Auto Suppliers Chase $255 Billion Electric Car Dreams
This really is the best time ever to be an automotive industry supplier.
Since there’s no set approach to electric vehicles, suppliers are scrambling to find their place under the sun through innovating and adaptation. With almost every car maker pursuing their own electric wet dream, the suppliers are taking sides and developing completely different, and rather complex technologies. While the stakes are high, the return may be even higher: all of this is done in order to capture the $255 billion electric car dream. After all, the major car makers are set to roll out hundreds of completely new electric car vehicle models over the next several years.
The EV industry is fueled by what an investment that AlixPartners consultancy estimates to be as high as $255 billion through 2023 alone. To put things into perspective, in 2017, all of the world’s automakers and suppliers combined invested $115 billion in research and development. The entire capital expenditures of the car industry, in general, were only $234 billion.
The most notable example comes from 3M, an industry giant that’s taking their part in the electric vehicle evolution. They are developing Novec – a non-conductive liquid solution that the conglomerate developed to cool down supercomputers – with an aim to sell to automakers in order to cool the vehicle batteries. The idea is simple: when batteries are kept cool, that helps electric vehicles to drive longer distances. And with the range being a key factor for most customers, this could become a really appealing solution. The idea was brought forward to Reuters when they visited the 3M research center.
“As you can see, the temperature remains constant” for the batteries at 32 Celsius (90 Fahrenheit), Fayemi said, the boiling point of this particular batch of Novec, which 3M also wants to sell to data centers to keep servers cool. “Automakers are trying to figure out how to get the absolute maximum out of batteries,” said Ray Eby, head of 3M’s automotive electrification program, which was created last year. “That’s right in 3M’s wheelhouse.”
With the $255 billion strong investments set to fuel the growth of the automotive industry, much of that will eventually flow to suppliers. But there’s a catch. The entire supply industry for the automotive world needs to find ways to cut electric vehicle manufacturing costs to make those vehicles both price-competitive to the ICE (Internal Combustion Engine) counterparts, but also, to make the whole production process cost-effective. This means that 3M and other automotive technology companies are looking for ways to adapt their current product lines to the particular requirements set forth by electric vehicles, thus ensuring these enjoy the same economies of scale brought from other markets.
Alongside major players in the automotive supply industry like BorgWarner and Aptiv, others like aluminum company Norsk Hydro ASA and synthetic rubber maker Trinseo SA are also developing products to extend the driving ranges of electric vehicles. If they succeed in tackling this significant barrier to higher EV adoption rates and sales, they could be at the forefront of the industry. And that could mean big bucks for the supply companies somewhere down the line.