Automotive Engineering - March 2023 - 3

SUPPLIER EYE
A bumpy ride to the BEV future
T
he bloom is slowly wilting off the rose.
The last two years witnessed an unprecedented
level of battery electric vehicle
(BEV) investment from both the auto
industry and federal government. Headsnapping
numbers in the billions of dollars have
been focused on vehicle development, batterycell
plants, upstream mineral supply capabilities,
vehicle-charging infrastructure build-out and
outfitting all of the above surrounding this shift.
One day we'll look back at these times - and
shake our heads.
Telling component suppliers that it is a matter
of when, not if, BEVs will achieve dominant
volumes, based on S&P Global intelligence and
forecasts, typically does not calm their fears of
the unknown. Vulnerabilities are emerging as
both suppliers and OEMs direct substantive
capital, resources and time towards growing
their businesses in electrification. It's already
clear that the transition will not be smooth and
orderly. More accurately, it's going to be bumpy
and erratic.
Both BEV and IC engine + hybrid offerings will
face timing " adjustments " over the next decade.
One propulsion format rises and the other declines
in prominence. As a result, suppliers will
be challenged more than ever.
The auto industry has become the realm of
delays, extensions, and slow launches. The BEV
revolution is in its early trajectory and many of
the technologies and supporting infrastructure
are new and not yet stress tested. Industry history
shows that 'new, new, new' in any aspect
of the business brings unforeseen issues.
Everything - suppliers, OEMs, systems, build
processes, facilities, input prices and, importantly,
customer acceptance - must align for a
seamless transition. That won't happen.
Delays are not welcome news to suppliers.
Michael Robinet
Executive Director,
Consulting,
S&P Global Mobility
SAE Foundation
Trustee
michael.robinet
@spglobal.com
History
shows that
'new, new,
new' brings
unforeseen
issues. And so
it is with the
shift to EVs.
After building a component or system for a
product life cycle of 5-6 years, for example, the
assumption is that all related process efficiencies
have been realized. Tooling and machines are
becoming tired. Annual productivity, in the context
of long-term agreements (LTA), has eaten
away at margins for those products based on
older technology. Suppliers bank on taking their
capital, including human and plant resources, to
refresh their portfolios, build efficiency and renew
margins for another five-year run. But when
they are asked to extend production of components
for an ICE vehicle for another couple of
years, it usually is an unwelcome request.
Slow launches have and will continue to be
troublesome. In the past, even with new ICE vehicles
that feature a high level of carryover,
slipped launch timing and slow program accelerations
were not uncommon. The weakest link
is usually the culprit. With BEVs, however, come
new build processes, propulsion systems (at
higher volumes), logistics and labor forces. Add
to this the lack of industry standardization as
the transition is made and the result will be that
many expensive lessons are learned.
Asking for patience from all involved while
these issues are resolved - particularly from
consumers who in many cases have waited
months for their new vehicles to arrive - is not a
solution. Taking a step back and stress testing
the system to 'run at rate' has never been more
critical, in my view. OEMs, suppliers, dealers and
even governments have too much at stake.
While I'm typically a 'glass-half-full' observer, it's
clear to me that the road to an electrified future
is going to be bumpy indeed.
AUTOMOTIVE ENGINEERING
March 2023 3
Automotive Engineering - March 2023

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