Chevrolet Bolt EV Cutaway (click to enlarge)
The upcoming mass electrification of the automobile was compared by Automotive News to a meteor that wipes out all the dinosaurs ... who in this case, are traditional auto parts suppliers.
The issue of the transition to EVs is of course broader that just parts; there will also be less servicing, a departure from the traditional dealership approach, and the introduction of all-new technologies.
Some labor unions are already concerned about the production of internal combustion engines in their plants.
According to the report, one of the first businesses to fall could be diesel engine developers and manufacturers. If several major brands follow through on the winding down of diesel, it will be hard to find new buyers to displace those lost engine buys.
But the major problem facing traditional auto parts suppliers is that disruptive technologies are often out of reach for their abilities. It's hard to transform into a battery supplier without having a chemical background (like LG Chem or Panasonic), or to develop an in-house autonomous driving solution better than the tech giants (Google, Apple, Intel, Tesla, Nvidia and so on) with no experience in the field.
As an example, LG Group apparently already supplies 87% of Chevrolet Bolt EV powertrain. What 3rd party supplier can slip into that role from an unrelated field?
It's suggested that up to 75% of the top 100 suppliers in the world today could face irrelevance by 2030 if they can't figure out what EV-related parts to build to offset the coming losses with their internal combustion business. Plug-ins, or at least 48 V hybrids, are expected to hold up to 57% of the new car market in 2030, worth some $213 billion.
"It is between 2025 and 2030 — as EVs and plug-in hybrids attain mass-market status — that Eichenberg's meteor appears likely to hit suppliers.
That's because automakers will tap the consumer electronics industry for cutting-edge technology, rather than waiting for traditional parts makers to catch up, Eichenberg said. Consumer electronics purveyors such as LG Electronics, Toshiba, Bosch and Panasonic will exploit their economies of scale to reduce the cost of EV electronics.
Likewise, automakers will turn to battery makers such as LG Chem, Panasonic, Samsung, Toshiba and Hitachi to secure a stable supply of batteries."
Paul Eichenberg, a former vice president of strategy at Magna Powertrain and Magna Electronics, who authored the report said:
"Vehicle electrification is coming much faster than most industry analysts expect. Many CEOs are so focused on this quarter's earnings that they are not seeing the future."
"If you are not dealing with this today," he warns, "as time goes on you will have fewer and fewer options."
Some companies are preparing for the future already, as Continental, of whom is supplying 48-volt hybrid systems to a growing number of models, while at the same time is developing EV powertrains, 350 kW charging systems, AC/DC converters, battery management systems and more.
This year, Delphi Automotive spun off its powertrain division to focus on electrification and autonomous drive.
Even if the top 100 all focus on electrification aggressively, they can't all be successful as the sheer number of parts found inside all-electric vehicles (the strongest growing segment of electrification today) is far less than the common petrol car. Let the competition ... begin!
source: Automotive News