INDUSTRY REPORT
Megatrends in the Global Automotive Value Chain
( from ‘ The Future of the EU Automotive Sector ’ report Oct 2021 )
1 . Automotive is a globalised industry that thrives on regional clusters with strong links between original equipment manufacturers ( OEMs ) and suppliers .
2 . OEMs and Tier 0.5 ( i . e . suppliers taking over responsibility from OEMs for major systems and modules from a vehicle value-creation perspective ) and Tier-One already have production lines ready for the new generation of electric vehicles ( EVs ).
3 . Outward Foreign Direct Investment ( FDI ) by Chinese EV OEMs increases competition for EU OEMs .
4 . The COVID pandemic accelerated the development and sale of EVs .
5 . COVID also increased the importance of digital channels and led to OEMs investing more in agile and resilient global value chains ( GVCs ) by increasing sourcing regionally .
6 . The increased electronic content in automotive production is motivating electronics companies to transition into the automotive industry .
7 . There has been a very significant increase in investment in lithium-ion battery production across Europe in the last two years .
8 . Connectivity , digitalisation and other new technologies introduce new ( data-driven ) business models .
9 . Joint Ventures and collaboration ( including with former competitors ) continue to increase .
10 . The twin transition will require the automotive sector to adapt to new realities .
Weaknesses in EV battery supply , raw materials and associated innovation represent a significant threat to the development of electromobility in Europe
into 2022 , although the IHS Markit outlook based on current forecasts remains at nearly 15.2 million units . This reflects growth of just over 2.2 million units year-over-year . A more normalised supply chain is forecast to support vehicle output levels of 90.6 million units for 2023 , a further 10 % y / y increase and comfortably above prepandemic output levels of 2019 .
Electrification remains a growing dynamic — 2021 has seen an " arms race " of ambition as OEMs declare electrification targets for the coming 5-15 years
Electric vehicles are fast evolving from a compliance side hustle into fully fledged core offerings for many OEMs . At COP26 in 2021 , policymakers and regulators also shared their visions for a greener future , including the U . S ,. the EU and the UK . Transformational change is firmly on the agenda and making sense of this arms race of ambition represents an ongoing challenge .
Electric vehicles in focus
Research and Energy ( ITRE ), with around 17,000 EU SMEs active in vehicle manufacture , carmakers specialising in traditional transmission and internal combustion engine ( ICE ) component production face major risks . There are only around 20 moving parts in an electric motor compared to over 2000 in an ICE , which also manifests in reduced servicing that will negatively impact SMEs in the aftersales market . “ The electromobility ecosystem in the EU , unlike the U . S . and China , was a late starter , but the pace of dynamic start-ups is gaining momentum . Weaknesses in EV battery supply , raw materials and associated innovation represent a significant threat to the development of electromobility in Europe . Locations with high concentrations of EVs or ‘ supercharging stations ’ will be prone to over-loading local substations , triggering ‘ black-outs ’ short term and costly remedial investment by grid operators , mid-term .
“ While EU automotive companies are leading in terms of R & D intensity , the EU must increase ICT R & D , which is a key digitalisation precondition . This challenge will increasingly be exacerbated if the existing STEM trained worker supply gap continues . Although an EV leaves a car showroom with zero emissions , the upstream supply chain associated with the same vehicle has already generated a large carbon footprint ,” added the report .
The COVID pandemic accelerated the development and sale of EVs while connectivity , digitalisation and other new technologies are creating new ‘ data-driven ’ business models whereby 2020 represented a ‘ tipping point ’ in the adoption of EVs .
From a broader EU perspective , electrification , smart and shared mobility represent major strides towards environmental sustainability and efficient transportation , enabled to a significant extent by digitalisation .
The report outlined key opportunities including Smart Charging ( V1G ) and Vehicle to Grid ( V2G ) technologies to increase the flexibility and efficiency of the existing grid and to drive further investment in renewable energy and cross-border transmission to enhance environmental sustainability .
According to new research , the electric commercial vehicle market is also set to witness steady growth during 2021-2031 . Strict pollution regulations in several nations are pressuring many corporations to electrify their vehicles , which is driving the market . The market is also growing because of developments in battery technology and the adoption of new technologies such as advanced driver assistance systems ( ADAS ), artificial intelligence ( AI ) and Internet of Things ( IoT ).
Various governments throughout the world have developed programmes such as the use of electric buses and trucks to make their urban public transportation networks more sustainable and fuel-efficient .
According to ‘ The Future of the EU Automotive Sector ’ report requested by the European Parliament ' s committee on Industry ,
Sales of electric vehicles have increased .
26 | sheetmetalplus . com | ISMR February 2022