The shift to electric cars is going to cost the auto sector billions of dollars and will almost certainly result in more mergers and partnerships. Still, major Michigan-based suppliers see the technology-driven change as an opportunity rather than a threat.
Recently, suppliers like American Axle & Manufacturing Holdings Inc., BorgWarner Inc., and Nexteer Automotive Group Ltd. battled a pandemic that forced the sector to shut down for months. While advancing EV and future product development, they handled supplier restrictions influencing manufacturing timelines, a manpower shortage, and economic instability.
They are now implementing a dual approach rooted in both the current and the future, just like their manufacturer customers. They are concentrating on profitable internal combustion product lines while also producing products to entice manufacturers that are attempting to lure consumers with the tech-heavy, eye-catching Electric Vehicles. Suppliers, especially those that specialize in parts for internal combustion engines, are unconcerned about the transition. One primary reason is that automakers aren’t abandoning their traditional gas-powered vehicles just yet despite spending billions on the shift.
“Because of the present North American OEM approach, even at-risk vendors have time to change between now and 2030 because nothing is being dropped,” noted Warren Browne, a former GM executive, and an auto supplier consultant. He spent 40 years with the automaker.
Nonetheless, the Detroit Three and many others have issued EV objectives that providers cannot ignore in the previous year. GM says it plans to sell 1 million electric vehicles globally by 2025, with an all-zero-emissions lineup “aspiration” date of 2035. Ford Motor Company intends its global sales to be 40 percent electric by 2030. By 2029, Stellantis NV claims that every vehicle in their U.S. lineup will be electric. Foreign automakers have also released EV objectives. According to the company, by 2040, battery-electric and fuel-cell electric vehicles will account for 100 percent of Honda’s vehicle sales.
In discussion with The Detroit News, American Axle Chief Executive Officer David Dauch stated, “Certainly, the OEMs are trying to signal to the market and to the supplier community, their extended associates… that they’re making a move in their approach from traditional ICE as well as hybrid engines to electrification.” He stated, “They have lofty ambitions that are out there.” “I believe it will take them a little longer to execute just because of customer acceptance, but they are doing exactly what we need to do… we need to be market agnostic.”
Even while automakers are pouring money into electric vehicles, they currently account for around 2% of the market in the United States. EVs will represent 16 percent of the affluent U.S. market by 2028, according to AutoForecast Solutions. According to Sam Fiorani, who works for AutoForecast Solutions as a global vehicle forecasting’s vice president, the change will take “a long time,” particularly in the United States. Suppliers should not be alarmed; instead, they should be prepared.