There are powers and weapon modifications that affect the ammo capacity. I'm wondering whether those make even sense for your squad mates, if they ever run out of ammo?
Do my squad mates have unlimited ammunition or can they run out of ammo?
Squadmates will not run out of ammo, however, the upgrades to ammo powers that increase capacity do carry over with the squad ammo powers. What does that mean?
It means that if you take the increased capacity upgrades for squad members that you intend to use a squad ammo power with, Shepard will benefit from it.
Additionally, upgrades that effect clip size rather than total capacity will result in your squad members reloading less often, and by extension, higher damage output.
They reload but they do not run out of ammo.