Electric vehicles are here, but how ready is the supply chain?
Automakers’ capital investments have already shifted to electric vehicles (EVs), and 2022 marks the peak of production — and sales — of internal combustion engines (ICEs). Several OEMs have plans to cease ICE production entirely by the mid-to-late 2030s, effectively rendering ICE components obsolete.We’re at a technology inflection point. Consumer adoption is growing for EV technology, with its lower costs and improved performance; OEMs are also driving toward cost savings as well as lower emissions targets.
The impact of the shift? The $1 trillion global auto supplier industry will look dramatically different in just a few years. Suppliers are carefully eyeing the near future — and those who aren’t should be — to understand their role in the global EV ecosystem.
Suppliers will need to transform their businesses, and that need for transformation comes at a difficult time, given so much recent and ongoing disruption. But the choice is clear: make the transition to EV or produce lower and lower ICE volumes until those programs end.
In an article for Area Development magazine, Plante Moran’s Daron Gifford, automotive industry leader, discusses the challenges, risks, and opportunities for automotive suppliers:
- How to understand your customers’ future requirements.
- Changing capital investment needs and return on investment time frames.
- The human resource and technology investments you should weigh.
- How to quickly build capabilities to meet future technology challenges.
- Critical actions suppliers must take now to compete in the EV ecosystem.
- Changes coming fast on the heels of EVs you must also watch.
Plentiful opportunities exist for companies that can quickly plan and strategically pivot. This article is a must-read as you lay out your roadmap for the future.
