priority over time, if government priorities shift and we are unable to adapt to changing regulations, our

business may suffer material adverse effects. Our regulatory obligations could increase as federal and local regulators impose more

stringent compliance and reporting requirements in response to product recalls and safety issues in our industry. We are subject to

existing stringent requirements under the National Traffic and Motor Vehicle Safety Act of 1966 (the “Vehicle Safety Act”), including a

duty to report safety defects with our products, subject to strict timing requirements. The Vehicle Safety Act imposes potentially

significant civil penalties for violations, including the failure to comply with such reporting obligations. We are also subject to the existing

U.S. Transportation Recall Enhancement, Accountability and Documentation (“TREAD”) Act, which requires equipment manufacturers,

such as Autoliv, to comply with “Early Warning” reporting requirements by providing NHTSA with certain information, including

information related to defects or reports of injury related to our products. The TREAD Act imposes criminal liability for violations if a

defect subsequently causes death or bodily injury. In addition, the Vehicle Safety Act authorizes NHTSA to require a manufacturer to

recall and repair vehicles that contain safety defects or fail to comply with U.S. federal motor vehicle safety standards. Sales into foreign

countries may be subject to similar regulations. Due to the record recall of airbag inflators of one of our competitors, NHTSA has

become more active in requesting information from suppliers and vehicle manufactures regarding potential product defects.

22

Negative or unexpected tax developments could adversely affect our effective tax rate, operating results and financial

condition

Changes in, or changes in the application of, U.S. or foreign tax laws, regulations or accounting principles with respect to matters such

as tax base, tax rates, transfer pricing, dividends and restrictions on certain forms of tax relief or limitations on favorable tax treatment

could affect the calculation of our income taxes and other tax liabilities, our effective tax rate, and the

carrying value of our deferred tax

assets. Our annual tax rate is based on our income and the tax laws in the jurisdictions in which we operate. Because of our global

operations we face uncertainties and judgments in the application of complex tax regulations in a multitude of jurisdictions. Significant

judgment and estimation are required in determining our effective tax rate and in evaluating our tax positions, in many cases where the

ultimate tax determination is uncertain. Although we believe that our tax estimates are reasonable, the final determination of our tax

liability may be different from what is reflected in our historical income tax provisions and accruals. We are regularly examined by tax

authorities around the world and in a number of jurisdictions, we are currently under examination, which inherently creates uncertainty.

Although we periodically assess the likelihood of adverse outcomes, negative or unexpected results from one or more of such reviews

and audits, including any related interest or penalties imposed by governmental authorities, could increase our effective tax rate and

adversely impact our operating results, cash flows, and financial condition. For example, we are currently in the early stages of a

dispute with the Mexican tax authorities in relation to various issues dealing with certain manufacturing activities that occur in Mexico.

An adverse result in this or other similar disputes could have a materially negative impact on our financial results. The effective tax

rates used for interim reporting are based on our projected full-year geographic earnings mix and take into account projected tax costs

on intercompany dividends from lower tier subsidiaries. Changes in currency exchange rates, earnings mix among taxing jurisdictions,

or the ability of our subsidiaries to pay dividends could impact our reported effective tax rates, or cause fluctuations in the tax rate from

quarter to quarter. Certain anti-trust judgments or settlements may not be tax deductible, which could have a material negative impact

to our annual tax rate. A number of other factors may also increase our effective tax rate, which could have an adverse impact on our

profitability and operating results. Due to our numerous foreign operations, our tax rate may be impacted by our global mix of earnings if

our pre-tax income is lower than anticipated in countries with lower statutory tax rates and/or is higher than anticipated in countries with

higher statutory tax rates. Based on U.S. GAAP, we do not record current or deferred tax liabilities on permanent investments in our

foreign subsidiaries. See Note 5, Income Taxes, to the Consolidated Financial Statements in this Annual Report.

We may not be able to fully realize our deferred tax assets

We currently carry deferred tax assets, net of valuation allowances, resulting from deductible temporary differences and tax loss carry-

forwards, both of which will reduce taxable income in the future. However, deferred tax assets may only be realized against taxable

income. The amount of our deferred tax assets could be reduced, from time to time, due to adverse changes in our operations or in

estimates of future taxable income from operations during the carry-forward period as a result of a deterioration in market conditions or

other circumstances. Any such reduction would adversely affect our income in the period of the adjustment. Additional information on

our deferred tax assets is included in Note 5, Income Taxes, to the Consolidated Financial Statements in this Annual Report.

Item 1B. Unresolved Staff Comments

Not applicable.

23

Item 1C. Cybersecurity

Autoliv maintains a cybersecurity program designed to identify, assess, manage, mitigate, and respond to cybersecurity threats as an

integrated part of the Company’s overall operations. The objective is to provide protection against cybersecurity threats to our

employees, operations, data, and products.

Cybersecurity risk management and strategy

Cybersecurity risk management for the Company is undertaken both through dedicated cybersecurity risk management processes and

within the Company’s overall Enterprise Risk Management program, which is overseen by the Audit, Risk, and Compliance Committee

of the Company’s Board of Directors.

Autoliv has established an Enterprise Risk Management framework aligned to the ISO 31000:2019 to ensure that the context,

principles, and processes for risk management are embedded and integrated with the operations of the company. Risks across the

Autoliv risk universe, including cybersecurity, are assessed with bottom-up risk assessments and subsequently are aggregated and

reported to the Audit, Risk, and Compliance Committee of the Company’s Board of Directors.

Autoliv utilizes the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework in combination with other

corresponding and partially mandated frameworks to guide cybersecurity risk management. This approach includes the identification,

assessment, response, and management of risks arising from cybersecurity threats that may result in material adverse effects on the

confidentiality, integrity, and availability of our business, data and information systems. The Company contracts with third parties to

assess Autoliv’s cybersecurity program relative to its peers, utilizing the NIST framework as a baseline. Furthermore, Autoliv is

pursuing, under TISAX (Trusted Information Security Assessment Exchange), an assessment and exchange mechanism for information

security in the automotive industry, as well as compliance with road vehicle cybersecurity requirements as applicable to the supply

chain under ISO 21434.

Frequent testing/auditing activities, bottom-up cybersecurity risk assessments, vulnerability scanning, monitoring of external threat

intelligence and supplier risk sources, and 24/7 incident monitoring are executed by the cybersecurity function to inform our

understanding of the cybersecurity risk landscape, including solutions from third-party service providers, and what areas of

enhancement to prioritize. Further input is gained from regular maturity assessments executed by third parties as well as TISAX

assessments executed by external audit bodies.

Autoliv combines expertise from our internal cybersecurity function with additional specialist capacities from external consultants and

partners as may be needed from time to time. Separately, because we understand the risks associated with engaging third party

vendors, such as service providers, consultants and partners, in our cybersecurity risk management processes, we conduct security

assessments pre-engagement and monitor their work to mitigate any identified risks.

Autoliv has not experienced any cybersecurity incidents that have materially affected or are reasonably likely to materially affect the

Company. Despite our efforts, there can be no assurance that our cybersecurity risk management processes and measures described

will be fully implemented, complied with or effective in protecting our systems and information. We face risks from cybersecurity threats

that, if realized, are reasonably likely to materially affect our business strategy, result of operations or financial condition. For a full

discussion of these cybersecurity risks, please see our Risk Factors in Item 1A.

Board and management governance

Management's Role

The Chief Information Security Officer (CISO) is responsible for overseeing the Company’s cybersecurity practices. Our CISO joined

Autoliv in 2015. He has 30 years of information technology experience, including seven years as CISO. The CISO reports directly to the

CFO but, in line with the corporate governance model, the CISO’s activities are formally governed through a management board, the

“Digitalization and IT Management Board” (“DITM Board”) comprised of the Chief Information Officer (CIO) and certain members of

Autoliv’s Executive Management Team (“EMT”) representing engineering, supply chain management, operations and manufacturing,

quality and project management, finance, information technology, and divisional teams. The DITM Board meets at least quarterly with

cybersecurity as a standing agenda item.

In addition to the standing DITM Board meetings, the CISO, when needs arise, meets with the full EMT typically at least semi-annually

to report on, or discuss, specific cybersecurity-related topics.

The Cybersecurity function in Autoliv reports to the CISO. The cybersecurity function includes team members in all of the Company’s

divisions including technical security architects and incident response team members. The core team is supported by the broader

organization with security coordinators in each plant and tech center and additional functional security experts as deemed relevant,

such as in supply chain management and engineering. The function has the responsibility to operate day-to-day activities (e.g., testing,

incident monitoring and response, vulnerability scanning and awareness training) as well as to drive prioritized improvements (as

identified through the risk management processes), together with other relevant Autoliv functions and stakeholders. The security

operations center (“SOC”), part of the Cybersecurity function, monitors Autoliv for cyber incidents 24/7. A documented incident

response process and numerous documented playbooks provide the SOC guidance on how to respond for each type of incident,

including categorization and principles for escalation. Incidents are escalated in the organization according to defined criteria to engage

a level of authority that is deemed appropriate, such as the Corporate Crisis Management Team if necessary.

24

Board of Directors Oversight

Our Board, in coordination with the Audit Risk and Compliance Committee (the "ARCC"), oversees the Company’s Enterprise Risk

Management process, including the management of risks arising from cybersecurity threats. Our Board has delegated the primary

responsibility to oversee cybersecurity matters to the ARCC. Both the Board and the ARCC periodically review the measures we have

implemented to identify and mitigate cybersecurity risks.

The ARCC receives information from the CISO and other members of management on at least a quarterly basis which is supplemented

by a more extensive briefing from the CISO and management on at least a semi-annual basis on cybersecurity matters, including

updates on cybersecurity training programs and the results of external assessments, as applicable. The CISO provides at least an

annual briefing to the Board of Directors on these same topics.

The routine reporting to the ARCC and the Board includes as appropriate the highlights from the full spectrum of work done within the

Company’s cybersecurity program. The briefings by the CISO to the ARCC and Board also include the review of certifications and

cybersecurity maturity assessments by management and third parties.

25

Item 2. Properties

Autoliv’s principal executive offices are located at Klarabergsviadukten 70, Section D5, SE-111 64, Stockholm, Sweden. Autoliv’s

various businesses operate in a number of production facilities and offices. Autoliv believes that its properties are adequately

maintained and suitable for their intended use and that the Company’s production facilities have adequate capacity for the Company’s

current and foreseeable needs. All of Autoliv’s production facilities and offices are owned or leased by operating (either subsidiary or

joint venture) companies.

AUTOLIV MANUFACTURING FACILITIES

Country/Company

Location of Facility

Items produced at Facility

Owned/Leased

Brazil

Autoliv do Brasil Ltda.

Taubaté

Seatbelts, airbags and steering

wheels

Owned

Nova Goiana

Seatbelts and steering wheels

Leased

Canada

Autoliv Canada, Inc.

Tilbury

Airbag cushions

Owned

VOA Canada, Inc.

Collingwood

Seatbelt webbing

Owned

China

Autoliv (Baoding) Vehicle Safety Systems Co., Ltd

Baoding

Airbags and steering wheels

Leased

Autoliv (Changchun) Vehicle Safety Systems Co., Ltd.

Changchun

Airbags and seatbelts

Owned

Autoliv (China) Steering Wheel Co., Ltd.

Fengxian/Shanghai

Steering wheels

Owned

Autoliv (Guangzhou) Vehicle Safety Systems Co., Ltd.

Guangzhou

Airbags and seatbelts

Owned

Autoliv (Nanjing) Vehicle Safety Systems Co., Ltd.

Nanjing

Seatbelts

Owned

Autoliv Shenda (Nanjing) Automotive Components Co., Ltd.

Nanjing

Seatbelt webbing

Owned

Autoliv (Shanghai) Vehicle Safety Systems Co., Ltd.

Shanghai

Airbags

Owned

Autoliv Shenda (Tai Cang) Automotive Safety Systems Co.,

Ltd.

Shanghai

Seatbelt webbing

Owned

Autoliv (Jiangsu) Automotive Safety Components Co., Ltd.

Jintan

Propellant, Airbag initiators and

Airbag inflators

Owned

Autoliv (Hefei) Vehicle Safety Systems Co., Ltd.

Hefei

Steering wheels

Leased

Autoliv (China) Automotive Safety Systems Co., Ltd.

Nantong

Airbag cushions

Owned

Mei-An Autoliv Co., Ltd.

Taipei

Seatbelts and airbags

Leased

Estonia

AS Norma

Tallinn

Seatbelts and belt components

Owned

France

Autoliv France SNC

Gournay-en-Bray

Airbags

Owned

Livbag SAS

Pont-de-Buis

Airbag inflators

Owned

N.C.S. Pyrotechnie et Technologies SAS

Survilliers

Airbag initiators and seatbelt

micro gas generators

Owned

Hungary

Autoliv Kft.

Sopronkövesd

Seatbelts

Owned

India

Autoliv India Private Ltd.

Bangalore

Seatbelts, airbags

Owned

Mysore

Seatbelt webbing and Airbag

Cushions

Owned

Badli

Airbags and steering wheels

Leased

Autoliv Inflators India Private Limited

Pune

Airbag and Airbag cushions

Leased

Chennai

Airbag inflators

Owned

Indonesia

P.T. Autoliv Indonesia

Jakarta

Seatbelts, airbags and steering

wheels

Owned

Japan

Autoliv Japan Ltd.

Chubu

Airbags and steering wheels

Owned

Hiroshima

Airbags

Owned

Tsukuba

Airbags, seatbelts and steering

wheels

Owned

26

Malaysia

Autoliv-Hirotako Sdn Bhd

Kuala Lumpur

Seatbelts, airbags and steering

wheels

Owned

Mexico

Autoliv Mexico East S.A. de C.V.

Matamoros

Steering wheels

Owned

Autoliv Mexico S.A. de C.V.

Lerma

Seatbelts

Owned

Autoliv Safety Technology de Mexico S.A. de C.V.

Tijuana

Seatbelts

Leased

Autoliv Steering Wheels Mexico S. de R.L. de C.V.

Querétaro

Airbag cushions

Leased

Autoliv Steering Wheels Mexico S. de R.L. de C.V.

Querétaro

Airbags

Leased

Autoliv Mexico S.A. de C.V.

Aguascalientes

Steering wheels

Owned

Philippines

Autoliv Cebu Safety Manufacturing, Inc.

Cebu

Steering wheels

Owned

Poland

Autoliv Poland Sp. zo.o.

Olawa

Airbag cushions

Owned

Jelcz-Laskowice

Airbags

Owned

Romania

Autoliv Romania S.R.L.

Brasov

Seatbelts, seatbelt webbing,

seatbelt components, airbag

inflators, steering wheels

Owned

Lugoj

Airbag cushions and airbags

Owned

Resita

Airbag cushions

Owned

Sfantu Georghe

Steering wheels

Owned

Onesti

Steering wheels

Leased

Rovinari

Seatbelts

Owned

South Africa

Autoliv Southern Africa (Pty) Ltd.

Krügersdorp

Seatbelts and airbags

Owned

South Korea

Autoliv Corporation

Hwasung

Airbags and steering wheels

Owned

Spain

Autoliv BKI S.A.U.

Valencia

Airbags

Owned

Sweden

Autoliv Sverige AB

Vårgårda

Airbag inflators

Owned

Thailand

Autoliv Thailand Ltd.

Chonburi

Seatbelts, Airbags, Airbag

cushions and Steering wheels

Owned

Chonburi

Seatbelt and Seatbelt

components

Leased

Tunisia

STE ASW3 Nadour

El Fahs

Steering wheels

Owned &

Leased

STE ASW3 Nadour

Nadhour

Steering wheels

Owned

Turkey

Autoliv Cankor Otomotiv Emniyet Sistemleri Sanayi Ve

Ticaret A.S.

Gebze-Kocaeli

Seatbelts

Owned

Autoliv Cankor Otomotiv Emniyet Sistemleri Sanayi Ve

Ticaret A.S. Gebze-Subesi

Gebze-Kocaeli

Airbags, Steering wheels and

Seatbelt components

Leased

USA

Autoliv ASP, Inc.

Brigham City

Airbag inflators

Owned

Ogden

Airbags

Owned

Ogden

Airbags and service parts

Leased

Promontory

Propellant

Owned

Tremonton

Airbag initiators and seatbelt

micro gas generators

Owned

Vietnam

Autoliv Vietnam Company Limited

Quang Yen

Airbag cushions

Owned

27

AUTOLIV TECHNICAL CENTERS AND CRASH TEST TRACKS

Country/Company

Location

Product(s) supported

China

Autoliv (Shanghai) Vehicle Safety System Technical

Center Co., Ltd.

Shanghai

Inflators and pyrotechnics customer

applications, airbags, steering wheels and

seatbelts customer applications and platform

development with full-scale test laboratory

France

Autoliv France SNC

Gournay-en-Bray

Airbags and seatbelts customer applications

and platform development with full-scale test

laboratory

Livbag SAS

Pont-de-Buis

Inflator and pyrotechnic development

Germany

Autoliv B.V. & Co. KG

Dachau

Customer applications and platform

development, airbags with full-scale test

laboratory

India

Autoliv India Private Ltd.

Bangalore

Airbags and seatbelts with sled testing

Japan

Autoliv Japan Ltd.

Tsukuba

Airbags and seatbelts customer applications

and platform development with sled test

laboratory

Mexico

Autoliv Steering Wheels Mexico S. de R.L. de C.V.

Queretaro

Technical center airbag

Poland

Autoliv Poland Sp. zo.o.

Jelcz

Airbags applications and platform development

Romania

Autoliv Romania S.R.L.

Brasov

Seatbelts with sled test laboratory

South Korea

Autoliv Corporation

Seoul

Airbags and seatbelts customer applications

and platform development with sled test

laboratory

Sweden

Autoliv Development AB

Vårgårda

Research center

Autoliv Sverige AB

Vårgårda

Airbags customer applications, inflator and

special safety products development with full-

scale test laboratory

USA

Autoliv ASP, Inc.

Auburn Hills

Airbags, steering wheels, and seatbelts

customer applications and platform

development with sled test laboratory

Ogden

Airbags, inflators and pyrotechnics customer

applications and platform development

28

Item 3. Legal Proceedings

In the ordinary course of its business, the Company is subject to legal proceedings brought by or against the Company and its

subsidiaries.

See Note 19, Contingent Liabilities, to the Consolidated Financial Statements in this Annual Report for a summary of certain ongoing

legal proceedings. Such information is incorporated into this Part I, Item 3 – “Legal Proceedings” by reference.

Item 4. Mine Safety Disclosures

Not applicable.

29

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities

Shareholder information

The primary exchange market for Autoliv’s securities is the New York Stock Exchange (NYSE) where Autoliv’s common stock trades

under the symbol “ALV”. Autoliv’s Swedish Depositary Receipts (SDRs) are traded on NASDAQ Stockholm under the symbol “ALIV

SDB”. Options in SDRs trade on Nasdaq Stockholm under the name “Autoliv SDB”. Options in Autoliv shares are traded on NASDAQ

OMX PHLX and on NYSE Amex Options under the symbol “ALV”.

Stock Performance Graph

The graph and table below show the cumulative total shareholder return for our common stock since December 31, 2020. The graph

compares our performance to that of the Standard & Poor’s 500 Stock Index (S&P 500) and the Dow Jones US Auto Parts Index.

The comparison assumes $100 was invested at the closing price of our common stock on the NYSE on December 31, 2020. Each of

the returns shown assumes that all dividends paid were reinvested.

(USD)

12-31-2020

12-31-2021

12-31-2022

12-31-2023

12-31-2024

12-31-2025

Autoliv, Inc.

$

100.00

$

114.51

$

87.71

$

129.84

$

113.33

$

147.54

S&P 500

100.00

128.71

105.40

133.10

166.40

196.16

Dow Jones US Auto Parts Index

100.00

119.82

86.99

85.80

65.38

74.11

30

Number of shares

As of December 31, 2025, the number of shares of common stock outstanding, net of treasury shares, was 74.7 million, compared to

77.7 million as of December 31, 2024. The Company repurchased and immediately retired approximately 3.1 million shares during

2025.

During 2025, the weighted average number of shares outstanding (excluding dilution and treasury shares) decreased to 76.6 million

from 80.2 million in 2024. Assuming dilution, the weighted average number of shares outstanding for the full year 2025 decreased to

76.9 million from 80.4 million in 2024.

Granted Restricted Stock Units (RSUs) and Performance Share Units (PSUs) could increase the number of shares outstanding as of

December 31, 2025 by 0.6 million shares in the aggregate. Combined, this would add 0.8% to the number of shares outstanding as of

December 31, 2025.

On December 31, 2025, the Company had 2.6 million treasury shares compared to 2.7 million as of December 31, 2024.

Shareholders

As of February 13, 2026, there were 1,116 holders of record of our common stock. Many stockholders choose to own shares through

brokerage accounts and other intermediaries rather than as holders of record (excluding individual participants in securities positions

listing) so the actual number of stockholders is unknown but significantly higher.

Dividends

Autoliv has a history of paying quarterly cash dividends. Declared dividends are announced in press releases and published on

Autoliv’s corporate website. The Board of Directors revisits dividends on a quarterly basis. There can be no assurance that the Board of

Directors will declare dividends in the future. See Autoliv’s corporate website for additional details regarding historical dividends.

Stock incentive plan

Autoliv employees participate in the Autoliv, Inc. 1997 Stock Incentive Plan, as amended (the “Stock Incentive Plan”) and receive

Autoliv stock-based awards from time to time. Additional information regarding the securities authorized for issuance under the Stock

Incentive Plan is included in Item 12 of this Annual Report.

Autoliv has adopted a Stock Ownership Policy for Executives requiring the Company’s Chief Executive Officer (CEO) to accumulate

and hold the number of Autoliv shares having a value of twice his annual base salary. For other executives, the minimum requirement

is, over time, a holding equal to each executive’s annual base salary.

Stock repurchase program

The following table provides information with respect to common stock repurchases by the Company during the three months period

ended December 31, 2025 on NYSE.

New York Stock Exchange (NYSE)

Period

Total Number of

Shares Purchased

(1)

Average Price

Paid per Share

(USD) (2)

Total Number of Shares

Purchased as Part of

Publicly Announced Plans

or Programs (3)

Approximate Dollar Value of

Shares That May Yet Be

Purchased Under the Plans or

Programs (USD) (3)

October 1-31, 2025

42,804

$

116.65

884,933

$

2,395,006,964

November 1-30, 2025

796,722

$

119.18

1,681,655

$

2,300,054,081

December 1-31, 2025

421,199

$

118.84

2,102,854

$

2,250,000,205

(1) The repurchases are being executed from time to time, subject to general business and market conditions and other investment opportunities,

through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans. For accounting purposes, shares

repurchased under our stock repurchase programs are recorded based upon the settlement date of the applicable trade.

(2) The average price paid per share in U.S. dollars exclude brokerage commissions and other costs of execution.

(3) On June 4, 2025, the Company announced that its Board of Directors approved a new stock repurchase program that authorizes the Company to

repurchase up to $2.5 billion of common shares and operates from July 1, 2025 through December 31, 2029.

Item 6. [RESERVED]

31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

IMPORTANT TRENDS

The discussions and analysis in this section are focused on the Company’s results of operations for the year ended December 31, 2025

compared to the year ended December 31, 2024. Discussions of the Company's results of operations for the year ended December 31,

2024 compared to the year ended December 31, 2023 can be found in Part II, Item 7. Management's Discussion and Analysis of

Financial Condition and Results of Operations in the Company's Form 10-K for the year ended December 31, 2024, which was filed

with the United States Securities and Exchange Commission on February 20, 2025.

Autoliv, Inc. (the “Company”) provides automotive safety systems to the automotive industry with a broad range of product offerings,

primarily passive safety systems. In the year ended December 31, 2025, a number of factors influenced the Company’s results of

operations, including:

•

Geopolitical uncertainties and tariffs

•

Cost inflation moderated but remains somewhat elevated, especially for labor

•

Growth impacted by LVP, shifting OEM landscape and safety content per vehicle

•

Order intake impacted by shifts in technology, customer landscape and geopolitics.

•

Strategic and structural initiatives

•

Continued focus on operational excellence and quality

2025

2024

YEARS ENDED DEC. 31 (DOLLARS IN MILLIONS, EXCEPT EPS)

Reported

1)

change

Reported

1)

change

Global light vehicle production (in thousands)

90,268

3.9

%

86,895

(1.0

)

%

Consolidated net sales

$

10,815

4.1

%

$

10,390

(0.8

)

%

Operating income

1,088

11

%

979

42

%

Operating margin, %

10.1

0.6

pp

9.4

2.8

pp

Net income attributable to controlling interest

735

14

%

646

33

%

Earnings per share - diluted

2)

9.55

19

%

8.04

40

%

Net cash provided by operating activities

1,157

9.3

%

1,059

7.8

%

Return on capital employed, %

26.4

1.5

pp

25.0

7.3

pp

1)

Reported figures impacted by costs for capacity alignments and antitrust related matters. See section Items affecting comparability and Note 13 to the

Consolidated Financial Statements included herein.

2)

Net of treasury shares.

GEOPOLITICAL UNCERTAINTIES AND TARIFFS

2025 saw global LVP increase by around 3.9% (according to S&P Global January 2026). Our sales to customers are based on

production schedule order quantities and delivery dates that are communicated to us by our customers, which we refer to as “call-off”

plans. Despite industry challenges such as chip shortages related to the Nexperia situation and the tariffs imposed in the beginning of

2025, which caused uncertainties regarding costs in the industry, we saw an improvement in call-off volatility in 2025. This improvement

supported our improvement in operating efficiency and productivity, including a reduction in direct workforce. However, customer call-off

volatility increased in the fourth quarter and remained higher than pre-pandemic levels, and low customer demand visibility and

changes to customer call-offs with short notice still had a negative impact on our production efficiency and profitability.

The effects of the new tariffs imposed in 2025 did not have a significant impact on our profitability in 2025, as we achieved customer

compensations for more than 80% of tariff costs. Including the dilutive effect of recovered tariffs, operating margin was negatively

impacted by around 20 bps. While it is our ambition and expectation to continue passing tariff costs on to our customers, there is

significant uncertainty as future recovery levels may vary. Geopolitical developments and the evolving trade environment are likely to

continue creating a challenging and unpredictable operating landscape. Any new, increased or modified tariffs or other trade restrictions

could materially affect our operations, customer relationships or cost recovery ability as well as contribute to the uncertainty of industry

expectations. We continue to closely monitor the tariff policy environment and remain prepared to be agile to adjust our commercial and

operational responses to any such developments.

INFLATION

Cost pressures from labor, in our own operations and related to our suppliers' labor costs, had a negative impact on our profitability in

2025. Most of the inflationary cost pressure was offset by customer price and other compensations. Changes in raw material costs had

a limited impact on our profitability in 2025. The Company expects limited raw material price impact also in 2026. We also expect

continued cost pressure from inflation relating mainly to labor, including increased labor costs for our suppliers, especially in Europe

and the Americas. The Company continues to execute on productivity and cost reduction activities to offset these cost pressures, and

we continue to seek inflation compensation from our customers. The continued uncertainty regarding the effects of tariffs and trade

restrictions may lead to a more adverse inflation environment.

32

GROWTH IMPACTED BY LIGHT VEHICLE PRODUCTION, SHIFTING OEM LANDSCAPE AND SAFETY CONTENT PER VEHICLE

The most important driver for Autoliv’s sales is the LVP. In 2025, global LVP grew by 3.9%.

Light Vehicle Production

1)

2025

2024

Change 2025 vs 2024

(000´)

units

% global

(000´)

units

% global

(000´)

units

%

Americas

16,964

19

%

16,968

20

%

(5

)

(0.0

)%

North America

13,955

15

%

14,021

16

%

(66

)

(0.5

)%

South America

3,008

3.3

%

2,947

3.4

%

61

2.1

%

Europe

16,860

19

%

17,035

20

%

(175

)

(1.0

)%

Asia

54,065

60

%

50,584

58

%

3,481

6.9

%

China

32,182

36

%

29,248

34

%

2,934

10.0

%

Japan

7,869

8.7

%

7,732

8.9

%

137

1.8

%

South Korea

4,049

4.5

%

4,072

4.7

%

(23

)

(0.6

)%

India

6,027

6.7

%

5,614

6.5

%

413

7.4

%

Other Asia

3,938

4.4

%

3,918

4.5

%

20

0.5

%

Other

2,379

2.6

%

2,308

2.7

%

71

3.1

%

Global Total

90,268

86,895

3,373

3.9

%

1)

Source: S&P Global, January 2026

The increase in LVP in China of 10% was significantly more than what was expected in the beginning of the year, driven mainly by a

multitude of successful launches of new models by domestic Chinese OEMs and in particular by increased exports, mainly to Asian

markets. The LVP decline of 1.0% in Europe was impacted by affordability issues and technology uncertainties. The LVP decline of

0.5% in North America was impacted by the EV market development, U.S. tariffs and growing consumer uncertainty, Japan increased

by 1.8%, mainly impacted by domestic demand and US exports, supplemented by Japanese OEM production repatriation. LVP in India

increased by 7.4%, driven by reduced sales tax on cars and multiple new model launches.

The different LVP growth rates for different regions in 2025 was dilutive to global safety content per vehicle (CPV), as LVP in several

high CPV regions declined while LVP increased in some lower CPV regions. The highest CPV region is North America, and its share of

global LVP declined by 0.5pp to 15.5%. The second highest CPV region is Europe, and its share of global LVP declined by 1.0pp, to

18.7%. India, a major region with the lowest CPV, which saw its share of LVP increase from 6.5% to 6.7%. CPV in China is below the

global average, and China’s share of global LVP increased from 33.7% to 35.7%. Japan’s share decreased to 8.7% from 8.9%.

Additional dilution to global CPV came from the difference in growth within China, where lower CPV models and segments grew

strongly while higher CPV models and segments growth was limited or negative. LVP growth for Domestic Chinese OEMs with typically

lower CPV was 16% compared to global OEMs with typically higher CPV saw LVP decline by 1.3%. Combined with the regional growth

differences, we estimate this shift in LVP mix contributed negatively to our sales growth by between 2 to 3 pp. The Company estimates

that its global market share was unchanged at around 44% in 2025 compared to 2024.

The strong growth of Chinese OEMs' LVP in both domestic and export markets is a trend the Company expects to continue. It is

therefore instrumental to have a solid position with this customer category. Over the past few years, the Company has taken significant

steps to strengthen its position with Chinese OEMs through investments in manufacturing and R,D&E capacities, as well as by signing

several strategic co-operation agreements with Chinese OEMs. These efforts have supported an improved performance, as shown by a

strong order intake, with 30% of the Company's total order intake value in 2025 coming from Chinese OEMs. Additionally, the

Company's sales to Chinese OEMs grew by 23% in 2025.

Another important market trend is the rapid growth of the automotive market in India. In recent years, India's significance for the

automotive industry has increased substantially. In 2025, LVP in India represented 6.7% of global LVP. As safety content per vehicle

has also grown rapidly over the past few years, India's importance for the Company has risen from around 2% of total sales in 2020 to

5% in 2025. Through timely investments in capacity for both manufacturing and R, D&E, the Company is the clear market leader in

India.

Despite macro-economic uncertainties in parts of the world, we expect light vehicle markets to grow both in the medium and long term,

driven by pent-up end user demand and a growing GDP/capita.

Due to more stringent crash test rating requirements by institutes such as Euro NCAP, increased government regulations and

increasing consumer demand for more safety in emerging markets, the Company sees vehicle manufacturers installing more airbags

and more advanced seatbelt systems in vehicles. This generally takes place when new models are introduced. The safety standards of

vehicles are increasing in China, India, and other growth markets, partially due to new government regulations and crash test rating

programs. This is supporting higher installation rates of airbags and more advanced seatbelts, impacting CPV positively

.

Commercial

customer recoveries compensating for increased labor costs and tariffs also added to CPV in 2025, partly offset by negative effects

from continued productivity related pricing pressure from vehicle manufacturers. CPV increased in India, South America, South Korea,

Europe and North America, was unchanged in Japan and China and decreased in Other Asia. The changes in regional and model mix

diluted global CPV by 2 to 3pp leading to a global CPV that was unchanged compared to 2024. This contributed to an organic growth

(Non-GAAP measure) of around 3.4% compared to global LVP growth of around 3.9%. The average global safety CPV (airbags,

pedestrian safety, seatbelts, and steering wheels) amounted to around $268 in 2025.

The Company believes that the more stringent crash rating requirements and consumer demand for more safety should enable the

global automotive safety market to grow around 1-2 percentage points per year faster than the global LVP in the medium and long term.

This excludes the impact from cost inflation related price increases.

33

The past several years’ high order intake share has supported a strong sales development over time. In the past 5 years, the

Company's organic sales development outpaced global LVP on average by around 4.3 percentage points. During 2025, growth was

positively affected through recent launches of several new models, including Honda Passport, Ford Expedition, Hyundai Palisade, Onvo

L90, Mercedes CLA, Citroen C3 Aircross and Opel Frontera.

The Company estimates that the sales for Electric Vehicles (not including PHEVs) amounted to around $1.7 billion in 2025.

GLOBAL FOOTPRINT WELL ADAPTED TO THE GEOGRAPHIC TREND SHIFT IN AUTOMOTIVE PRODUCTION

The Company's regional sales mix continues to be balanced with 29% of sales in Europe, 32% in the Americas and 20% in Asia,

excluding China in 2025, compared to 28%, 33% and 19%, respectively, in 2024. The Company's sales in the important Chinese

market was 19% of total sales in 2025 compared to 19% in 2024.

The balanced regional sales mix has been achieved through timely investments and strengthening of technical and support capabilities

in growth markets.

ORDER INTAKE IMPACTED BY SHIFTS IN TECHNOLOGY, CUSTOMER LANDSCAPE AND GEOPOLITICS

The Company's order intake in 2025, with high win rates for new platforms with both new and traditional OEMs as well as for both EV

and ICE platforms, supports the Company's already strong base, which includes supplying products to more than 1,400 vehicle models

and around 100 car brands. The order intake in 2025 supports the Company's ability to defend its around 44% sales market share in

the near and medium term. For several years, the automotive industry has faced key trends that impact the industry, notably changes in

technologies as well as geographic growth differences, with the emergence of new automakers being particularly visible in China.

Autoliv has therefore increasingly focused resources on developing new products and strengthening its position with new automakers to

capture the growth opportunities that come with these changes. This includes long-term development agreements with several new

automakers in China in recent years, as well as increased investments in capacity and capabilities in India. The order intake from new

automakers, mainly in China, accounted for around 1/3 of our total order intake in 2025.We won multiple awards tied to industry trends

such as autonomous driving. These include solutions that protect occupants in reclined seating positions, addressing critical safety risks

in next

‑

generation interiors. We strengthened our Mobility Safety Solutions business by winning new orders for our advanced Pyro

Safety Switch, supporting the growing segment of 1,000

‑

volt electric vehicles. We continued to expand our safety offering in India with

advanced systems such as seat

‑

cushion airbags and front

‑

center airbags. We licensed our Human Body Model solution to our first

customer. In China, the Company estimates that around 50% of order intake in 2025 was with domestic Chinese OEMs, which supports

our expectation that domestic OEMs in China will continue to increase their share of the Company's sales in China in 2026. New order

intake is defined as the sales value of awards for future business received within that year. The lifetime value is calculated using

detailed assumptions of price and volumes over the years of production and the exchange rates prevailing at the time of receiving the

order.

The lead time from order intake to start of production is typically 1-3 years. During this period the products are engineered into the

vehicle to provide the expected protection for occupants in case of a crash and to meet legal and regulatory requirements, as well as

other requirements from the vehicle manufacturer. This investment in new products is the main factor of RD&E expenses, net.

Additionally, the Company has to build up production capacity, in the form of new lines, to meet future product launches.

In 2025, OEMs sourcing of new business was at a low level for the industry, as OEMs are reconsidering certain future product offerings

due to technological and geopolitical uncertainties, including uncertainties regarding costs for tariffs. The Company's order intake share

for 2025 continued on a high level. Even so, the low level of OEM sourcing activity in 2025 resulted in an order intake in 2025 that was

on the same low level as in 2024. The estimated life-time sales for all orders booked in 2025 is around $7.7 billion, compared to around

$7.4 billion in 2024. As sourcing of several large platforms were pushed into 2026, we expect a rebound of OEM sourcing activity and

Autoliv order intake in 2026.

STRATEGIC AND STRUCTURAL INITIATIVES

The 2025 light vehicle market was impacted by a technological and geopolitical uncertainties, with continued elevated customer call-off

volatility and inflationary pressure on costs for labor. In response, Autoliv management continued to implement strict cost control

measures, as well as execute significant structural cost reduction measures. In June 2023, the Company communicated a cost

reduction framework that included the intent to reduce its indirect headcount by up to 2,000, and to improve direct labor productivity

equivalent to a reduction of up to a 6,000 direct workforce positions. Based on the intended indirect workforce reductions, the Company

estimates that total annual cost reductions will amount to around $130 million when fully implemented, with approximately $50 million in

savings recorded in 2024, increasing to around $100 million in 2025 and the remaining amount expected in 2026 and 2027. At the end

of 2025, around 1,600 of the planned indirect reductions had been completed.

Direct labor efficiency has developed well in both 2024 and 2025, supported by the direct labor workforce reduction program, improved

call-off accuracy and a focused automation effort. It is the Company's estimate that the program's target of 6,000 direct labor workforce

reduction was achieved by the end of 2025.

The provision, net of reversals, for restructuring activities in 2025 amounted to $8 million compared to $18 million in 2024. As of

December 31, 2025, the Company had $82 million reserved in its balance sheet related to restructuring compared to $151 million last

year. For more information, see Note 13, Restructuring, to the Consolidated Financial Statements included herein.

In addition to the structural improvements outlined above, the Company continues to implement the strategic initiatives to improve the

efficiency of its value chain from end to end, not least through the Autoliv Production System and increased digitalization and

automation. The Company has a high pace in the planning and implementation of the strategic initiatives. These initiatives are key

drivers to the Company's targets and building the foundation to continue to create shareholder value.

34

IMPROVED EFFICIENCIES THROUGH OPERATIONAL EXCELLENCE

Pricing pressure is an inherent part of the automotive supplier business. Price reductions are generally higher on newer products with

strong volume growth compared to older products, where both the possibilities to re-design the product to reduce costs and market

growth are less. Price reductions can also depend on the business cycle and raw material price development. For the five-year period

2017-2021, the Company estimates the average reduction of product prices on existing programs to have been in the range of around

2-4% annually. In 2022, the pricing environment changed to some extent due to high raw material price and cost increases, which led to

renegotiations with customers regarding commercial terms. These discussions resulted in a net positive price development, gradually

implemented throughout the year. This was also the case in 2023, and for 2024 as well, albeit at a lower level as inflation moderated. In

2025, inflation moderated further, as did customer compensations for excess inflation. Customer recoveries for increased tariff costs

impacted net sales positively in 2025.

A key strategy for Autoliv to be and to remain cost competitive is to reduce labor costs, through continuously implementing productivity

improvement programs, optimizing the Company's production footprint, and instituting restructuring and capacity alignment activities as

well as other actions to address the Company's cost structure.

The Company's productivity improvement target, measured as labor minutes per unit, is to achieve at least 8% savings per year. This is

an increase from previous target of 5% savings per year. The increase reflects mainly increased opportunities related to advances in

digitalization and automation, including machine learning and AI. To meet this target, Autoliv has developed a set of strategies to

reduce costs in manufacturing:

•

Autoliv production system (APS) is based on lean manufacturing methodology which aims to continuously increase output

with less resources. APS provides the target conditions and tools to achieve the delivery of goods and services at the right

time, in the right amount, at the required quality and at the lowest cost possible to all the Company's customers.

•

Autoliv One Product One Process (1P1P) strategy focuses on product and process standardization and reducing cost and

complexity. The 1P1P strategy, combined with initiatives to reduce costs for components from external suppliers, ensures

that the Company continuously optimizes its supply base footprint, consolidates purchase volumes to fewer suppliers,

improves productivity in the Company's supply chain, standardizes components and redesign its products.

•

Strategic Initiatives, including Automation, Digitalization, Machine Learning and AI, Supply Chain Management

Effectiveness and RD&E Effectiveness.

The Company's historical experience is that its continuous improvement strategies have enabled productivity improvements at or above

its historic target of 5%. However, the Company has not achieved its 5% productivity target since the COVID-19 pandemic in 2020, due

to the decline in LVP in 2020 and the high volatility in customer call-offs in 2021, 2022 and 2023, driven by the industry wide supply

chain instability, especially for semiconductors. In 2024, however, the Company achieved its 5% productivity target, as gradual

improvement in customer call-off volatility enabled improved operational efficiency. In 2025, the Company achieved its new target of 8%

labor minutes per unit productivity.

The Company foresees opportunities for further productivity on organic sales growth and increased call-off stability when global supply

chains continue to stabilize further to pre-pandemic levels, but also from increasing use of automation in its assembly for lean

manufacturing processes. Additionally, automated cells typically perform the manufacturing process with reduced variability. This

results in greater control and consistency of product quality.

FOCUS ON QUALITY

The number of vehicle recalls in the automotive industry continues to be at a relatively high level. The Company expects overall recall

numbers to remain high for years to come and, although the Company strives for the highest quality in its processes, it cannot be ruled

out that the Company may also be adversely impacted by a future recall.

Quality has been and always will be the Company's number one priority, and the Company continues to sharpen its focus in this area.

The Company now holds a global market share in passive safety of around 44%, while the Company has been involved in around 3%

of recalls in the industry in the past ten years. This indicates that the Company is delivering on its quality strategy. For more information

see product warranty and recalls in Note 14, Product Related Liabilities, to the Consolidated Financial Statements in this Annual

Report.

CHANGES IN COMPETITIVE AND CUSTOMER LANDSCAPE

The Company has not noted any significant changes in the competitive landscape in 2025. We consider Joyson Safety Systems, a part

of Ningbo Joyson Electronic Corp., and ZF LIFETEC, a part of ZF Friedrichshafen AG, to be global competitors to Autoliv. In addition,

there are several smaller regional and product specific competitors, especially in China.

The customer landscape is gradually changing, with a multitude of new OEMs emerging in recent years. This is especially prominent

within electric vehicles and in China. In China, domestic OEMs have gained significant market shares and as a group now has larger

market share than global OEMs have in China. Autoliv's sales to domestic OEMs in China has grown rapidly. In 2022, this group

accounted for 22% of Autoliv's sales in China, and in 2025 their share of Autoliv sales in China was 44%. The fastest growing OEM in

China in recent years has been BYD, although its growth slowed significantly in 2025. BYD has a uniquely high degree of vertical

integration, with a large proportion of in-house sourcing of products and systems. This includes passive safety systems, which is

supplied by its subsidiary FinDreams Technology. Autoliv supplies components, especially inflators, to FinDreams Technology.

35

CAPITAL STRUCTURE

The Company’s net debt stood at $1,566 million on December 31, 2025. This was an increase of $12 million compared to December

31, 2024. Total interest-bearing debt at December 31, 2025 amounted to $2,153 million, an increase of $244 million compared to

December 31, 2024.

Cash flow from operations was $1,157 million in 2025 and $1,059 million in 2024. Capital expenditures, net amounted to $423 million in

2025 and $563 million in 2024. During 2025 and 2024, the Company paid dividends of $238 million and $219 million, respectively.

It is the Company’s policy to maintain a financial leverage commensurate with a “strong investment grade credit rating”. The long-term

target is to have a leverage ratio (see section Non-GAAP Performance Measures) not above

1.5x. At December 31, 2025, the leverage

ratio was 1.1x. The Company monitors its capital structure and the financial markets closely and intends to maintain a high level of

financial flexibility while being shareholder friendly.

As part of the adjustment of the capital structure, the Company has historically repurchased shares of its common stock. During 2025

and 2024, the Company repurchased and retired 3.1 million and 5.1 million shares, respectively. On June 4, 2025, the Company

announced that its Board of Directors approved a new stock repurchase program that authorizes the Company to repurchase up to $2.5

billion of common shares and operates from July 1, 2025 through December 31, 2029.

In 2024, the Company also retired 2 million shares previously held in Treasury stock. As of December 31, 2025, the Company

continues to hold around 2.6 million shares of common stock in treasury.

OUTLOOK FOR 2026

In addition to the assumptions noted below and our business and market update provided herein, the Company's guidance for 2026 is

mainly based on its customer call-offs and the achievement of its targeted cost compensation adjustments with its customers, including

no material changes to tariffs or trade restrictions, as compared to what is in effect as of January 23, 2026, as well as no significant

changes in the macro-economic environment, changes to customer call-off volatility or significant supply chain disruptions.

Full year 2026 Guidance

Organic sales growth

Around 0%

Adjusted operating margin

1)

Around 10.5-11.0%

Operating cash flow

2)

Around $1.2 billion

Capital expenditures, net, % of sales

Less than 5%

1)

Excluding effects from capacity alignments, antitrust related matters and other discrete items.

2)

Excluding unusual items.

Full year 2026 Assumptions

LVP growth

Around 1% negative

Foreign currency impact on net sales

Around 1% positive

Tax rate

3)

Around 28%

3)

Excluding unusual tax items.

The forward-looking non-GAAP financial measures above are provided on a non-GAAP basis. Autoliv has not provided a GAAP

reconciliation of these measures because items that impact these measures, such as costs related to capacity alignments and antitrust

matters, cannot be reasonably predicted or determined. As a result, such reconciliation is not available without unreasonable efforts

and Autoliv is unable to determine the probable significance of the unavailable information.

SIGNIFICANT LEGAL MATTERS

See Item 3. Legal Proceedings and Note 19, Contingent Liabilities, to the Consolidated Financial Statements in this Annual Report.

36

RESULTS OF OPERATIONS

Consolidated net sales in 2025 increased by 4.1% compared to 2024. Excluding positive currency translation effects of 0.7%, the

organic sales increased (Non-GAAP measure, see reconciliation table below) by 3.4% compared to the global LVP increase of 3.9%

(according to S&P Global, Jan 2026).

Sales by Product

Years ended December 31,

Components of change in net sales

2025

2024

Reported

change

Currency

effects

1)

Organic

3)

Airbags, Steering Wheels and

Other

2)

$

7,302

$

7,023

4.0

%

0.6

%

3.4

%

Seatbelt products and Other

2)

3,513

3,367

4.3

%

0.8

%

3.5

%

Total

$

10,815

$

10,390

4.1

%

0.7

%

3.4

%

1) Effects from currency translations.

2) Including Corporate and Other sales.

Airbags, Steering Wheels and Other

Sales for Airbags, Steering Wheels and Other grew organically (Non-GAAP measure, see reconciliation table above) by 3.4% in 2025.

The largest contributor to the increase was side airbags and inflatable curtains, followed by steering wheels, center airbags and driver

airbags.

Seatbelt Products and Other

Sales for Seatbelt Products and Other grew organically (Non-GAAP measure, see reconciliation table above) by 3.5% in 2025. Sales

growth was mainly driven by Americas and Asia excluding China followed by Europe and China.

Sales by Region

Years ended December 31,

Components of change in net sales

2025

2024

Reported

change

Currency

effects

1)

Organic

3)

Americas

$

3,480

$

3,424

1.6

%

(1.7

)%

3.3

%

Europe

3,116

2,946

5.8

%

4.4

%

1.4

%

China

2,095

2,010

4.2

%

0.2

%

4.0

%

Asia excl. China

2,124

2,010

5.7

%

(0.2

)%

5.9

%

Total

$

10,815

$

10,390

4.1

%

0.7

%

3.4

%

1) Effects from currency translations.

Autoliv’s global sales increased organically (Non-GAAP measure, see reconciliation table above) by 3.4% in 2025 compared to 2024,

which was around 0.5 percentage points below global LVP growth (according to S&P Global, January 2026). The 0.5pp

underperformance was positively impacted by product launches and tariff compensations. This was more than offset by negative effects

from the regional and model LVP mix development, which we estimate contributed to about 2.5pp underperformance. This was

particularly accentuated in China.

Our organic sales growth (Non-GAAP measure) outperformed LVP growth by 3.4pp in Americas, by 3.3pp in Asia excluding China and

by 2.4pp in Europe, while we underperformed by 6.1pp in China. LVP growth in China in 2025 was driven by domestic OEMs with

typically lower safety content. LVP for global OEMs declined by 1.3% while it increased by 16% for domestic OEMs. Autoliv's sales to

domestic OEMs increased by 23% in 2025 while it decreased by 7.3% to global OEMs in China. We expect continued strong sales

growth in China in 2026, driven by our performance with domestic OEMs.

2025 Organic Growth (Non-GAAP measure)

Americas

Europe

China

Asia excl. China

Global

Autoliv

3.3 %

1.4%

4.0 %

5.9%

3.4%

Main growth drivers

Stellantis,

Toyota, Ford

Stellantis, BMW,

VW

Chery, Great

Wall, Nio

Suzuki, Toyota,

Hyundai

Stellantis, Suzuki,

Toyota

Main decline drivers

EV GOEM,

GM, Hyundai

EV GOEM, JLR,

Hyundai

EV GOEM, VW,

Mercedes

Mitsubishi, Honda,

GM

EV GOEM, JLR,

Lixiang

37

Condensed Statement of Income

Years ended December 31,

(Dollars in millions, except per share data)

2025

2024

Change

Net Sales

$

10,815

$

10,390

4.1

%

Gross profit

2,074

1,927

7.6

%

% of sales

19.2

%

18.5

%

0.6

pp

S, G&A

(571

)

(530

)

7.6

%

% of sales

(5.3

)%

(5.1

)%

(0.2

)pp

R, D&E, net

(413

)

(398

)

3.8

%

% of sales

(3.8

)%

(3.8

)%

0.0

pp

Other income (expense), net

(2

)

(19

)

(91

)%

Operating income

1,088

979

11

%

% of sales

10.1

%

9.4

%

0.6

pp

Adjusted operating income

1)

1,114

1,007

11

%

% of sales

10.3

%

9.7

%

0.6

pp

Financial and non-operating items, net

(102

)

(105

)

(2.5

)%

Income before taxes

986

875

13

%

Income taxes

(250

)

(227

)

10

%

Tax rate

25.4

%

26.0

%

(0.6

)pp

Net income

736

648

14

%

Earnings per share, diluted

2)

9.55

8.04

19

%

Adjusted earnings per share, diluted

1,2)

9.85

8.32

18

%

1)

Non-GAAP Measure

.

2)

Net of treasury shares

.

Gross Profit

In 2025, gross profit increased by $147 million and the gross margin increased by 0.6pp compared to 2024. The drivers behind the

gross profit improvement were mainly improved operational efficiency with lower costs for labor, logistics, premium freight and waste

and scrap. We also had positive effects from the organic sales growth and lower material costs partly offset by negative effects from

recall and warranty costs, un-recovered tariffs and higher depreciation.

Operating Income

Operating income increased in 2025 by $109 million, mainly due to the higher gross profit, as outlined above and the improvement in

Other income (expense), partly offset by higher costs for S,G&A and R,D&E, as outlined below.

Selling, General and Administrative (S,G&A) expenses increased in 2025 by $40 million, mainly due to $20 million in increased

personnel costs driven by wage inflation, $13 million in higher IT costs mainly due to higher license costs, $6 million in negative FX

translation effects. S,G&A costs in relation to sales increased from 5.1% to 5.3%, a level that is considered to be slightly above normal.

Research, Development & Engineering (R,D&E) expenses, net increased in 2025 by $15 million, mainly due to $18 million in lower

engineering income due to timing effects and $7 million in higher personnel costs due to wage inflation partly offset by $5 million from

positive FX translation effects. R,D&E, net, in relation to sales was unchanged at 3.8%. The Company consider a level of around 4% to

be representative for its business scope.

Other income (expense), net was an expense of $2 million in 2025 compared to an expense of $19 million in 2024. Almost all of the $17

million in lower expense was due to lower restructuring costs in 2025 compared to 2024

.

Financial and Non-operating Items, net

Financial and non-operating items, net, improved by $3 million in 2025 compared to previous year, mainly due to $5 million in lower

interest expense partly offset by $3 million in lower interest income.

Income Taxes

The tax rate for 2025 was 25.4%, compared to 26.0% in 2024. Discrete tax items, net, had a favorable impact of 3.1pp in 2025

compared to 4.8pp favorable impact in 2024. The reported 25.4% tax rate as well as the underlying tax rate excluding discrete items

was within our expected normal tax rate range of 25-30%.

Net Income and Earnings Per Share

Net income in 2025 increased by $88 million compared to 2024. Earnings per share, diluted increased by $1.52 compared to a year

earlier, where the main drivers were $0.90 from higher operating income and $0.41 from lower number of outstanding shares, diluted,

$0.17 from tax and by $0.03 from lower financial and non-operating items, net. The weighted average number of shares outstanding

assuming dilution in 2025 was 76.9 million compared to 80.4 million in 2024.

38

NON-GAAP PERFORMANCE MEASURES

In this annual report, the Company sometimes refers to Non-GAAP measures that the Company and securities analysts use in

measuring Autoliv’s performance.

The Company believes that these measures assist management and investors in analyzing trends in the Company’s business for the

reasons given below. Investors should not consider these Non-GAAP measures as substitutes for, but rather as additions to, financial

reporting measures prepared in accordance with GAAP.

These Non-GAAP measures have been identified, as applicable, in each section of this annual report with tabular presentations

provided below, reconciling them to GAAP.

It should be noted that these measures, as defined, may not be comparable to similarly titled measures used by other companies.

Organic Sales

The Company analyzes its sales trends and performance as changes in “organic sales growth” or “organic sales decline” because the

Company currently generates approximately three quarters of net sales in currencies other than the reporting currency (i.e. U.S. dollars)

and currency rates have proven to be rather volatile. Organic sales present the increase or decrease in the overall U.S. dollar net sales

on a comparable basis, allowing separate discussions of the impact of acquisitions/divestitures and exchange rates.

See tabular reconciliations above, that present changes in “organic sales growth” as reconciled to the change in total GAAP net sales.

Net debt

The Company, from time to time enters into “debt-related derivatives” (DRDs) as a part of its debt management and as part of efficiently

managing the Company’s overall cost of funds. Creditors and credit rating agencies use net debt adjusted for DRDs in their analyses of

the Company’s debt, therefore we provide this Non-GAAP measure. DRDs are fair value adjustments to the carrying value of the

underlying debt. Also included in the DRDs is the unamortized fair value adjustment related to a discontinued fair value hedge that will

be amortized over the remaining life of the debt. By adjusting for DRDs, the total financial liability of net debt is disclosed without

grossing debt up with currency or interest fair values.

Reconciliation of GAAP measure "Total debt" to Non-GAAP measure “Net debt”

DECEMBER 31 (Dollars in millions)

2025

2024

Short-term debt

$

419

$

387

Long-term debt

1,734

1,522

Total debt

2,153

1,909

Cash and cash equivalents

(604

)

(330

)

Debt issuance cost/Debt-related derivatives, net

17

(24

)

Net debt

$

1,566

$

1,554

Adjusted operating income, adjusted operating margin and adjusted diluted Earnings per share (EPS)

Adjusted operating margin and adjusted diluted EPS are Non-GAAP measures the Company uses to evaluate its business, because

the Company believes it assists investors and analysts in comparing the Company's performance across reporting periods on a

consistent basis by excluding items that are non-operational or non-recurring in nature (such as costs related to capacity alignments,

costs related to antitrust matters and for diluted EPS unusual tax items) and that the Company does not believe are indicative of its core

operating performance and underlying business trends. Adjusted operating margin and adjusted diluted EPS, as shown in the table

below, should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance

with GAAP, including operating margin and diluted EPS.

Reconciliation of GAAP measure "Operating income" to Non-GAAP measure "Adjusted Operating income"

(Dollars in millions)

2025

2024

Operating income (GAAP)

$

1,088

$

979

Non-GAAP adjustments:

Less: Capacity alignments

23

19

Less: Antitrust related items

3

8

Total non-GAAP adjustments to operating income

26

27

Adjusted Operating income (Non-GAAP)

$

1,114

$

1,007

39

Reconciliation of GAAP measure "Operating margin" to Non-GAAP measure "Adjusted Operating margin"

(Percentage)

2025

2024

Operating margin (GAAP)

10.1

%

9.4

%

Non-GAAP adjustments:

Less: Capacity alignments

0.2

%

0.2

%

Less: Antitrust related items

0.0

%

0.1

%

Total non-GAAP adjustments to operating margin

0.2

%

0.3

%

Adjusted Operating margin (Non-GAAP)

10.3

%

9.7

%

Reconciliation of GAAP measure "Earnings per share - diluted" to Non-GAAP measure "Adjusted Earnings per share -

diluted"

(Dollars)

2025

2024

Earnings per share - diluted (GAAP)

$

9.55

$

8.04

Non-GAAP adjustments:

Less: Capacity alignments

0.29

0.24

Less: Antitrust related items

0.04

0.10

Less: Tax on non-GAAP adjustments

(0.04

)

(0.06

)

Total non-GAAP adjustments to Earnings per share - diluted

0.30

0.28

Adjusted Earnings per share - diluted (Non-GAAP)

$

9.85

$

8.32

Weighted average number of shares outstanding - diluted (in millions)

76.9

80.4

Income before income taxes, Net income, Net income attributable to controlling interest, Capital employed

The following tables reconcile Income before income taxes, Net income, Net income attributable to controlling interest, Capital

employed, which are inputs utilized to calculate Return On Capital Employed (“ROCE”), adjusted ROCE, Return On Total Equity

(“ROE”) and adjusted ROE. The Company believes this presentation may be useful to investors and industry analysts who utilize these

adjusted Non-GAAP measures in their ROCE and ROE calculations to exclude certain items for comparison purposes across periods.

Autoliv’s management uses the ROCE, adjusted ROCE, ROE and adjusted ROE measures for purposes of comparing its financial

performance with the financial performance of other companies in the industry and providing useful information regarding the factors

and trends affecting the Company’s business.

The Company believes ROCE and adjusted ROCE are useful indicators of long-term performance both absolute and relative to the

Company's peers as it allows for a comparison of the profitability of the Company’s capital employed in its business relative to that of its

peers. The Company’s management believes that ROE and adjusted ROE are a useful indicators of how well management creates

value for its shareholders through its operating activities and its capital management.

Accordingly, the tables below reconcile from GAAP to the equivalent Non-GAAP measure.

Reconciliation of GAAP measure "Income before income taxes" to Non-GAAP measure "Adjusted Income before income

taxes"

(Dollars in millions)

2025

2024

Income before income taxes (GAAP)

$

986

$

875

Non-GAAP adjustments:

Less: Capacity alignments

23

19

Less: Antitrust related items

3

8

Total non-GAAP adjustments to Income before income taxes

26

27

Adjusted Income before income taxes (Non-GAAP)

$

1,012

$

902

40

Reconciliation of GAAP measure "Net income" to Non-GAAP measure "Adjusted Net income"

(Dollars in millions)

2025

2024

Net income (GAAP)

$

736

$

648

Non-GAAP adjustments:

Less: Capacity alignments

23

19

Less: Antitrust related items

3

8

Less: Tax on non-GAAP adjustments

(3

)

(5

)

Total non-GAAP adjustments to Net income

23

22

Adjusted Net income (Non-GAAP)

$

759

$

670

Reconciliation of GAAP measure "Net income attributable to controlling interest" to Non-GAAP measure "Adjusted Net

income attributable to controlling interest"

(Dollars in millions)

2025

2024

Net income attributable to controlling interest (GAAP)

$

735

$

646

Non-GAAP adjustments:

Less: Capacity alignments

23

19

Less: Antitrust related items

3

8

Less: Tax on non-GAAP adjustments

(3

)

(5

)

Total non-GAAP adjustments to Net income attributable to controlling interest

23

22

Adjusted Net income attributable to controlling interest (Non-GAAP)

$

758

$

668

Reconciliation of GAAP measure "Return on Capital Employed" to Non-GAAP measure "Adjusted Return on Capital

Employed"

(Percentage)

2025

2024

Return on capital employed

1)

(GAAP)

26.4

%

25.0

%

Non-GAAP adjustments:

Less: Capacity alignments

0.5

%

0.4

%

Less: Antitrust related items

0.1

%

0.2

%

Total non-GAAP adjustments to Return on capital employed

1)

0.6

%

0.6

%

Adjusted Return on capital employed

1)

(Non-GAAP)

27.0

%

25.6

%

Adjustment on Return on capital employed

1)

(in millions)

$

26

$

27

1)

The average capital employed amount is calculated as an average of the opening balance amount and the closing balance amounts for each

quarter included in the period.

Reconciliation of GAAP measure "Return on Total Equity" to Non-GAAP measure "Adjusted Return on Total Equity"

(Percentage)

2025

2024

Return on total equity

1)

(GAAP)

30.0

%

27.2

%

Non-GAAP adjustments:

Less: Capacity alignments

0.8

%

0.7

%

Less: Antitrust related items

0.1

%

0.3

%

Less: Tax on non-GAAP adjustments

(0.1

%)

(0.2

%)

Total non-GAAP adjustments to Return on total equity

1)

0.9

%

0.8

%

Adjusted Return on total equity

1)

(Non-GAAP)

30.8

%

28.0

%

Adjustment on Return on capital employed

1)

(in millions)

$

23

$

22

1)

The average total equity amount is calculated as an average of the opening balance amount and the closing balance amounts for each quarter

included in the period.

41

LIQUIDITY, CAPITAL RESOURCES, AND FINANCIAL POSITION

Years ended December 31

(DOLLARS IN MILLIONS)

2025

2024

Net cash provided by operating activities

$

1,157

$

1,059

Net cash used in investing activities

(423

)

(563

)

Net cash used in financing activities

(369

)

(680

)

Effect of exchange rate changes on cash and cash equivalents

(90

)

16

Decrease in cash and cash equivalents

274

(168

)

Cash and cash equivalents at beginning of year

330

498

Cash and cash equivalents at end of year

$

604

$

330

NET CASH PROVIDED BY OPERATING ACTIVITIES

Cash flow from operations, together with available financial resources and credit facilities, is expected to be sufficient to fund the

Company’s anticipated working capital requirements, capital expenditures and future dividend payments.

Net cash provided by operating activities was $1,157 million in 2025 compared to $1,059 million in 2024. The increase of $98 million in

2025 was mainly due to $88 million in higher net income. The improvement was also supported by more positive effects compared to in

2024 from non-cash items such as $20 million from depreciation and amortization and $55 million from Other non-cash adjustments,

which mainly constitutes positive effects from deferred income taxes, pension liabilities and other long term liabilities. This was partly

offset by $65 million in less favorable effects from changes in operating working capital compared to 2024.

Receivables, net outstanding in relation to annualized fourth quarter sales was 20% at December 31, 2025, compared to 19% at

December 31, 2024. Factoring agreements did not have any material impact on receivables outstanding for 2025 or 2024.

Inventory, net outstanding in relation to annualized fourth quarter sales was 9% at December 31, 2025, compared to 9% at December

31, 2024.

Payables outstanding in relation to annualized fourth quarter sales was 18% at December 31, 2025 compared to 17% at December 31,

2024.

NET CASH USED IN INVESTING ACTIVITIES

In 2025 and 2024, net cash used in investing activities amounted to $423 million and $563 million, respectively. The Company's

investing activities primarily consist of investments in property, plant and equipment. Net cash generated by operating activities

continued to sufficiently cover capital expenditures for property, plant and equipment.

In relation to net sales, capital expenditures, net (expenditures for property, plant and equipment less proceeds from sale of property,

plant and equipment) was 3.9% compared to 5.4% in previous year. The lower level of capital expenditure, net is mainly related to the

finalizing of several footprint optimization projects in Europe and Americas and less capacity expansion projects, especially in Asia.

The 3.9% level is slightly below what the Company expects for the longer term, which is to on average be below 5% in relation to sales.

Depreciation and amortization totaled $407 million in 2025 compared to $387 million in 2024.

During the years 2025 and 2024, a majority of the Company's investments were for production capacity to support new product

launches, but also for automation projects for improved efficiency.

NET CASH USED IN FINANCING ACTIVITIES

Net cash used in financing activities amounted to $369 million and $680 million for the years 2025 and 2024, respectively. The

decrease of $311 million in cash used in financial activities was mainly the result of $201 million less in repurchased shares in 2025

compared to 2024 and a higher net increase in short-term debt by $137 million in 2025 compared to 2024.

The Company's issuance, net of long-term debt was $210 million in 2025 and $220 million in 2024.

In 2025, the Company paid cash dividends of $238 million. In 2024, the Company paid dividends of $219 million. The Company's

dividend approach has been the same for several years.

The Company repurchased shares to an amount of $351 million and $552 million in 2025 and 2024, respectively. The Company intends

to continue to repurchase shares in accordance with the current authorization until the end of 2029.

INCOME TAXES

The Company has reserves for taxes that may become payable in future periods as a result of tax audits. At any given time, the

Company is undergoing tax audits covering multiple years in several tax jurisdictions. Ultimate outcomes are uncertain but could, in

future periods, have a significant impact on the Company’s cash flows. See discussions of income taxes under Significant Accounting

Policies in this section, Note 2, Summary of Significant Accounting Policies, and Note 5, Income Taxes, to the Consolidated Financial

Statements included herein.

42

PENSION ARRANGEMENTS

The Company has defined benefit pension plans covering nearly half of the U.S. employees. As of December 31, 2021, the main U.S

defined benefit plan was frozen for further benefits. Many of the Company’s non-U.S. employees are also covered by pension

arrangements.

At December 31, 2025, the Company’s net pension liability (i.e. the actual funded status) for its U.S. and non-U.S. plans was $169

million compared to $153 million at December 31, 2024.

The plans had a total net unamortized actuarial loss before tax of $29 million recorded in Accumulated Other Comprehensive (Loss)

Income in the Consolidated Balance Sheets at December 31, 2025, compared to $36 million at December 31, 2024. The amortization

of the actuarial loss is expected to be $2 million in 2026.

Total pension expense associated with the defined benefit plans was $22 million in 2025 and $34 million in 2024, and is expected to be

$25 million in 2026.

The Company contributed $15 million to its defined benefit plans in 2025 and $29 million in 2024. The Company expects to contribute

$16 million to these plans in 2026 and is currently projecting a yearly funding at approximately the same level in the subsequent years.

For further information about retirement plans see Note 20, Retirement Plans, to the Consolidated Financial Statements included

herein.

EQUITY

During 2025, total equity increased by $297 million to $2,582 million as of December 31, 2025. The change was mainly due to net

income of $736 million and positive currency translation effects of $137 million, offset by share repurchases, including taxes of $355

million and dividends paid of $239 million,

TREASURY ACTIVITES

DEBT AND CREDIT ARRANGEMENTS

The Company's total debt on December 31, 2025 and 2024 was $2,153 million and $1,909 million, respectively. The Company had a

net debt position (see section Non-GAAP Performance Measures) on December 31, 2025 and 2024 of $1,566 million and $1,554

million, respectively.

In July 2024, the Company entered into a $125 million bilateral revolving credit facility (Bilateral RCF) with substantially the same terms

as the revolving credit facility (RCF) with the 11 banks (see below). In May 2022, the Company refinanced its existing RCF of $1,100

million. The facility was syndicated among 11 banks and matures May 2029. The Company pays a commitment fee on the undrawn

amount of 0.10%, representing 35% of the applicable margin, which is 0.275% (given the Company’s ratings of "BBB+" from Fitch and

“Baa1” from Moody’s). Borrowings under the facility are unsecured. On December 31, 2025, the Company’s unutilized long-term credit

facilities were $1,225 million, represented by the RCF and the Bilateral RCF. These facilities are not subject to any financial covenants

nor is any other substantial financing of Autoliv.

In October 2025, the Company priced and issued a 5-year green bond for a total of €300 million in the Eurobond market. The bond

carries a coupon of 3.0% and matures in October 2030.

In February 2024, the Company priced and issued a 5.5-year green bond for a total of €500 million in the Eurobond market. The bond

carries a coupon of 3.625% and matures in August 2029.

In March 2023, the Company priced and issued a 5-year green bond for a total of €500 million in the Eurobond market. The bond

carries a coupon of 4.25% and matures in March 2028.

The Company has a €3,000 million Euro Medium Term Note Program in place for being able to issue notes to be traded on the Global

Exchange Market of Euronext Dublin. On December 31, 2025, €1,300 million had been issued under this program.

In 2014, the Company issued and sold long-term debt securities in a U.S. Private Placement pursuant to a Note Purchase and

Guaranty Agreement dated April 23, 2014, by and among Autoliv ASP Inc., the Company and the purchasers listed therein. On

December 31,2025, $470 million remains outstanding from the 2014 issuance, of which $185 is long-term.

On December 31, 2025 Autoliv’s long-term credit rating from Moody’s was Baa1, and from Fitch BBB+. All ratings with stable outlook.

As of February 7, 2025, S&P Global Ratings withdrew the ratings for Autoliv on the Company’s request. The company aims to maintain

a strong investment grade credit rating.

For additional information about the Company's debt and credit arrangements, see Note 15, Debt and Credit Agreements, to the

Consolidated Financial Statements included herein.

FACTORING

During 2025 and 2024, the Company sold receivables and discounted notes related to selected customers. These factoring

arrangements increase cash while reducing accounts receivable and customer risks. On December 31, 2025, the Company had

received $258 million for sold receivables without recourse and discounted notes with a discount cost of $2 million during the year,

compared to $211 million on December 31, 2024 with a discount cost of $3 million recorded in Other non-operating items, net.

43

NUMBER OF SHARES

At December 31, 2025, 74.7 million shares were outstanding (net of 2.6 million treasury shares), a 3.9% decrease from 77.7 million one

year earlier.

The number of shares outstanding is expected to increase by 0.6 million when all RSUs and PSUs vest, see Note 18, Stock Incentive

Plans, to the Consolidated Financial Statements included herein.

During 2025, the Company repurchased and retired approximately 3.1 million shares equal to $351 million. During 2024 the Company

repurchased and retired approximately 5.1 million shares equal to $552 million. In addition, the Company also retired 2,000,000

treasury shares in December 2024. On June 4, 2025, the Company announced that its Board of Directors approved a new stock

repurchase program that authorizes the Company to repurchase up to $2.5 billion of common shares and operates from July 1, 2025

through December 31, 2029.

Contractual Obligations and Commitments

Contractual obligations include debt, sponsored defined benefit plans, lease and purchase obligations that are enforceable and legally

binding on the Company.

For material contractual debt obligations as of December 31, 2025, see Note 15, Debt and Credit Agreements, to the Consolidated

Financial Statements included herein.

Operating lease obligations represent the payment obligations (undiscounted cash flows) under leases classified as operating leases.

Capital lease obligations are not material. See Note 3, Leases, to the Consolidated Financial Statements included herein.

There are no unconditional purchase obligations other than short-term obligations related to inventory, services, tooling, and property,

plant and equipment purchased in the ordinary course of business. Purchase agreements with suppliers entered into in the ordinary

course of business do not generally include fixed quantities. Quantities and delivery dates are established in “call off plans” accessible

electronically for all customers and suppliers involved. Communicated “call off plans” for production material from suppliers are normally

reflected in equivalent commitments from Autoliv customers.

The Company sponsors defined benefit plans that cover a significant portion of the Company's U.S. employees and certain non-U.S.

employees. The pension plans in the U.S. are funded in conformity with the minimum funding requirements of the Pension Protection

Act of 2006. Funding for the Company's pension plans in other countries is based upon plan provisions, actuarial recommendations

and/or statutory requirements. Due to volatility associated with future changes in interest rates and plan asset returns, the Company

cannot predict with reasonable reliability the timing and amounts of future funding requirements. The Company may elect to make

contributions in excess of the minimum funding requirements for the U.S. plans in response to investment performance and changes in

interest rates, or when the Company believes that it is financially advantageous to do so and based on other capital requirements. See

Note 20, Retirement Plans, to the Consolidated Financial Statements included herein.

COMMITMENTS

The Company has entered into a number of unrecognized unconditional purchase agreements relating to Solar Farms in US and China

during 2024, of which none is individually significant for disclosure. Together these agreements have an aggregated termination fee

(discounted) of approximately $51 million as of December 31, 2025. These Solar Farm agreements have a contract period ranging from

20-25 years. The future payments (undiscounted) relating to these unrecognized unconditional purchase agreements are in total $60

million to be paid over the following years: 1-3 years: $6 million; 4-5 years: $4 million and; more than 5 years: $50 million.

During 2025 the Company has entered into a global 5-year Enterprise Subscription Agreement. The subscription fees for the software

licenses will be paid annually in advance. The future payments (undiscounted) relating to this unrecognized software subscription

agreement are in total approximately $42 million to be paid over the following years: Less than 1 year: $12 million; 2-3 years: $25

million; 4-5 years: $5 million.

Additionally, the Company has entered into a number of software license agreements, mainly during 2025, of which none is individually

significant for disclosure. The future payments (undiscounted) for these unrecognized software license agreements are in total $26

million to be paid as follows: Less than 1 year: $8 million; 2-3 years: $12 million and 4-5 years: $6 million.

Risks and Risk Management

The Company is exposed to several categories of risks. They can broadly be categorized as operational risks, strategic risks and

financial risks. Some of the major risks in each category are described below. There are also other risks that could have a material

effect on the Company’s results and financial position, and the description below is not complete but should be read in conjunction with

the discussion of risks described in Item 1A above, which contains a description of the Company's material risks.

As described below, the Company has taken several mitigating actions, applied numerous strategies, adopted policies, and introduced

control and reporting systems to reduce and mitigate these risks. In addition, the Company from time to time identifies and evaluates

emerging or changing risks to the Company in order to ensure that identified risks and related risk management are updated in this fast-

moving environment.

44

Operational Risks

LIGHT VEHICLE PRODUCTION

Around 35% of Autoliv’s costs are fixed; therefore, short-term earnings are dependent on sales volumes and highly dependent on

capacity utilization in the Company’s plants.

Global LVP is an indicator of the Company’s sales development. Ultimately, however, sales are determined by the production levels for

the individual vehicle models for which Autoliv is a supplier (see Dependence on Customers). The Company’s sales are split over

several hundred contracts covering more than 1,300 vehicle models. This moderates the effect of changes in vehicle demand of

individual countries and regions as well as production issues. The risk of fluctuating sales has also been mitigated by Autoliv’s rapid

expansion in Asia and other growth markets, which has reduced the Company’s former high dependence on sales in Europe to a

diversified mix with Europe, the Americas and Asia, each accounting for approximately 29%, 32% and 39%, respectively, of the

Company's 2025 total sales.

It is the Company’s strategy to reduce the risks associated with fluctuating LVP by using temporary personnel in direct production,

when appropriate. During 2025 and 2024, the level of temporary personnel in relation to total personnel in direct production increased

to 12% from 11%. To reduce the potential impact of unusual fluctuations in the production of vehicle models supplied by the Company

such as during the financial crisis in 2008-2009 and the COVID-19 pandemic in 2020-2021 – it is also necessary for the Company to be

prepared to quickly adapt the level of permanent employees as well as fixed cost production capacity.

PRICING PRESSURE

Pricing pressure from customers is an inherent part of the automotive components business. The historical extent of price reductions

varies from year to year and takes the form of one time give backs, reductions in direct sales prices and/or discounted reimbursements

for engineering work.

In response, Autoliv is continuously engaged in efforts to reduce costs and to provide customers added value by developing new

products. Generally, the speed by which these cost-reduction programs generate results will, to a large extent, determine the future

profitability of the Company. The various cost-reduction programs are, to a considerable extent, interrelated. This interrelationship

makes it difficult to isolate the impact of costs on any single program; therefore, the Company monitors key measures such as costs in

relation to sales and productivity.

In 2025, due to cost pressures from labor and other items the Company engaged in extensive negotiations with its customers regarding

compensations.

COMPONENT COSTS AND RAW MATERIAL PRICES

The cost of direct materials was approximately 54% of sales in 2025 (55% in 2024).

The main raw materials being used as input material for the Company's operations are steel, textiles, plastic and non-ferrous metals.

The Company still sees effects coming from import tariffs and trade barriers across borders. These barriers are impacting the raw

material market and creating pricing and availability uncertainties. There is also volatility in the sea freight rates driven by geopolitical

events.

In 2025, raw material inflation was limited. Cost inflation remained significant and related primarily to labor. The Company took actions,

including pricing discussions with customers and suppliers, competitive sourcing and exploring alternative materials.

LEGAL

The Company is involved from time to time in regulatory, commercial, and contractual legal proceedings that may be significant, and

the Company’s business may suffer as a result of adverse outcomes of current or future legal proceedings. These claims may include,

without limitation, commercial or contractual disputes, including disputes with the Company’s suppliers and customers, intellectual

property matters, alleged violations of laws, rules or regulations, governmental investigations, personal injury claims, product liability

claims, environmental issues, tax and customs matters, and employment matters.

A substantial legal liability or adverse regulatory outcome and the substantial cost to defend the litigation or regulatory proceedings may

have an adverse effect on the Company’s business, operating results, financial condition, cash flows and reputation.

No assurances can be given that such proceedings and claims will not have a material adverse impact on the Company’s profitability

and consolidated financial position, or that reserves or insurance will mitigate such impact. See Note 19, Contingent Liabilities, to the

Consolidated Financial Statements included herein and Item 3 – Legal Proceedings.

45

PRODUCT WARRANTY AND RECALLS

If our products are alleged to fail to perform as expected or are defective, the Company may be exposed to various claims for damages

and compensation. Such claims may result in costs and other losses to the Company even where the relevant product is eventually

found to have functioned properly. If a product (actually or allegedly) fails to perform as expected or is defective, we may face warranty

and recall claims. If such actual or alleged failure or defect results, or is alleged to result, in bodily injury and/or property damage, we

may also face product liability and other claims. The Company may experience material warranty, recall, product or other liability claims

or losses in the future, and the Company may incur significant cost to defend against such claims. The Company may be required to

participate in a recall involving its products. Each vehicle manufacturer has its own practices regarding product recalls and other

product liability actions relating to its suppliers. Government safety regulators also have policies and practices with respect to recalls.

As suppliers become more integrally involved in the vehicle design process and assume more of the vehicle assembly functions,

vehicle manufacturers are increasingly looking to their suppliers for contribution when faced with recalls and product liability claims. In

addition, with global platforms and procedures, vehicle manufacturers are increasingly evaluating our quality performance on a global

basis. Any one or more quality, warranty or other recall issue(s), including the ones affecting few units and/or having a small financial

impact, may cause a vehicle manufacturer to implement measures which may have a severe impact on the Company’s operations,

such as a temporary or prolonged suspension of new orders or the Company’s ability to bid for new business.

In addition, over time, there is a risk that the number of vehicles affected by a failure or defect will increase significantly (as would the

Company’s costs), since our products often use global designs and are increasingly based on or utilize the same or similar parts,

components, or solutions.

Although quality has always been a central focus in the automotive industry, especially for safety products, our customers and

regulators have become increasingly attentive to quality with even less tolerance for any deviations, which has resulted in an increase

in the number of automotive recalls. This trend is likely to continue as automobile manufacturers introduce even stricter quality

requirements and regulating agencies and other authorities increase the level of scrutiny given to vehicle safety issues. A warranty

recall or a product liability claim brought against the Company in excess of the Company’s insurance may have a material adverse

effect on its business and/or financial results. Vehicle manufacturers are also increasingly requiring their external suppliers to guarantee

or warrant their products and bear the costs of repair and replacement of such products under new vehicle warranties. A vehicle

manufacturer may attempt to hold the Company responsible for some or all of the repair or replacement costs of defective products

under new vehicle warranties when the product supplied did not perform as represented. Additionally, a customer may not allow us to

bid for expiring or new business until certain remedial steps have been taken. Accordingly, the future costs of warranty claims by the

Company’s customers may be material.

The Company’s warranty reserves are based upon management’s best estimates of amounts necessary to settle future and existing

claims. Management regularly evaluates the appropriateness of these reserves and adjusts them when we believe it is appropriate to

do so. However, the final amounts determined to be due could differ materially from the Company’s recorded estimates. We believe our

established reserves are adequate to cover potential warranty settlements typically seen in our business.

The Company’s strategy is to follow a stringent procedure when developing new products and technologies and to apply a proactive

“zero-defect” quality policy (see section Quality Management). In addition, the Company maintains a program of insurance, which

includes commercial insurance, self-insurance, or a combination of both approaches, for potential recall and product liability claims in

amounts and on terms that it believes are reasonable and prudent based on our prior claims experience. However, such insurance may

not be sufficient to cover every possible claim that can arise in the Company’s businesses, now or in the future, or may not always be

available should the Company, now or in the future, wish to extend, renew, increase or otherwise adjust such insurance. In recent

years, the cost of recall and product liability insurance as well as the Company’s level of self-insurance and deductibles has increased.

Management’s decision regarding what insurance to procure is also impacted by the cost for such insurance. As a result, the Company

may face material losses in excess of the insurance coverage procured. A substantial recall or liability in excess of coverage levels

could therefore have a material adverse effect on the Company.

ENVIRONMENTAL

Most of the Company’s manufacturing processes consist of the assembly of components. As a result, the environmental impact from

the Company’s plants is generally modest. While the Company’s businesses from time to time are subject to environmental

investigations, there are no material environmental-related cases pending against the Company. Therefore, Autoliv does not incur (or

expect to incur) any material costs or capital expenditures associated with maintaining facilities compliant with U.S. or non-U.S.

environmental requirements. To reduce environmental risk, the Company has implemented an environmental management system in

all plants globally and has adopted an environmental policy (see corporate website www.autoliv.com).

Autoliv is subject to a number of environmental and occupational health and safety laws and regulations. Such requirements are

complex and are generally becoming more stringent over time. There can be no assurance that these requirements will not change in

the future, or that the Company will at all times be in compliance with all such requirements and regulations, despite its intention to be.

The Company may also find itself subject, possibly due to changes in legislation or other regulation, to environmental liabilities based

on the activities of its predecessor entities or of businesses acquired. Such liability could be based on activities which are not related to

the Company’s current activities.

46

TRADE AND TARIFFS

Autoliv is subject to various international trade regulations and regimes and changes in these regimes could lead to increased

compliance costs and costs of raw materials and other components. In addition, political conditions leading to trade conflicts and the

imposition of tariffs or other trade barriers between countries in which the Company does business could increase its costs of doing

business. The effects of the new tariffs imposed in 2025 did not have a material impact on our profitability in 2025, as we achieved

customer compensations for more than 80% of tariff costs. Including the dilutive effect of recovered tariffs, operating margin was

negatively impacted by around 20 basis points in 2025.

Strategic Risks

REGULATIONS

In addition to vehicle production, the Company’s market is driven by the safety CPV, which is affected by new regulations and new

vehicle rating programs, in addition to consumer demand for new safety technologies.

The most important regulations are the seatbelt installation laws that exist in all vehicle-producing countries. Many countries also have

strict enforcement laws on the wearing of seatbelts. Another significant vehicle safety regulation is the U.S. federal law that, since 1997,

requires frontal airbags for both the driver and the front-seat passenger in all new vehicles sold in the U.S. In 2007, the U.S. adopted

new regulations for head impact and enhanced thorax protection in side impact crashes, which now have been fully phased-in.

The United States upgraded its vehicle rating program, US NCAP, in 2011 and again in 2024. In December 2024, NHTSA issued the

Final Notice for the U.S. NCAP, outlining mid

‑

and long

‑

term updates across the VRU Safety Program, Crash Avoidance Program, and

Crashworthiness Program, including the adoption of advanced ATDs such as the THOR

‑

05F. The U.S. Department of Transportation

also signaled regulatory modernization efforts, including potential use of negotiated rulemaking, and emphasized priorities such as

transparency, vehicle affordability, and improved female occupant protection.

Europe upgraded the Euro NCAP rating system during 2018, and is updating its rating protocol for cars in 2026, and then plans further

enhancements on a three-year rolling schedule. Euro NCAP established a rating program for heavy goods vehicles in 2024, which will

add assessment of occupant protection in a 2030-timeframe.

China introduced a vehicle rating program in 2006, and together with the C-IASI, a rating program established in 2017 by CAERI, they

drive the Chinese vehicle safety market and are beginning to influence developments in other regions. The next major upgrades to

China NCAP will be phased in from 2027 through 2030. Both Euro NCAP and China NCAP are considering the use of virtual crash

testing with virtual human body models as a new method to evaluate the robust safety performance of passenger vehicles, taking into

account a wider number of load cases and variations in occupant weight, sex and age.

Japan and South Korea are continuously upgrading their vehicle rating programs, JNCAP and KNCAP, respectively. Latin America

introduced a basic rating program in 2010 followed by ASEAN NCAP in Southeast Asia in 2011. Global NCAP advocates for vehicle

standards, and its programs are addressing less regulated markets in Latin America, Africa, India, and South east Asia to promote

government and industry action. Several newly industrialized countries, such as Malaysia and Thailand, are increasingly adopting the

UN Regulations regarding vehicle safety under the UN 1958 agreement, and Malaysia started the world's first motorcycle safety rating

program in 2021. India has required frontal airbags for the driver since July 2019, and passenger airbags since 2021 for all new

passenger vehicles. In addition, India started its Bharat NCAP in October 2023 and is working on an upgrade for the next four-year

cycle with implementation in October 2027.

Vehicles with automated driving systems are expected to provide additional opportunities through integration of protective safety

systems with advanced driver assistance system

technologies, as well as new opportunities and challenges related to its impact on

vehicle interior layouts, steer-by-wire steering systems, and seating configurations. These developments are expected to be subject to

legal requirements and addressed in safety rating assessments.

There are also other plans for improved automotive safety through new or revised regulations, both in the countries mentioned above

and in others regions, which could affect the Company’s market. However, there can be no assurance that changes in regulations will

not adversely affect the demand for the Company’s products or, at least, result in a slower increase in the demand for them.

47

DEPENDENCE ON CUSTOMERS

As a result of this highly consolidated market, the Company is dependent on a relatively small number of customers with strong

purchasing power. In 2025, the Company's five largest customers accounted for around 40% of global LVP and the ten largest

accounted for around 56% of global LVP. In 2025, the Company’s five largest customers accounted for around 44% of

consolidated

sales and the ten largest customers accounted for around 70% of consolidated sales. The Company's largest customer contract

accounted for around 2% of consolidated sales in 2025.

Customer

% of Autoliv sales

% of Global LVP

1)

Stellantis

9.8

%

5.8

%

Toyota

9.6

%

12.3

%

VW

9.0

%

9.6

%

Honda

8.3

%

3.8

%

Hyundai

7.0

%

8.1

%

Ford

6.8

%

3.8

%

Nissan

5.3

%

3.4

%

General Motors

5.2

%

4.4

%

Mercedes Benz

5.0

%

2.4

%

BMW

4.0

%

2.7

%

1) Source: S&P Global January 2026

Although business with every major customer is split into at least several contracts (usually one contract per vehicle platform) and

although the customer base has become more balanced and diversified as a result of the Company's significant expansion in China

and other rapidly-growing markets, the loss of all business from a major customer (whether by a cancellation of existing contracts or not

awarding Autoliv new business), the consolidation of one or more major customers or a bankruptcy of a major customer could have a

material adverse effect on the Company. In addition, a quality issue, shortcomings in the Company's service to a customer or

uncompetitive prices or products could result in the customer not awarding the Company new business, which will gradually have a

negative impact on the Company's sales when current contracts start to expire.

See also Note 21, Segment Information, to the Consolidated Financial Statements included herein.

CUSTOMER PAYMENT RISK

Another risk related to the Company's customers is the risk that one or more of its customers will be unable to pay their invoices that

become due. The Company seeks to limit this customer payment risk by invoicing its major customers through their local subsidiaries in

each country, even for global contracts. By invoicing this way, the Company attempts to avoid having the receivables with a

multinational customer group exposed to the risk that a bankruptcy or similar event in one country would put all receivables with such

customer group at risk. In each country, the Company also monitors invoices becoming overdue.

Even so, if a major customer is unable to fulfill its payment obligations, it is likely that the Company would be forced to record a

substantial loss on such receivables.

DEPENDENCE ON SUPPLIERS

The Company relies on internal and/or external suppliers in order to meet its delivery commitments to the customers. In some cases,

suppliers are dictated by the customers. The Company's supply chain organization continually reviews sourcing risks and actively works

on mitigating related supply chain risks.

The Company’s ambition is to maintain an optimal number of suppliers in all significant component technologies.

NEW COMPETITION

Increased competition may result in price reductions, reduced margins and the Company's inability to gain or hold market share. OEMs

rigorously evaluate suppliers on the basis of product quality, price, reliability and delivery as well as engineering capabilities, technical

expertise, product innovation, financial viability, application of lean principles, operational flexibility, customer service, and overall

management. To maintain the Company's competitiveness and position as a market leader, it is important to focus on all these aspects

of supplier evaluation and selection.

Although the market for occupant restraint systems has undergone a significant consolidation during the past ten years, the passive

safety market remains very competitive. It cannot be excluded that additional competitors, both global and local, will seek to enter the

market or grow beyond their current Keiretsu group or traditional customer base. Particularly in China, South Korea, and Japan there

are numerous domestic competitors often supplying just one OEM group.

48

PATENTS AND PROPRIETARY TECHNOLOGY

The Company’s strategy is to protect its innovations with patents, and to vigorously protect and defend its patents, trademarks, and

know-how against infringement and unauthorized use. At the end of 2025, the Company held more than 6,600 patents and patents

applications. These patents expire on various dates during the period from 2026 to 2045. The expiration of any single patent is not

expected to have a material adverse effect on the Company’s financial results.

Although the Company believes that its products and technology do not infringe upon the proprietary rights of others, there can be no

assurance that third parties will not assert infringement claims against the Company in the future. Also, there can be no assurance that

any patent now owned by the Company will afford protection against competitors that develop similar technology. As the Company

continues to expand its products and expand into new businesses, it will increase its exposure to intellectual property claims.

Financial Risks

The Company is exposed to financial risks through its operations. To reduce the financial risks and to take advantage of economies of

scale, the Company has a central treasury department supporting operations and management. The treasury department handles

external financial transactions and functions as the Company’s in-house bank for its subsidiaries.

The Board of Directors monitors compliance with the financial risk policy on an on-going basis. For information about specific financial

risks, see Item 7A – Quantitative and Qualitative Disclosures about Market Risk.

Significant Accounting Policies and Critical Accounting Estimates

NEW ACCOUNTING STANDARDS

The Company has considered all applicable recently issued accounting standards. The Company has summarized in Note 2, Summary

of Significant Accounting Policies, to the Consolidated Financial Statements each of the recently issued accounting standards and

stated the impact or whether management is continuing to assess the impact.

CRITICAL ACCOUNTING ESTIMATES

The Company’s significant accounting policies are disclosed in Note 2, Summary of Significant Accounting Policies, to the Consolidated

Financial Statements included herein. The application of accounting policies necessarily requires judgments and the use of estimates

by a Company’s management. Actual results could differ from these estimates. By their nature, these judgments are subject to an

inherent degree of uncertainty. These judgments are based on the Company's historical experience, terms of existing contracts, and

management’s evaluation of trends in the industry, information provided by the Company's customers and information available from

other outside sources, as appropriate. The Company considers an accounting estimate to be critical if:

•

It requires management to make assumptions about matters that were uncertain at the time of the estimate, and

•

Changes in the estimate or different estimates that could have been selected would have had a material impact on the

Company's financial condition or results of operations. The accounting estimates that require management’s most

significant judgments include the estimation of variable considerations, estimation of pension benefit obligations based on

actuarial assumptions, estimation of accruals for warranty and recalls, uncertain tax positions, valuation allowances and

legal proceedings.

The Company has summarized its critical accounting policies requiring judgment below. These might change over time based on the

current facts and circumstances.

REVENUE RECOGNITION

In accordance with ASC 606,

Revenue from Contracts with Customers

, revenue is measured based on consideration specified in a

contract with a customer, adjusted for any variable consideration (i.e., price concessions) and estimated at contract inception. The

Company recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer. The

estimated amount of variable consideration that will be received or paid by the Company is based on historical experience and trends,

management's understanding of the status of negotiations with customers and including pricing strategies. Negotiations with customers

is an ongoing process and the recognition of variable considerations is impacted by the outcome and timing of these negations.

Estimating variable consideration to be received or paid related to price concessions requires significant judgments by management

that affect the amount of revenue recorded in the financial statements due to the unique facts and circumstances in each of the

customer agreements and the on-going commercial negotiations with the customers. For the year-end 2025 the Company recognized

an accrual amounting to $242 million net for variable considerations to be received or paid for variable considerations versus $185

million the year before.

In addition, from time to time, the Company may make payments to customers in connection with ongoing and future business. These

payments to customers are generally recognized as a reduction to revenue at the time of the commitment to make these payments

unless the payment concession can be clearly linked to the future business award. If the payments are capitalized, the amounts are

amortized to revenue as the related goods are transferred. In the year-end 2025 and 2024 respectively the capitalized amount has

been insignificant.

49

CONTINGENT LIABILITIES

Various claims, lawsuits and proceedings are pending or threatened against the Company or its subsidiaries, covering a range of

matters that arise in the ordinary course of its business activities with respect to commercial, product liability or other matters.

The Company diligently defends itself in such matters and, in addition, carries insurance coverage to the extent reasonably available

against insurable risks.

The Company records liabilities for claims, lawsuits and proceedings when they are probable and it is possible to reasonably estimate

the cost of such liabilities. Legal costs expected to be incurred in connection with a loss contingency are expensed as such costs are

incurred.

A loss contingency is accrued by a charge to income if it is probable that an asset has been impaired or a liability has been incurred

and the amount of the loss can be reasonably estimated. In determining whether a loss should be accrued management evaluates,

among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount

of loss. Changes in these factors could materially impact the Company's consolidated financial statements.

The Company continuously assesses the relevant facts and circumstances for on-going litigation matters in its determination of whether

it is probable that an asset has been impaired or a liability has been incurred. The Company also considers its historical experience of

similar matters using significant judgement to make its estimates

.

For the years ended December 31, 2025 and 2024 management's

estimation process has been consistent and there have not been any material changes to the contingent liabilities recorded during

2025.

For further information regarding the significant on-going claims and lawsuits the Company is involved in, see Note 19 Contingent

Liabilities, to the Consolidated Financial Statements.

RECALL PROVISIONS AND WARRANTY OBLIGATIONS

The Company records liabilities for product recalls when probable claims are identified and when it is possible to reasonably estimate

costs. Recall costs are costs incurred when the customer decides to formally recall a product due to a known or suspected safety

concern. Product recall costs are estimated based on the expected cost of replacing the product and the customers' cost of carrying out

the recall, which is affected by the number of vehicles subject to recall and the cost of labor and materials to remove and replace the

defective product. The Company maintains a program of insurance, which may include commercial insurance, self-insurance, or a

combination of both approaches, for potential recall and product liability claims in amounts and on terms that it believes are reasonable

and prudent based on our prior claims experience. The Company’s insurance policies generally include coverage of the costs of a

recall, although costs related to replacement parts are generally not covered. Actual costs incurred could differ from the amounts

estimated, requiring adjustments to these reserves in future periods. It is possible that changes in our assumptions or future product

recall issues could materially affect our financial position, results of operations or cash flows.

Estimating warranty obligations requires the Company to forecast the resolution of existing claims and expected future claims on

products sold. The Company bases the estimate on historical trends of units sold and payment amounts, combined with our current

understanding of the status of existing claims and discussions with our customers. These estimates are re-evaluated on an ongoing

basis. Actual warranty obligations could differ from the amounts estimated requiring adjustments to existing reserves in future periods.

Due to the uncertainty and potential volatility of the factors contributing to developing these estimates, changes in our assumptions

could materially affect our results of operations.

The provision recorded for product liabilities for the years ended December 31, 2025 and 2024 were $87 million and $65 million

respectively. The Company continuously assesses the relevant facts and circumstances for on-going product recall matters and

considers its historical experience of similar matters using significant judgement to make its estimates, which are generally supported

by external counsel expertise. For the years ended December 31, 2025 and 2024 respectively, management’s estimation process has

been consistent and the ultimate outcome for settled product recall matters during the years ended December 31, 2025 have been in

line with estimates and for December 31, 2024 were favorable compared to Management’s estimate. The reversal of the reserve in

2024 was related to certain recall issues that were settled with a favorable outcome.

For further information, see Note 14 Product Related Liabilities and

Note 19 Contingent Liabilities, to the Consolidated Financial

Statements.

DEFINED BENEFIT PENSION PLANS

The Company has defined benefit pension plans in thirteen countries. The most significant plans exist in the U.S. These U.S. plans

represent approximately 46% of the Company’s total pension benefit obligation. See Note 20 Retirement Plans to the Consolidated

Financial Statements.

The Company, in consultation with its actuarial advisors, determines certain key assumptions to be used in calculating the projected

benefit obligation and annual pension expense. For the U.S. plans, the assumptions used for calculating the 2025 pension expense

were a discount rate of 5.60% and an expected long-term rate of return on plan assets of 5.61%.

The assumptions used in calculating the U.S. benefit obligations disclosed, as of December 31, 2025 were a discount rate of 5.22%.

The discount rate for the U.S. plans has been set based on the rates of return of high-quality fixed-income investments currently

available at the measurement date and are expected to be available during the period the benefits will be paid. The expected rate of

long-term return on plan assets are determined based on several factors and must consider long-term expectations and reflect the

financial environment in the respective local markets. At December 31, 2025, 27% of the U.S. plan assets were invested in equities,

which is close to the target of 32%.

50

The table below illustrates the sensitivity of the U.S. net periodic benefit cost and projected U.S. benefit obligation to a 1pp change in

the discount rate and decrease in return on plan assets for the U.S. plans (in millions). The use of actuarial assumptions is an area of

management’s estimate.

Assumption

(in millions)

Change

2025 net

periodic

benefit

cost increase

(decrease)

2025 projected

benefit

obligation

increase

(decrease)

Discount rate

1pp increase

$

1

$

(14

)

Discount rate

1pp decrease

(1

)

16

Return on plan assets

1pp decrease

2

n/a

INCOME TAXES

Significant judgment is required in determining the worldwide provision for income taxes. In the ordinary course of a global business,

there are many transactions for which the ultimate tax outcome is uncertain. Many of these uncertainties arise because of intercompany

transactions. The measurement of current and deferred tax liabilities and assets is based on provisions of enacted tax laws. Deferred

tax assets are reduced by the amount of any tax benefits that are not expected to be realized. A valuation allowance is recognized if,

based on the weight of all available evidence, it is more likely than not that some portion, or all, of the deferred tax asset will not be

realized. Evaluation of the realizability of deferred tax assets is subject to significant judgment requiring careful consideration of all facts

and circumstances, including key factors such as projected future profitability including tax planning strategies, interpretation of

applicable tax laws and on-going or anticipated tax audits. Deferred net tax assets amounted to $446 million for the year 2025 including

a valuation allowance of $109 million. For 2024, the deferred net tax assets amounted to $394 million including a valuation allowance of

$126 million.

The Company evaluates its uncertain tax positions based on enacted tax laws and consideration of all facts and circumstances,

including key factors such as interpretation of applicable tax laws, on-going tax audits or anticipated tax controversies. The

unrecognized tax benefits amounted to $36 million and $35 million respectively for the year 2025 and 2024.

See also the discussion of reserves for uncertain tax positions, and the determination of valuation allowances on the Company's

deferred tax assets in Note 5, Income Taxes, to the Consolidated Financial Statements.

51

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

The Company is exposed to several markets risks in the ordinary course of business including risks related to currencies, interest rates,

financing, capital structure, credit ratings and impairment. See also Note 2, Summary of Significant Accounting Policies, to the

Consolidated Financial Statements included with this Annual Report for information about how these risks are quantified.

CURRENCY RISKS

1. Transaction Exposure and Revaluation effects

Transaction exposure arises because the cost of a product originates in one currency and the product is sold in another currency.

Revaluation effects come from valuation of assets and liabilities denominated in other currencies than the reporting currency of each

unit.

The Company's net transaction exposure in 2025 was approximately $2.9 billion. The four largest net exposures are U.S. dollars (sell)

against the Mexican Peso, Romanian Lei (buy) against the Euro, U.S. dollars (buy) against Korean Won and Thai Baht (buy) against

Japanese Yen. Together these currencies accounted for approximately 43% of the Company’s net currency transaction exposure.

Since the Company can only effectively hedge these currency flows in the short term, periodic hedging would only reduce the impact of

fluctuations temporarily. Over time, periodic hedging would postpone but not reduce the impact of fluctuations. In addition, the net

exposure is limited to only around one quarter of net sales and is made up of around 45 different currency pairs with exposures of more

than $1 million each. The Company generally does not hedge these flows.

2. Translation Exposure in the Income Statement and Balance Sheet

Another effect of exchange rate fluctuations arises when the income statements of non-U.S. subsidiaries are translated into U.S.

dollars. Outside the U.S., the Company’s most significant currency is the Euro. The Company estimates that 27% of its consolidated net

sales will be denominated in Euro or other European currencies during 2026, while 16% of its consolidated net sales are estimated to

be denominated in U.S. dollars.

The Company estimates that a 1% increase in the value of the U.S. dollar versus European currencies will decrease reported U.S.

dollar annual net sales in 2026 by $30 million, while operating income for 2026 will decline by $3 million, assuming reported corporate

average margin.

The Company’s policy is not to hedge this type of translation exposure.

A translation exposure also arises when the balance sheets of non-U.S. subsidiaries are translated into U.S. dollars. The policy of the

Company is to finance major subsidiaries in the country’s local currency and to minimize the amounts held by subsidiaries in foreign

currency accounts.

Consequently, changes in currency rates relating to funding and foreign currency accounts normally have a small impact on the

Company’s income. In 2025 and 2024, the impact from the Company’s currency exposure were not material.

INTEREST RATE RISK

Interest rate risk refers to the risk that interest rate changes will affect the Company’s borrowing costs. The Company's interest rate risk

policy states that the average interest rate fixing period should be minimum 1 year and maximum 5 years.

On December 31, 2025, the average interest rate fixing period for the Company’s outstanding debt was 2.9 years, and on December

31, 2024, the average interest rate fixing period for the Company’s outstanding debt was 2.8 years.

Given the Company’s current capital structure, we estimate that a one-percentage point interest rate increase would increase net

interest income by approximately $4.7 million on an annual basis. This is based on the capital structure at the end of 2025 when the

gross fixed-rate debt was $1,734 million while the Company had a net debt position of $1,566 million (see section Non-GAAP

Performance Measures). Thus, a change in the interest rate environment would not have a notable impact on the Company’s interest

expense. On December 31, 2025, the Company had $604 million in cash and cash equivalents of which the majority was subject to a

floating interest rate.

Fixed interest rate debt may be achieved both by issuing fixed rate notes and through interest rate swaps. The most notable debt

carrying fixed interest rates are the €500 million bond issued in 2023, the €500 million bond issued in 2024, the €300 million bond

issued in 2025 and the U.S. private placement notes totaling $470 million. See Note 15, Debt and Credit Agreements, to the

Consolidated Financial Statements.

52

FINANCING RISK

Financing risk refers to the risk that it will be difficult and/or expensive to finance new or existing debt to meet the financing needs of the

Autoliv Group.

The management of the financing risk ensures access to funding in a cost-efficient way by diversification of funding sources and debt

maturities.

Autoliv has diversified its long-term funding sources by issuing notes in the USPP and Eurobond markets, and by signing long-term

credit agreements with 12 banks.

The Company has a Euro Medium Term Note Program in place for being able to issue notes to be listed at Euronext Dublin. The

Company has established programs for short-term issuance of commercial papers in the Swedish and US markets and short-term

credit agreements, e.g. bank overdrafts and money market loans.

To ensure diversification of debt maturities no more than 20% of the Autoliv Group’s total debt may mature the next 12 months, unless

such maturities (in excess of 20%) are covered by unutilized committed credit facilities with maturity in excess of 12 months. On

December 31, 2025, 19% corresponding to $419 million of the Autoliv Group’s total debt had maturity less than 12 months. This amount

was fully covered by unutilized committed credit facilities with maturity in excess of 12 months.

CAPITAL STRUCTURE AND CREDIT RATING

The overall objective relating to Autoliv’s target capital structure and credit rating is to provide the Company with sufficient flexibility to

manage the inherent risks and cyclicality in Autoliv’s business and allow the Company to realize strategic opportunities and fund growth

initiatives while creating shareholder value.

Autoliv is committed to maintain a “strong investment grade credit rating." As of December 31, 2025, the Company had a long-term

credit rating from Moody’s of Baa1 and from Fitch of BBB+. As of February 7, 2025, S&P Global Ratings withdrew the ratings for Autoliv

on the company’s request.

The amount of interest-bearing debt impacts future financial flexibility as well as the credit rating. Management uses the non-GAAP

measure “Leverage Ratio” to analyze the amount of debt the Company can incur under its debt policy. Management believes that this

policy also provides guidance to credit and equity investors regarding the extent to which the Company would be prepared to leverage

its operations. It is Autoliv’s target to operate with a leverage ratio (sum of net debt plus pension liabilities divided by EBITDA) of 1.5x or

below. On December 31, 2025, the leverage ratio (Non-GAAP measure, see calculation table below) was 1.1x. For details and

calculation of leverage ratio, refer to the table below.

CALCULATION OF NON-GAAP MEASURE LEVERAGE RATIO

December 31,

2025

2024

Net debt

1)

$

1,566

$

1,554

Pension liabilities

169

153

Debt per the Policy

1,736

1,708

Net income

2)

736

648

Income taxes

2)

250

227

Interest expense, net

2,3)

93

95

Other non-operating items, net

2)

15

16

Income from equity method investments

2)

(6

)

(7

)

Depreciation and amortization of intangibles

2)

407

387

Capacity alignments costs

2)

23

19

Antitrust related matters

2)

3

8

Other items

2)

—

—

EBITDA per the Policy (Adjusted EBITDA)

$

1,521

$

1,394

Leverage ratio

1.1

1.2

1) Net debt is short- and long-term debt and debt-related derivatives less cash and cash equivalents (non-GAAP measure).

2) Latest 12 months.

3) Interest expense, net is interest expense including cost for extinguishment of debt, if any, less interest income.

53

CREDIT RISK IN FINANCIAL MARKETS

Credit risk refers to the risk of a financial counterparty being unable to fulfill an agreed-upon obligation.

In the Company’s financial operations, credit risk arises when cash is deposited with banks and when entering into forward exchange

agreements, swap contracts or other financial instruments.

The policy of the Company is to work with banks that have a high credit rating and that participate in Autoliv’s financing.

To further reduce credit risk, deposits and financial instruments can only be entered into with core banks up to a calculated risk amount

of $250 million per bank for banks rated A- or above and up to $50 million for banks rated BBB+. In addition, deposits can be made in

U.S. and Swedish government short-term notes and certain AAA rated money market funds, as approved by the Company’s Board of

Directors. On December 31, 2025, the Company held $267 million in AAA rated money market funds.

IMPAIRMENT RISK

Impairment risk refers to the risk that the Company will write down a material amount of its goodwill of close to $1.4 billion as of

December 31, 2025. This risk is assessed at least annually in the fourth quarter each year when the Company performs its impairment

testing.

It has been concluded that presently the Company's goodwill is not “at risk”. However, there can be no assurance that goodwill will not

be impaired due to future significant declines in LVP, due to the Company's technologies or products becoming obsolete or for any

other reason. The Company could also acquire companies where goodwill could turn out to be less resilient to deteriorations in external

conditions.

See also discussion under Goodwill and Intangible Assets in Note 2, Summary of Significant Accounting Policies, and Note 10,

Goodwill and Intangible Assets, to the Consolidated Financial Statements included herein.

Item 8. Financial Statements and Supplementary Data

The Consolidated Balance Sheets of Autoliv as of December 31, 2025 and 2024 and the Consolidated Statements of Income,

Comprehensive Income, Cash Flows and Total Equity for each of the three years in the period ended December 31, 2025, the Notes to

the Consolidated Financial Statements, and the Reports of the Independent Registered Public Accounting Firm are included below.

All of the schedules specified under Regulation S-X to be provided by Autoliv have been omitted either because they are not applicable,

are not required or the information required is included in the financial statements or notes thereto.

54

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Autoliv, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Autoliv, Inc. (the Company) as of December 31, 2025 and 2024,

the related consolidated statements of income, comprehensive income, total equity and cash flows for each of the three years in the

period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our

opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December

31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31,

2025, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),

the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control-

Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our

report dated February 19, 2026 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the

Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to

be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and

regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used

and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe

that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were

communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to

the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical

audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by

communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or

disclosures to which they relate.

Revenue recognition

Description of the

Matter

As discussed in Note 2 and 12 to the consolidated financial statements, the Company measures revenue based

on consideration specified in a contract with a customer, adjusted for any variable consideration, including price

concessions. Revenue is recognized based on the agreed-upon price at the time of shipment, and sales

incentives, allowances and certain customer payments are recognized as a reduction to revenue at the time of

the commitment to provide such incentives or make such payments.

Auditing revenue recorded for customer contracts containing variable consideration, that are subject to on-going

commercial negotiations for price concessions, was complex and judgmental due to the difficulty in evaluating

the sufficiency of evidence available to assess the existence of and likely outcome of on-going commercial

negotiations.

How We

Addressed the

Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls

over management’s review of customer contracts containing variable consideration. This included testing

controls over management’s process to identify and evaluate the accounting of customer contracts that contain

sales incentives, allowances, and customer payments that impact revenue recognition.

Our audit procedures to assess the Company’s identification of and accounting for customer contracts

containing variable consideration that are subject to on-going commercial negotiations for price concessions,

included, among others, interviewing and obtaining written representations from executives within the Company,

responsible for such negotiations with customers, regarding the accuracy and completeness of the Company’s

accounting for price concessions

and testing a sample of payments and credit memos issued to customers for

agreed price concessions. Our procedures also included inspecting a sample of customer contracts, and other

related supporting documentation, evaluating the terms therein and assessing the appropriateness of the

accounting treatment applied by management, considering the status of the on-going commercial negotiations.

55

Product recall liabilities

Description of the

Matter

As discussed in Notes 2, 12, 14 and 19 to the consolidated financial statements, the Company is exposed to

product liability claims in the event its products fail to perform as represented and such failure results, or is

alleged to result, in bodily injury, and/or property damage or other loss. The Company records liabilities for

product recalls when probable claims are identified and when it is possible to reasonably estimate costs.

Provisions for product recalls are estimated based on the expected cost of replacing the product and the

customer’s cost of carrying out the recall, which is affected by the number of vehicles subject to recall and the

cost of labor and materials to remove and replace the defective

product.

Auditing product recall liabilities was complex due to the uncertainty inherent in identifying product recalls, as

well as the assumptions and estimates management uses to calculate the provisions for product recalls. These

significant assumptions and estimates include the nature, likelihood, timing, and anticipated cost of known and

potential

claims.

How We

Addressed the

Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls

over the Company’s product recall liabilities process. This included testing controls over management’s process

to search for product recalls and determine the assumptions and estimates used to record product recall

liabilities.

To audit product recall liabilities, our procedures included, among others, obtaining and reviewing source

documentation, used by the Company to estimate the liability and assessing the reasonableness of assumptions

used, by performing independent calculations and sensitivity analyses to determine the existence of contrary

evidence. We evaluated the

Company’s

ability to estimate the product recall liabilities by performing

retrospective reviews of management’s estimates and comparing actual results to previous estimates made by

management. We also obtained letters from the Company’s internal and external legal counsel addressing

material claims against the Company, if any, and examined relevant third-party automotive safety regulatory

information to identify potential unrecorded product recall

liabilities.

/s/ Ernst & Young AB

We have served as the Company's auditor since 1984.

Stockholm, Sweden

February 19, 2026

56

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Autoliv, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Autoliv, Inc.’s internal control over financial reporting as of December 31, 2025, based on criteria established in

Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013

framework) (the COSO criteria). In our opinion, Autoliv, Inc. (the Company) maintained, in all material respects, effective internal control

over financial reporting as of December 31, 2025, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),

the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of income,

comprehensive income, total equity and cash flows for each of the three years in the period ended December 31, 2025, and the related

notes and our report dated February 19, 2026 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of

the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control

over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on

our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company

in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange

Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to

obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness

exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing

such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our

opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of

financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting

principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the

maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the

company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements

in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in

accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding

prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect

on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of

any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in

conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young AB

Stockholm, Sweden

February 19, 2026

57

Consolidated Statements of Income

Years ended December 31,

(DOLLARS AND SHARES IN MILLIONS, EXCEPT PER SHARE DATA)

2025

2024

2023

Net sales

Note 21

$

10,815

$

10,390

$

10,475

Cost of sales

1)

(8,741

)

(8,463

)

(8,654

)

Gross profit

2,074

1,927

1,822

Selling, general and administrative expenses

(571

)

(530

)

(500

)

Research, development and engineering expenses, net

Note 2

(413

)

(398

)

(425

)

Other income (expense), net

2)

Notes 13, 19

(2

)

(19

)

(207

)

Operating income

1,088

979

690

Income from equity method investment

Note 8

6

7

5

Interest income

10

13

13

Interest expense

Note 15

(103

)

(108

)

(93

)

Other non-operating items, net

(15

)

(16

)

(3

)

Income before income taxes

986

875

612

Income tax expense

Note 5

(250

)

(227