Summary
The automotive supply chain is undergoing changes as a result of the rise of electric cars. Automotive News examines how those developments are altering the landscape of an industry.
The increased demand for electric vehicles is reshaping the automotive supply chain at a time when it is already under strain due to the coronavirus epidemic, rising material costs, and semiconductor shortages.
The industry is making a huge push for new technologies and solutions, and R&D is taking place across the board.
Between 2019 and 2020, the world’s top 20 automakers will invest roughly $94 billion in research and development as their EV product ambitions gain traction, according to a forecast released last year by the financial company BDO.
Suppliers, too, must be prepared to endure the expense of the technological transformation, according to Stellantis CEO Carlos Tavares.
“This industry transition is not only about OEMs,” Tavares stated during a late February earnings conference. “It’s also about supplier diversity.”
The new EV world requires advances in motors, batteries, materials, and manufacturing techniques to get automakers up and running on a mass-production scale.
It is a difficult journey.
Startups face difficulties
Rivian and Lucid, two fast-growing electric car companies, have seen their stock values collapse as they struggle to manufacture their launch vehicles without enough parts to achieve their original production objectives.
Rivian CEO RJ Scaringe stated on a March earnings conference that the business plans to construct roughly 25,000 of its R1T truck, R1S SUV, and EDV delivery vans this year, less than half the amount that might be built at the company’s Normal, Illinois, assembly plant if adequate parts were available.
The tale is similar at Lucid, which has reduced its manufacturing target for the Air sedan to around 14,000 units this year from 20,000 previously.
“We have over 250 suppliers worldwide and approximately 3,000 components. And this has been a phenomena confined to just a few of our 250 suppliers “According to CEO Peter Rawlinson during a February earnings call.
Rivian and Lucid have stated that one way to address their supplier difficulties is to increase in-house manufacturing. Rivian will create its own electric motors for future vehicle generations and is considering entering the battery market, Scaringe stated. Lucid did not specify which components it may manufacture in the future.
Increased quantities of everything
Rivian and Lucid’s woes show a pattern that affects all EV manufacturers. Lithium supply, rare earth metals, electric motor magnets, and battery assembly are just as critical to their future as high-quality automobiles and efficient assembly factories.
“Raw materials are rapidly becoming a bottleneck,” said Sam Fiorani, AutoForecast Solutions’ vice president of global vehicle forecasting. “As the EV industry expands gradually, the supply chain for motors and batteries will expand to meet the additional volume. Nickel, lithium, and cobalt are all expected to restrain this rise.”
General Motors has created joint ventures with California startup Controlled Thermal Resources for lithium supply and with LG Energy for the production of GM’s proprietary Ultium batteries.
Automobile manufacturers worldwide are developing relationships with lithium miners and battery manufacturers, and even securing supply of rare-earth metals required for permanent-magnet electric motors, the industry’s dominant technology.
Securing the supply chain as rapidly as possible would be critical for automakers if they wish to compete in an increasingly competitive EV market, Fiorani added. He referenced Ford’s transition to aluminium for its F-150 pickup truck, the best-selling vehicle in the United States, as a non-EV example.
“Like Ford’s decision years ago to secure aluminium sourcing for the F-Series, forward-thinking EV producers are securing their own supply of these critical elements, which may leave other automakers short of these critical components,” he added.