Automotive OEMs to invest >500 billion in Electric Vehicle related tech

Date: 30/05/2022
ABI published a whitepaper on supply chain challenges faced by car makers when they shift to Electric Vehicle (EV). The paper lists action items for automotive OEMs and suppliers to avoid substantial operational disruptions.

ABI finds based on updated EV introduction plans by car and other vehicle manufacturers, the complete transition to EV production to happen around year 2030. Auto OEMs estimated to invest US$515 billion in EV-related technologies and manufacturing plant upgrades over the next 5-10 years.

ABI alerts automakers that they have not adequately recognized other impacts that the EV transition will have on the supply chain and, consequently, the impact on the ability to achieve their new vehicular model rollout plans.

“Specifically, automakers, from GM and Ford to VW and Mercedes, will need to maintain the simultaneous development of new/updated Internal Combustion Engine (ICE) models and the introduction of differentiated EV models (models that are not powertrain variants of existing ICE models). Incumbent automakers also need to contend with an influx of new OEM entrants beyond Tesla, including Lucid Motors, Rivian, and Fisker. These market pressures will require an elevated level of new model “programs” that will address operational capacity constraints, which have been largely overlooked,” explains Ryan Martin, Industrial and Manufacturing Research Director at ABI Research.

Supplier is said to have limited resources to manage new model launches and are already stretched thin. “Unless automakers and suppliers take the initiatives needed to expand overall program launch capacity, their electrification goals are under threat,” Martin concludes.

A modern automobile is assembled from tens of thousands of parts, most of which are sourced from a global supplier network and many of which are custom components designed for a specific OEM vehicle model or platform program. “From ABI Research’s ongoing research, automotive program management has not received the same managerial attention or level of investment as the supply chain that it supports,” adds Jake Saunders, Vice President at ABI Research.

Author: Srinivasa Reddy N
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