Study Suggests 75 Of Top 100 Automotive Suppliers Will Be Irrelevant By 2030 Unless They Shift To EVs

AUG 21 2017 BY MARK KANE 34

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.

AllCharge Technology from Continental Makes EVs Fit for Any Type of Charging Station

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

Categories: General


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34 Comments on "Study Suggests 75 Of Top 100 Automotive Suppliers Will Be Irrelevant By 2030 Unless They Shift To EVs"

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75%? That seems too high. Much of the cars are the same and two of the big ICE components, the ICE and transmission, are usually done by the automaker not suppliers.

But there certainly will be a lot of pain if they don’t start transitioning.

The only suppliers that EV’s and ICE’s share is chassis, lights, glass, interiors, wheels, suspension, and brakes. The number of parts that overlap is actually pretty small.

Well, I’d argue that makes up most of an ICE car by weight or volume.

The ICE parts that are not needed are the ICE, transmission, ignition system, hydrocarbon fueling, coolant system, and exhaust system.

But the suppliers generally don’t make the ICE & transmissions so that leaves the ignition system, hydrocarbon fueling, coolant system, and exhaust system. That’s a lot…but not 75%.

Per: “that leaves the ignition system, hydrocarbon fueling, coolant system, and exhaust system.”;

Ignition Systems – Learn how to make Motor Controllers!

Fueling- Learn how to make EV Chargers for the cars, or EVSE’s for filling them up (going to need lots of EVSE’s!)

Cooling Systems – Learn how to make Battery Thermal Management Systems! (Nissan needs lots of help here!)

Exhaust Systems – Learn about how to Repackage, Repurpose, or Recycle Batteries!

Also, they could get on with learning how to make better partnerships, like, with Siemens, for Motors! With LG, to make Battery Modules (that can be made into large packs of different Voltages, or Sizes, and Capacities! Etc!

Yeah, I was gonna say this. The coolant systems seems like a good one.

And someone needs to build a really good air source heat pump for heating & cooling.

Great idea, I wish the coal miners were learning how to install solar panels.

“The only suppliers that EV’s and ICE’s share is chassis, lights, glass, interiors, wheels, suspension, and brakes. ”

So basically everything?

The only new things are: electric motor + inverter, battery, BSM, on board charger and DC-DC. Compare that to: Seats, windows, cooling, HVAC, suspension, chassis, wiring harness, lights, various electronics from screens to mirror motor and controls, various plastics, trim pieces and other cabin materials, airbags, proximity sensors, cameras, steering racks and that list goes on and on and on.

Even some parts of the drivetrain, like coolant loops and pumps, radiators, differentials, or reduction gears, don’t change a lot.

And since most engines are already built by the manufacturers, with maybe some turbos, fuel injectors and things like that added by suppliers. Many suppliers won’t be affected at all.

“75%? That seems too high.”

Yeah, it certainly is. The fallacious assumption there seems to be that makers of auto parts are “locked into” only the parts they make, and can’t switch to making other parts. Pretty silly.

The parts makers who are going to be in trouble are those who specialize in making parts for ICEngines, and all the kludges (muffler, water pump, oil pump, fan belt pulleys, etc. etc.) those need to function without melting or tearing themselves to pieces.

Fortunately for auto parts makers, most legacy gasmobile makers keep the manufacture of the actual engine in-house.

True, engines are almost always ASSEMBLED b the OEMs but all of the hundreds of internal components are sourced from various suppliers. Probably about 1/2 of transmissions today are purchased and not even assembled by the OEMs.

Good overview of the top 100 suppliers in 2012 and what they supply.

Yeah, this could explain the high figure. If suppliers provide all the parts that go into the ICE and transmission then they need to look to transition. They can provide gears for EV gearboxes but that is going to be a smaller business than all the ICE parts. Same with electric motor parts.

First to be second, there is plenty of time to transition.

IHS Power train group would be an example of “head in the sand”, compared to the above. They have a 2017 power point slide showing: Stop-start, ICE, MHEV (mild/48v hybrid), full HEV, PHEV, BEV. They predict, for 2025, depending upon continent:

41-63% Stop-start
20-29% MHEV (accept in US, @7%)
13-18% ICE (accept in Europe, @7%)

Get this:
1-6% FHEV (accept in Japan, @16%) -this is regular hybrid.
3-5% Global BEV

When your business is built around “75 of Top 100”, this is how you see the world. 95% ICE, by sales, in 2025.

95%…MHEV, FHEV, PHEV all have an ICE.

That might not be such a bad estimate. We EV fans need to remember that we are far more enthusiastic than most. Transition will mostly likely happen slower than we would like.

With the exception of the base Model 3, most pure EVs are too expensive or unappealing to most consumers. But the Model 3 just might be the tipping point that really changes things. If they really can profitably sell the base Model 3 for $35K, I think they’ll be able to sell a LOT of them and it will become the car for everyone to try to copy.

Well, EVs are not that expensive.

GM-Baojun just released the E100 EV for the Chinese market. Almost a replica of Smart for two, but at $5,367 after taxes and incentives.

Yeah, that is a heavily subsidized car…China pays for much of it because they are pushing EVs real hard.

The Smart ED is available in the USA and it is $22K before incentives. That’s cheap but it is very small and has a ridiculously short range. Base Model 3 is better value with seating for 5 adults, 220 miles of range, and supercharger ability.

There was only Tesla before 2017, if we assume >200 miles of range will force bigger changes. In 2025, attitudes will mature a lot about what EVs are, and what they aren’t. That’s the variable we can all sit and speculate about, adoption. These acronyms have little meaning to most, but I think “more battery” will mean a lot more, by 2025. It is rapidly becoming understood as a premium feature, where MHEV and stop/start are compliance tools, with all the appeal of powdered milk. To your point, CAFE, CARB and international rules could probably be met with “stop / start” fever, and a balance of other approaches. At that point, however, much tougher CO2 standards (95gr/km) will put ICE, stop/start and MHEV, on the wrong side of the sea-saw (thinking ~30-40mpgs?). Euro rules are notoriously “bendy”, but 95 grams equates to 60mpg. If NEDC gets to artificially represent the spec, than that figure converts to ~37, by my math. That’s not far off the CAFE “54.5” goal, once what was described to me as 20% inflation from EPA cycle and the (alt fuel) credit system are taken out of the number. -That’s a lot to arm-chair and I’m sure… Read more »

Yep, and while Tesla’s hold their value better than any car, the ICE will lose even more value, as it’s appeal continues to drop, into the future.
Currently there is a glut of cars on the market with so many cars coming off lease.
So used cars are really cheap.

It wasn’t’ that long-winded since you always worthwhile to say.

speculawyer said:

“That might not be such a bad estimate.”

I think only 3-5% global BEVs by 2025 is a pretty serious underestimation. At least, I hope so! I hope that it will be 2-3 x as much by then… or even more. Given the number of BEVs that auto makers plan to put into production starting in 2020, I expect to see sales really take off beyond that date.

Otherwise, that list might not be too far off.

Well, that does mean that the market will be three times to 5 times bigger in 7 years than it is now. Even though we would like more, that would show substantial growth.

Yes, well, I certainly could be wrong. I’ve been overly optimistic in the past about this subject.

But I’m looking at all the auto makers who have targeted 2020 as they year they’re going to start selling multiple models of plug-in EVs. I’m hoping, and guessing, that by 2020, if not earlier, the EV revolution will enter the rapid growth phase of the “S” curve of adoption of new tech during a disruptive tech revolution. So I’m hoping the percentage growth rate will be faster by 2020, if not before.

Anyway, we may have to wait 7 years before one of us can say “See, I told you so!” 😉

Not only suppliers will take a hit; but, aftermarket maintenance business will drop as EVs are much more reliable.

EV uptake could be quicker if autonomous EV ride services take off. And since the idea behind these services is that more people get served by a smaller number of vehicles, total number of vehicles sold could fall off a cliff once the services get supplied with “rolling stock.”

If most passenger miles in 2030 are autonomous EV miles, it won’t matter how many ICE cars are sitting unused in garages. Auto parts suppliers will need to have an appropriate inventory. Muffler assemblies, spark plugs, oil filters and fan belts aren’t going to cut it.

“…since the idea behind these services is that more people get served by a smaller number of vehicles, total number of vehicles sold could fall off a cliff once the services get supplied with ‘rolling stock’.”

I think this is almost entirely wishful thinking. People are not going to give up the freedom that owning your own car gives you, nor is there going to magically be any reduction in the number of vehicles that need to be on the road during rush hour just because of some car-sharing services. People also will not suddenly find carpooling by a ride-sharing service to be less inconvenient or less time-wasting than it is now.

I think it will be like the impact of Air BnB on the hotel industry. In other words, an impact so minimal as to be irrelevant.

Right, the freedom to spend your time searching for parking spaces at every destination (and to pay for those spaces in many cases). The freedom to spend thousands of dollars either on car payments, or on maintenance and repairs of an older vehicle. The freedom to need to get inspections and licenses for both yourself as a driver and for your vehicle. The freedom to pay parking and moving violation fines. The freedom to need to buy insurance for your vehicle. And most of all, the freedom to pay multiple times the total amount of ownership cost for a personal vehicle versus just calling for a ride when you need it (which you only have to share if you are trying to save money).

Now, maybe you love the idea of needing to spend the money and care needed for your own vehicle. Lots of people (me included) would happily chuck all that.

And that’s not even counting the potential convenience of not needing to shuttle unlicensed family around (school kids, post-driving-age parents, even yourself when you get older, or if you’re disabled).

“Right, the freedom to spend your time searching for parking spaces at every destination (and to pay for those spaces in many cases).”

I’m glad I don’t live in a city that densely populated. Here in Kansas City, we rarely have trouble finding a parking place.

The dense cities which you appear to be describing are already well served by taxi services, and already have a sizable percentage of the population which doesn’t own a car.

So again, I don’t see that these new ride-sharing services are going to motivate many car owners to get rid of their cars. Taxi service will get somewhat cheaper, but no more convenient.

I agree… The biggest change I see is the number of cars a family might need. Maybe a family with 4 drivers could get away with two cars if the could summons a car as needed. I could see the tire business loving autonomous cars since more miles will be put on each car.

In cities you can take the metro also, that is much faster than a taxi. Beside even at only two trips per day, on a car lifetime you are at about 10000 trips. If you add all those trips together and multiply by the few dollars a taxi or Uber will charge you for it, you will get to a big amount of money that will not leave you much difference with a car, even less or a negative one if you are a family.

I think it’s more like infestation of gypsy moths, than a meteor, or something in the middle. Slow to start but inexorable which also picks up speed, like EM pulse engine.

I don’t feel bad for any company that’s hitched it’s wagon to any ICE company without the foresight to start weaning into a different direction. Boo-hoo.

It’s like the Saudi’s continuing to export one product only, for decades. Reap it.

“Study” is the most misleading word in the title. There’s ONE guy, who conveniently consults on this issue, who guessed the number without any freaking backup..

I really take exception to the whole world is going to end stories relating to EV’s. An EV is still a car what should happen is a transition from an industry focused on ICE’s to an industry focused on EV’s. Instead of taking your car to a mechanic to add nitrous you’ll take your car to a mechanic to add super-capacitors. Rather than the engine overheating and destroying it’s self the motor an fixed ratio gear box with get stuffed. The oil industry is in trouble as are the manufacturers of nitrous systems but the rest of the world will keep going. More jobs have been lost over the last 20 years due to factory automation than will be lost in the next 20 years due to vehicle electrification.

The demise of the ICE vehicle is here, as has been the case for several decades, grossly exaggerated. If you believe this I have a bridge in N.Y. I would like to sell you.

InsideEVs has only been around since 2012. So even aside from your whistling past the graveyard of gasmobile obsolescence, Dan, you are factually incorrect.