As with all companies who form part of the traditional automotive supply chain, Irish Pressings has been looking on with interest over the past 24-months as “EV fever” has swept the globe.
The concept of an Electric Vehicle (EV) goes back to the dawn of automotive vehicles as we know them. It is well known that Henry Ford and Thomas Edison had undertaken extensive research, design and indeed prototype development in the early 20th century but ultimately the concept fell apart due to a booming oil industry, costs and technological uncertainties (sound familiar???!). What was deemed the cheaper, more reliable option of the internal combustion engine (ICE) was pursued and dominated the following 100+ years of automotive manufacture.
“Electricity is the thing. There are no whirring and grinding gears with their numerous levers to confuse. There is not that almost terrifying uncertain throb and whirr of the powerful combustion engine. There is no water circulating system to get out of order – no dangerous and evil-smelling gasoline and no noise.”Henry Ford, 1903
After various failed attempts over the past 30 years in particular, this past 24-months has seen EV development climb to the top of the agenda amongst automotive manufacturers. Fueled by concerns over climate change, air-pollution and the diesel emissions scandal, policymakers have finally taken decisive action by setting explicit targets for the cessation of sales of traditional ICE vehicles and OEMs are being forced to react.
For OEMs and the entire automotive supply chain, the speed at which the phasing out of ICEs and planned replacement with EVs (both full and partial) is being implemented is challenging every aspect of their future business strategies.
For traditional ICE OEMs, the arrival of EVs is in some places being viewed with dread. Having spent decades perfecting the design, engineering and fabrication process to squeeze every last drop out of the profit margin, some of these firms who have been world leaders in the automotive industry for decades are now at risk of being left behind.
With failure to join in the EV evolution not an option, those traditional OEMs – and their supply chains – are having to redevelop their entire business strategy, operations and raison d’etre, and reach out to form partnerships with companies who have battery and technological capacities much greater than their own. The problem with this is that it is very difficult to share an already very small profit margin.
On the flip-side, manufacturers of batteries and related technologies who have been working away in their own cocoon for the past few decades are now in high demand with the spotlight shining firmly on them to develop the holy grail of battery solutions to the automotive industry. Companies who may never previously have been engaged with the automotive sector could ultimately end up becoming some of the industry’s biggest players.
It is hard to think that there has ever been such a comprehensive shake-up of the automotive sector.
Obviously it is not just the traditional ICE OEMs who are concerned about where the industry is headed. The traditional supply-chain is also looking on anxiously as the pursuit of EVs demands the use of lighter materials, more innovative designs, and obviously spells the end of demand for the traditional ICE as we know it.
But while there will obviously be challenges for suppliers whose product offering is solely connected to ICEs only, there are huge opportunities for suppliers who have the agility to react and take advantage of the industry evolution. With every EV produced comes new requirements for the automotive supply chain with a much changed braking system requirement, the need for secure casing to protect the battery systems, implications for heating/cooling/air-flow under the bonnet, implications for the provision of comfort heating, etc.
Some studies have been done to try and identify what the EVolution will mean for the automotive supply chain with estimates suggesting that traditional ICE component suppliers could see their market segment fall from 50-55% of a finished ICE, to 30-35% of a finished EV. However, by engaging with the EV sector and exploring the possibilities with battery components, light-weighting, etc., component suppliers could actually see their market segment of car production increase beyond the current 50-55% for ICEs.
Time will tell but in order to survive every challenge must now be viewed as an opportunity.