For more than a century, the automotive supply chain has remained largely consistent, thanks to the dominance of internal combustion engine (ICE) vehicles. But as Bob Dylan sang, “The times are changing”. The rise of electric vehicles (EVs) is disrupting this long-standing system, with the 2023 Deloitte Automotive Supplier Study predicting a significant restructuring of revenues across the sector.
A story of contrasting fates
According to the study, revenue from ICE components, including fuel and exhaust systems, is expected to decline by 44% by 2027. Meanwhile, electric drivetrain and battery or fuel cell revenues are expected to increase by a whopping 245%. The reason for this change is a simple fact. An ICE powertrain requires approximately 2,000 parts, while a battery electric vehicle powertrain requires approximately 20 parts.
Impact on suppliers
This reduction in complexity not only reduces the total number of parts needed, but also shakes up the entire branched supply chain of the companies that manufacture these parts. This impact is particularly acute for small, family-run businesses that have been part of the industry for generations. Major suppliers such as Bosch, Denso, Magna and ZF have responded by spinning off their ICE divisions or reducing their focus on these parts and shifting their focus to EVs. However, smaller suppliers may not have the capital needed for such a transition and are instead focusing on their core competencies and seeking innovative solutions to remain relevant. Masu.
Innovation and efficiency
Meanwhile, innovations like Tesla's Gigacasting, which builds large parts of a car at once, are helping to streamline the manufacturing process. This will allow automakers to internalize more of their supply chain. Disruption of traditional supply chains, exacerbated by deglobalization and the COVID-19 pandemic, calls for the establishment of new industrial ecosystems to address this fragmentation. This development is also focused on transforming the role and capabilities of the automotive industry, particularly in the electric and intelligent vehicle sectors, with the establishment of strategic partnerships and expansion of the EV market in regions such as the Middle East, Southeast Asia and Asia. We sought. Pacific.
