As the auto industry begins its push towards mass electrification, suppliers will be forced to innovate or die. That’s the general consensus among analysts and the companies themselves. Internal combustion engines require a lot more parts. And it’s the suppliers that provide the parts for virtually every car, truck, or crossover currently on the road today. If electric vehicles are heavily embraced by consumers, many companies could face extinction.
We’ll probably see major supplier upheavals by 2030. That’s because China and the European Union initiated CO2 reduction measures based on fairly strict guidelines. In 2020, the Euro 6 standard will require automakers in the European Union to maintain a fleet-wide fuel economy of approximately 57 miles per gallon. It’s possible that requirement will rise to 73 by 2030. The new regulations already doomed the Ford Ka and other small vehicles as the costs involved with upgrading their powertrains proved too expensive for automakers, given their entry level prices. Estimates vary, but early projections say about three quarters of the 100 largest automotive suppliers could face extinction in this new climate.
There is considerable uncertainty over the speed at which consumers will embrace electric vehicles, which further complicates things. Regardless, the adoption of electric powertrains is likely to diminish demand for internal combustion engines, which require far more parts to function. An electric vehicle is essentially just a battery paired to one or several electric motors and a few other components. Contrast that with an internal combustion engine, which involves seals, gaskets, fuel injectors, complex transmissions, and hundreds of other parts.
And there’s another angle here too. Electrified vehicles are generally more reliable than their internal combustion counterparts. Despite the complexity involved with mating an electric motor to a gasoline engine, the hybrid variants almost always end up requiring less maintenance. The culprit? Less stress on the internal combustion engine. That’s going to impact demand for replacement parts.
Cost-cutting has also impacted the automakers themselves. Audi recently announced an effort to reduce costs. The FCA-PSA merger will no doubt produce redundancies. The companies that can’t innovate or prepare for an EV-dominated future will perish. All told, some 80,000 jobs are being cut as automakers prepare to budget for EV research and development. There are other factors involved in those cuts, but the expense associated with electrification is considerable. If electric vehicle gain traction, even more jobs could be at risk too.
How can companies adapt? FCA’s e-Torque Mild Hybrid System is but one example of how suppliers can adapt to the new normal. The 48 volt battery replaces the traditional 12 volt system and can power the vehicle at low speeds. Mild hybrids will probably spread throughout the industry, but even a company like Continental AG, which developed components of the system, faces risks as it balances new technologies with continued production of internal combustion powertrains. The company is obviously aware of this, which is why it recently announced its intention to fully spin-off its powertrain division, which is now called Vitesco Technologies. Spin-offs are never a sign of confidence and the move is undoubtedly designed to minimize risk.
There’s another element to this too, and that concerns the already established companies that haven’t traditionally supported automakers:
It is between 2025 and 2030 — as EVs and plug-in hybrids attain mass-market status — that Eichenberg’s meteor appears likely to hit suppliers.
That’s because automakers will tap the consumer electronics industry for cutting-edge technology, rather than waiting for traditional parts makers to catch up, Eichenberg said. Consumer electronics purveyors such as LG Electronics, Toshiba, Bosch and Panasonic will exploit their economies of scale to reduce the cost of EV electronics.
Likewise, automakers will turn to battery makers such as LG Chem, Panasonic, Samsung, Toshiba and Hitachi to secure a stable supply of batteries.
That trend has begun. In February, Honda Motor Co. announced a joint venture with a Hitachi subsidiary to produce EV motors. And General Motors is working closely with LG Electronics and LG Chem, which produce key components for the Chevrolet Bolt.
There’s no bombshell shake up among suppliers right now, but that’s bound to change. And for countries like the United States, Germany, and the U.K., which host a substantial number of factories, those job losses will be acutely felt.
CC Newsstand: European To Slash Costs, Once Again – The EV/PSA Crunch by Paul Niedermeyer
” If electric vehicles are heavily embraced by consumers, many companies could face extinction.”
That’s a big if. My guess is that new ICE cars will slowly all be converted to ICE/electric motor hybrids over the next 10 years or so. Hybrid cars, especially small ones, are just about as efficient as pure electrics (well-to-wheel) but don’t have the range limitations, which is considerable worse in very cold weather. What works in Mediterranean-climate LA doesn’t necessarily work in Minneapolis.
“What works in Mediterranean-climate LA doesn’t necessarily work in Minneapolis.”
This is a relevant point that I think some forget. In my opinion, while electric vehicles show a lot of potential, ICE vehicles are currently more versatile overall, especially in extreme climates or rural areas without the infrastructure to support electric cars.
So I think that while electric cars will eventually dominate the market, ICE cars will survive in some areas for a long time.
I guess there won’t be a big need for piston rings or oil filters. And even wear items, like brake pads which should last as long (longer?) than clutch plates. Rotors on modern cars also seem like wear items, but with regen braking those should last forever. I guess the Autozones and Pep Boys (or Halfords or Repco) of the future will downsize to selling only wiper blades and air fresheners. And what will become of Midas Mufflers?
Suspension and steering components are still wear items.
There’s no telling what the used market will be like with a full EV new car fleet. The diehard ICE users may end up creating a boon for them unless these cars are outright outlawed
Electric cars still have springs, bearings, hinges, etc so those are not going away. Generally the braking systems have more parts. We have seen a massive increase in adoption of in car entertainment and others luxury items even at the bottom end of the market so likely to see a shift in suppliers rather an elimination of. Plus the current gas heavy fleet likely has a 15-20 year life span with older units needing parts more regularly.
Mild hybrids are highly unlikely to spread and instead they are going to be gone within 5-10 years as they just don’t produce significant real world MPG gains. They are a stop gap for companies that are behind the curve when it comes to hybrids. The big gains from hybrids are due to the regen braking and the ability to shut down the ICE when the vehicle is still in motion. 48v systems with tiny batteries can’t capture and store much energy and the belt connection doesn’t allow engine off operation. About the only thing they are really good at is stop/start w/o the clunky restart of many of those systems that use a traditional geared starter and for really small vehicles where there is not a lot of inertia to capture and store.
The effect will vary across supplier sectors. A lot of products are common across gas and electric vehicles so suspension, HVAC, interior parts and body electrical makers will be only slightly affected. Engine electrical and engine and drivetrain component makers have a bigger problem although many of them are diversified enough to retool for other parts. As an example TRW and Mahle both make pistons, but also wheels and other cast and forged pieces so they can adapt.
Some suppliers like Bosch will be able to reallocate resources since they are already a major player in both control systems and motors. While the quoted article mentions consumer electronics companies as partners I think that automotive electrical and electronics companies are likely to maintain their position since the sector requires more specialist knowledge than Silicon Valley tech bros think it does.
The major risk sectors would appear to be fuel systems, engine components and to a lesser extent drivetrains.
And the reality is the suppliers of automotive electronics and systems are not lagging behind the consumer electronics companies. They were making computers for cars before anyone ever dreamed of everyone having a computer in their pocket. They also don’t have a problem with economies of scale as the modern car has a dozen or more computers, heck I’ve got 2 cars in the driveway that have 40 yes Four Zero computers in them.
But here’s what is a threat to them: the car builders taking full control of all the software. That’s what VW is doing; they’ve announced a huge multi-billion dollar program to totally centralize their own software, a la Tesla. This is another big threat and impact to the OEM suppliers, especially if others go the same way. Which is likely. Tesla has shown that having an all-inclusive OS is the way to go.
You are correct, the all-inclusive OS is the holy grail. But, at the end of the day, will it make sense financially?
It brings up the oft cited Apple/Android OS choice in phones. Apple, via their proprietary OS, can have a closed ecosystem. They control who gets access, and what can work with it and what cannot. Android, being open source, is cheaper and more mainstream, and thus used by more manufacturers of devices. The tradeoffs are considerable for either. Apple gives (perceived) safer apps, but has to charge luxury prices. Android phones offer more universal apps, and is cheaper, but is more easily targeted for hacking via apps. There are other OS versions in use, but they are never really considered in discussion.
I just don’t think that an automotive OEM can successfully develop an internally based OS without major interoperability issues finally taking it down. Add to that the fact that China is probably going to want to either fully understand the OS or have direct access to source code for sales in China to move forward, and it all becomes a sticky wicket.
I can see that being a threat to some hardware suppliers as they have typically sold the hardware as a package with their software.
When software in cars first started happening you had 2 camps, those that did all their own software in house, like many US and Japanese companies and those that farmed it out like many European mfgs who bought a total EFI solution, mostly from Bosch.
I’ve also seen the use of outside suppliers when technology is young and that then coming in house as the tech became mature or mainstream. A good example is TPMS when it first came out many of the initial applications had a 3rd party total solution with a stand alone unit. As that progressed to being something mandated for all cars the mfgs incorporated that function into other modules. For example on our 03 Mountaineer it was still an option box to be checked and they used 3rd party total solution with a separate module. Meanwhile my 09 E-150 has integrated that hardware and software into the Smart Junction Box.
Personally I don’t think there will be a wholesale shift away from 3rd party software and most mfgs will continue to use a mix.
The George Jetson age is approaching…
I would be happy to have Rosie around the house. I would be extremely happy to have a hovercar that folds up into an attaché case at the touch of a button, though I’d prefer a molecular transporter. I think I’d also prefer a replicator over a foodarackacycle (do you have a $20 I could borrow for 30 seconds? I’ll give it right back).
Is this not just the natural progression of things? If you look back, there have always been in a constant state of change. How many carburetor rebuild companies are there these days? How many people lost jobs when conversion vans lost favor with the market? What about somebody to rebuild the generator (not alternator) on your car? And let’s not forget product lines, such as inner tubes, which were once as common as dirt.
It seems like “innovate or die” has long been the mantra in the automotive sector, particularly parts suppliers and aftermarket companies.
Agreed, mostly. But this is a major one-time convulsion in the industry, as suppliers who spent decades constantly improving the performance, reliability and cost effectiveness of their ICE-oriented product lines are now in a huge quandary. Many of them face an existential threat. Battery technology is dominated by a few companies that have no/little previous involvement in the auto industry. And the huge expansion of software is also dominated by companies outside the automotive mainstream.
The closest analogy that comes to mind is the transition from steam to diesel locomotives. Some of the steam engine builders tried to builders tried to build diesels, but they couldn’t compete.
In business; it’s adapt, change, innovate — or die. Yes, some companies will go under, but new ones will emerge. Peerless went from luxury cars to Carling Black Label. When I started in computers punch cards were the norm and disk drives were as big as washing machines. Just look at things now. The sky is falling only for those who will not see.
As mentioned, in terms of existing OEM suppliers some will be able to adapt and thrive, others won’t and will die off. Some will simply shift to producing repair parts and/or performance/modification parts in the aftermarket for existing ICE vehicles, to the extent dictated by both future demand and regulation of existing ICE vehicles (at some point ICE vehicles may well be completely outlawed or regulated out of existence, at least for regular use on public roads). Only time will tell how this all shakes out.
Kodak saw it coming and reacted with some of the first consumer digital cameras. It still didn’t save them.
Kodak were the ones who invented the tech behind digital cameras, but chose not to pursue it because they were making so much money off film sales. It wasn’t until other companies invented digital cameras and they started selling well that Kodak made their own.
Their downfall was, quite literally, a lack of foresight. They had their salvation in their grasp but waited until it was too late.
Exactly. And has anybody heard from the Carter Carburetor people lately?
Well the AFB is still being made, it is just sold under the Edelbrock name now.
Surely. And has anybody heard from the Carter Carburetor people lately?
Does anyone else feel nothing toward the electric car? The underside of the Rivian’s hood looks like a table at the Apple store or a giant iPad.
For some reason I am attracted to the hunk of metal beneath mess of belts, hoses, and wires.
There is something romantic about the precariousness of the internal-combustion engine; constantly fighting entropy to keep its fluids contained and its parts well lubricated.
These cars are nothing more than appliance.
Now you know how the steam engine/locomotive era guys felt about the IC engine and diesel locomotives. 🙂
They hated them because they weren’t “alive” like steam engines, spitting steam and bellowing clouds of smoke and dripping water and…
It’s only natural. You’ll get used to it; or not.
One of Man’s earliest and most vital traits for survival and growth as a species was the ability to create and control fire. There’s an evolutionary reason for our attraction to combustion engines. That or we’re just Neanderthals. 🙂
IBM went from punched-card mechanical tabulating machines to electric typewriters to check clearing machines to mainframe computers to database software to PCs, finally leaving hardware behind and concentrating on systems development. Companies can adapt. I imagine the autonomous vehicle software industry will be huge and lucrative.
A bigger threat than electric cars may be car & ride sharing. Society continues to become more urban which brings changing transport needs. I don’t think private cars will disappear, but I could easily imagine a lot less demand.
Depends on the longterm. I don’t think anyone in 1920 would have predicted 30 years later people would be fleeing the cities for suburbs. No reason it won’t happen again, trends are cyclical. Ride sharing has clogged the cities.
Millions already lived in suburbs by 1920 – at least around Chicago, and NYC.
Even earlier. Streetcar suburbs developed in Boston 1870-1900 – and in many other cities.
There is a few points that needs to be addressed first…
Mining, extracting, and processing the lithium from earth take an enormous amount of energy, including millions of barrels of oil to operate the extractors, mining trucks, conveyor belts, etc. I was at one of the world’s biggest open pit mine close to Calama, Chile three years ago and was blown away by the sheer size of everything, including the mining trucks overshadowing our full-sized tour bus. Not to mention the enormous amount of oil for transporting the material to other countries for processing and manufacturing into the batteries. That seems to negate the effect of using electric vehicles for reducing the carbon dioxide.
Same for lithium mining. Bolivia wisely chose not to allow the commerical mining of lithium at Salar de Uyuni—the world’s largest source of lithium—just a very extremely limited pilot production. I travelled through Salar de Uyuni for four days, and it was one of the most spiritual and beautiful road trips in my life. I can’t imagine the devastation of Salar de Uyuni if the commerical mining was to be allowed.
Secondly, the ability to recycle the lithium-ion batteries at their end of life is still neither feasible nor possible. My understanding is that lithium ion, as lot of you are familiar with the explosive notebook computers and smartphones, reacts violently and intensely when exposed to air. The technology would have to be developed to practically open and separate lithium ion from the components. Otherwise, they are sealed up and casted away like nuclear waste.
The ICE vehicles are easily dealt with if there’s fire after collision or due to mechanical issues. Just hose them down and be done in ten minutes or so. Not so with electric vehicles. Remember the little mishap with Richard Hammond and the Croatian electric supercar in Switzerland? It took five days to finally extinguish the battery fire.
We have seen this issue in California recently, following the blackouts and wildfires, when the homeowners couldn’t charge their Teslas or keep them charged in case of catastrophic events. With ICE, the homeowners could keep five or ten gallons of fuel in jerry cans in the garage to be ready for this eventuality. The advantage of jerry cans can’t be overstated, especially when you are stranded on the side of road after running out of fuel. That happened to me a few times when it turned out that my car’s fuel gauge slowly malfunctioned. What if the electric car ran out of juice, will there be service vehicles equipped with batteries showing up to recharge your vehicle? Will these service vehicles use ICE to generate the electricity or to get around?
In Germany, the e-scooters were highly criticised not for the inadept riders who wreak havoc on the sidewalks but for use of diesel vans. The e-scooters are collected and brought to the service centres by diesel vans for recharging and servicing before returning back to the streets. The environmental groups praised e-scooters as most ingenious “democratic” and “clean” mode of transportation while ignoring the negating effect of diesel vans…
As we have seen with technology in the past, when the holy grail of energy storage has been invented and put into the widespread use, what becomes of those lithium ion batteries? Would they be replaced by new technology inexpensively and easily? Or would they be sent to the junkyards? Again, that negates the environmental benefit of using electric vehicles.
Hydrogen fuel is very promising technology because it’s cheaper and more effective than petroleum fuel and electric. Perhaps more superior than the latter. Yet, the politicians and environmentalists pushed it aside in a mad rush to electrifying the vehicles. Or perhaps the “suppressed technology” that would have ended the use of oil and such. Yeah, I’ll put on the tinfoil hat for the last part and ramble…
Reducing the CO2 is probably one of the most controversial actions by the opportunistic politicians, scientists, and environmental activitists who either have little understanding of how CO2 work or choose to take advantage of the situation. Believe me, I’ve seen it all since the 1970s: in the 1970s, we were told of a threat of global cooling in the 1980s if we didn’t take action; we were told that ozone layer would collapse in the 1990s if we didn’t take action; we were told that global warming would escalate by 2010s if we didn’t take action; we were told of catastrophic event about Y2K flaw, which didn’t happen; we were told that the Arctic ice layers would disappear by 2010s if we didn’t take action; we were told that CO2 must be reduced (or “eliminated” as some of people such as AOC insisted) in order to keep the global warming from happening.
All based on the computer models that predicted incorrectly almost 99% of times in the last twenty years. No one can accurately predict the long-term weather forecast, especially ten to twenty years down the road: anyone can see that the weather forecasts aren’t exact science today, five or ten days later. Any sixth graders could see that CO2 is essential for the plant growth. Reducing CO2 would reduce the plant growth, including the ones grown for food. Remember the big movement to list the carbon footprint and carbon exchange in the advertisement and such in the early 2000s? They mainly disappeared as people started to get weary of being so hypervigilant toward their choices.
Sometimes, people and politicians would tweak the statistics to support their agendas. For example, the city council in Stuttgart collected the air quality data as part of their “green initiatives” by declaring Stuttgart the most polluted city in Germany. The problem with their data is the extremely close proximity of air quality monitors to the certain stretches of roads known for heavy traffic and the date being collected at certain time of the day, i.e. rush hour traffic. This sort of thing didn’t comply with EU directives on data collection and placement of air quality monitors.
Of course, we do have to take a large part in reducing waste, especially the plastic waste that is prevasive in developing and third world countries, and increasing the recycling of post-consumer material. I don’t appreciate being yelled by the unhinged leftists telling us to change our lifestyle to the 15th century or like just to save the planet. They could do more by helping the developing and third world countries in establishing the recycling, educating the people to reduce the waste, and like than disrupting our lives in Europe and the United States in a very bad way (think of Extinction Rebellion that has gotten bad rap lately).
I am still not sold on electric vehicles yet. I will continue to drive ICE vehicles for the foreseeable future until the better technology comes along. Call me hypocrite, but I am being very realistic and look at the bigger picture…
Oy, where to start?
1. Gasoline doesn’t just flow out of the gas pump either. It has to be extracted, shipped, refined, shipped again, etc. Wars are fought over it. Oil pollutes and no oil company or oil producing country has a perfect record. Gasoline filling stations tanks leak, product spills on the ground, I can go on and on. Lithium, if you want to stop mining, you just stop. It doesn’t spill and ruin the environment. (an oversimplification but relatively accurate)
2. Lithium can absolutely be recycled. It does not need to go to a lanfill. The first thing that comes out of an electric car at a junkyard is the battery and sold off to a recycler. I can take any li-ion battery from my laptop or electric drill or whatever and drop it off at my local Home Depot store. They have a collection center that is neither mandated nor a cost to them. They sell the used up batteries to a recycler and make money off the market for them. I’m surprised you seem to indicate that you in Europe just throw these items in your landfill garbage or “seal them up like nuclear waste”, generally Europe is more advanced in matters of recycling than the US. Where is Europe’s large Li-Ion storage facility located? The biggest problem with recycling batteries is that there are too many shapes, sizes, and formats currently which makes it hard to develop a standardized process to economically extract the materials from that package, making it less viable the smaller than pack. But an EV battery? No problems finding a buyer to recycle it, they are large and well worth the effort. Smaller packs will/can get there too.
3. Two jerrycans with 10 gallons of gasoline gets you maybe 300 miles down the road, about the same distance as a fully charged Tesla. It is certainly possible to store energy in battery packs as is being done by some people. It’s likely also possible to run a generator to then charge said Tesla. But if you can get down the road out of the fire area you can get to a different charger, nothing says you have to ONLY charge at home. You forgot to mention that if they power goes out, then the gas pump won’t pump gas into your car or jerry can either.
4. There is nothing stopping an e-scooter company from using an electric vehicle to collect scooters. That’s a company choice, has nothing to do with the e-scooter itself.
5. In regard to Hydrogen I’ll use your own type of argument against you – The Hindenburg, “Oh, the humanity”. Yes, not accurate and thoroughly misleading to support an agenda.
6. Arctic ice layers ARE disappearing. It’s hard to avoid seeing direct evidence of climate change.
7. There is no problem with food production, the problem is food OVERproduction in many areas. Before you bring up hunger issues, that’s a logistics and distribution problem, not a production problem due to a lack of CO2.
8. Nobody can help it if the Stuttgart City Council is too stupid to use accurate scientific principles, hopefully they get called out on such shenanigans and re-test. That incident doesn’t indirectly invalidate every other correct test ever conducted anywhere else.
9. The plastic waste in many developing countries is mainly from Europe, the US, and other “modern” industrialized nations that have been shipping it there for decades because it has been cheaper to do that than deal with it at the source. Some countries such as China are finally waking up to that and refusing to take it and are making the source deal with it directly. Good, but I am surprised you think that these third-world countries have such consumer cultures that they generate all this waste themselves. Hardly. No “unhinged leftie” is yelling at you to re-enter the 15th Century. I’m fairly apolitical but it doesn’t take much to see that there are some very simple things that can be done to reduce waste and be more conscious. Driving an internal combustion car vs an electric one and thinking that is the best “environmental choice” is hilarious when that’s not even the argument – really the best environmental choice is to not drive a personal vehicle at all whenever remotely avoidable in favor of mass transit (well established and usable and often preferable in Western Europe).
10. You may be looking at the picture but your eyes are closed or you don’t understand what you are seeing. It does not take more than a few minutes of research to learn about the reality in any of the points you made.
And finally, no, I’m not even remotely an environmentalist nor do I drive an electric vehicle although I could certainly afford one if I wished to. I recycle when I can, I try to avoid excess packaging, I’m aware of my own impacts. But I can easily see that there are talking points being pontificated by both the extreme right and left that most reasonable people could easily research with a minimum of effort and figure out the truth rather than just parroting the bits that make the best argument for my own personal convenience.
+1. (Y)es to all.
Oliver, are you okeh? I’ve always known you (or considered you, I guess) to be quite a bit more thoughtful and factually aware than this unhinged screed of yours makes you look. Jim K has done a fine job of pointwise rebuttal; there’s just one I’d like to address:
Er, no. See here and here and…well…here.
(Well, okeh, two: that thing about lithium battery production completely overwhelming any CO2 benefit of an EV over an ICE? Nope, that’s wrong too.)
I am being very realistic and look at the bigger picture…
The only “realistic / bigger picture” statement in all of that BS was what you wrote about the Salar de Uyuni. Went there myself (and Atacama in Chile) about 15 years ago. Just an utterly amazing place, like nowhere else on Earth. Mining that would be a crime. But it looks like the Bolivians know this.
Not a single steam locomotive OEM successfully evolved to the Electro-motive era.
Looking at the Steam-Diesel timeline from 1920-1950 in the rail sector we are only ~5 or 10yrs on the path to full electrification.
Now in pickups I still see a place for ICE engines. Ford has a F150 plug-in in the product pipeline. A Tacoma Hybrid with with the ability to supply 5-10kW of jobsite, tailgate party or backup power would be a great USP.