With increasing consumer demand for electric vehicles (EVs), automotive manufacturers are rapidly expanding their EV line. This is in line with J.P. Morgan’s prediction that EVs and hybrid EVs will account for roughly 30% of all car sales by 2025. Such expansion translates into more product design, more engineering, more manufacturing. This entails significant change not only in the automotive company itself, but also in its supply chain – all organisations that supply the components needed to bring those new EV designs to life.
We’re likely all familiar with the idea of a butterfly flapping its wings on one side of the planet, causing a hurricane on the other. But what’s the effect of this increased EV demand on the future of the automotive supply chain?
In this article, we’ll explore how the EV automotive supply chain is developing and how your organisation can best capitalise on these changes.
The EV supply chain is defined by the design and engineering of the intended end product. As such, supply chain trends will mirror those in EV product design. These include aspects like better ways to manage heat, increased focus on safety considerations, maximising efficiency in the conversion of power to movement, as well as the reduction of vibrations and unwanted sound.
Many of these trends are simply a matter of identifying key differences between EV and ICE vehicles, and then improving their quality and functionality. For example, all EVs are powered by a battery that, when in use, can become extremely hot. While regulation is in place to ensure batteries operate at a non-dangerous temperature, this heat can affect adjacent components over time and reduce the lifespan of the battery itself.
Automotive manufacturers are therefore inclined to make supply chain decisions that facilitate the best-possible EV design. Suppliers should be able to demonstrate a sharp understanding of EV engineering – especially of the role their product plays and how it interacts with the rest of the build. This leads to a key feature of the future of the automotive supply chain: working with suppliers to co-create high-performing EV products.
As we’ve discussed in previous blog posts, co-creation is a collaborative form of innovation where experts from organisations across the supply chain create, improve and share new ideas. This means that an EV development team may include a product owner from your automotive brand, while the team includes a battery specialist from one vendor and an adhesive specialist from another (tesa, for instance.).
Co-creation will be integral to the future of the EV supply chain for several reasons. For one, it fosters far closer and more rewarding supply chain relationships. With increased involvement in product development, all parties can benefit from greater transparency and commitment – so fewer headaches and surprises from an unreliable link in the supply chain.
If you’d like to learn more about co-creation and its benefits, read our blog post.
No matter how promising the future looks for EV adoption and manufacturing, traditional ICE vehicles aren’t going anywhere soon. This is especially the case in developing markets where the infrastructure needed to sustain EVs at scale – such as charging stations available to the public across a large area — is still being built.
With many hurdles yet to overcome, suppliers are yet to flood the market with high quality and affordable EV parts, like batteries, powertrain components and related materials. This short supply of key materials and components, at least compared to ICE vehicle parts, means that EV manufacturers will continue to face high competition to secure high-quality suppliers that not only deliver great products but also offer expertise and co-creation opportunities.
If you’d like to learn more about co-creation, we’ve got you covered. We recently created a detailed guide outlining everything you need to know about co-creation and how it’s set to define the future of the automotive supply chain.
Click the button below to download our guide for free.