The Electric Vehicle Supply Chain: Manage Risk, Accelerate Production
A worldwide shift away from internal combustion engine (ICE) vehicles with increasingly electrified powertrains is underway, and with it the formation of burgeoning electric vehicle supply chains. In the first few months of 2021, many automakers have made big announcements about their fleets: General Motors plans to be completely electric by 2035; Volvo revealed that it will be fully electric by 2030; Jaguar aims to be an all-electric car brand starting 2025. And others, like Ford, have reaffirmed their commitment to an all-electric future by stating that their European line-up will be fully electric by 2030.
The Traditional Automotive Supply Chain Goes Electric
For Automakers and Tier 1s accustomed to deploying supply chain management strategies based on decades of ICE-centered production, it is particularly challenging to determine how best to predict and plan for the electrification market.
The rapid shift toward electrified powertrains necessitates more than just a few tweaks to the automotive supply chain. The classic automotive manufacturing supply chains place the original equipment manufacturer (OEM) solidly at the top of a pyramid, with the regional strata below trickling down to Tier 1, Tier 2, Tier 3 and so on. The electrification supply chain resembles a conduit, more of a network than pyramid. This isn't the streamlined, tried-and-true automotive supply chain. It's more of a group effort.
This is not a simple "plug-and-play" scenario. Electric cars require completely different components-such as busbars, heat sinks, insulated-gate bipolar transistors-than their predecessors. Though need persists for traditional automobile components, electronics hold a large share in the completed electric vehicles, meaning high commoditization of these parts is the future.
The current supply chain for electrification, however, reveals 6 - 12 months of lead time for semi-conductors alone, given the ongoing component shortages. It comes as no surprise that the supply chain for electric vehicles is not nearly as mature as the traditional automotive supply chain, which is largely dependent on a regional supplier network and driven by mechanical parts. When it's time for necessary components to be delivered, trucks transport them. Those parts join the line as needed, resulting in assembly line fluidity. This time-honored flexibility is challenged by the long lead time of electronics. An automotive OEM or Tier 1 player cannot just call the neighboring plant and ask for electronic components on a whim.
Managing Unforeseen Events in the Electric Vehicle Supply Chain
Risks can be simultaneously managed through a strong, supportive supply chain with a vetted supplier network. Consider, for example, sourcing requirements for EV charging stations. Specialist suppliers are required to have equipment, processes, and know-how to accommodate large form factor, highly aesthetic plastic housings. In addition, these suppliers must be able to provide mechanical housings that meet the demands of sealing, installation, maintenance, and repair.
Enlisting a partner with established expertise in the electronics ecosystem helps reduce time-to-market and builds alternative supplier networks to tackle any production halts and component shortages (both presently occurring). For example, EVBox, an electric vehicle charging company, increased production capacity by 300% and ramped up production from zero to 5,000 units/month within a two-month period, with help from Jabil.
From a supply chain point of view, as new commodities become more important, OEMs and Tier 1s need to make sure that their suppliers and EV manufacturing partners' suppliers have the right sourcing strategy and capacity to meet flexible production requirements. Specifically, they should be able to:
- Design for the EV supply chain by understanding the impact different product decisions make and avoid high-risk components in early product design and prototyping
- Provide supply chain visibility with real-time insights on orders, compliance, problem resolution and financial performance
- Oversee event influence with instant alerts, impact analyses and detailed recovery options during unforeseen events
- Manage supply chain risk to reduce vulnerability and ensure continuity by leveraging dynamic and customized risk scoring
- Produce supply chain diagnostics with actionable insights to improve sourcing and collaboration, as well as root cause analysis of missed KPIs and key metrics
The EV sector is rewriting the playbook when it comes to automobiles and using power as the punch. Universally, a continuity plan is successful when it presents feasible options. The single supplier model is always vulnerable; when component shortages affect everyone who seeks the same parts, different solutions must be considered.
Having a partner with expertise in the electronic ecosystem helps OEMs reduce time-to-market and establish a strong, supported supply and value chain. Automakers must look beyond their tried-and-true suppliers to establish relationships with power component suppliers. Most are entering the automotive industry for the first time, and, due to the power needs of the EV market, many are here to stay.
Do suppliers have the right strategy for sourcing? Can capacity goals be made flexible to account for component shortages? These are questions that must be addressed for proper risk management in the electrification supply chain. In a world gone electric but without overwhelming power supply, robust risk management is imperative.
Whitepaper: Accelerating Electrified Vehicle Production Through Risk-Mitigating Partnerships
Electrified vehicles’ shift from niche market to mainstream mobility is visibly in-process, but it comes with considerable challenges. To meet the estimated levels of adoption, the automotive industry can create manufacturing ecosystems that will accelerate time to mass-market of electrified vehicles, while managing risks associated with: product design & development; investments & asset management; supply chain & unforeseen events; specialized manufacturing & localized footprint; and, fluctuations in demand.