Auto OEMs to invest $515 billion in EV-related technologies and upgrades but supply chain challenges remain

Based on updated electric vehicle (EV) introduction plans from automakers, the complete transition to EV production for many OEMs could come as soon as 2030. According to global technology intelligence firm ABI Research, auto OEMs will invest an estimated US$515 billion in EV-related technologies and manufacturing plant upgrades over the next 5 to 10 years.

However, in its new whitepaper, The Electrification Wave and its Impact on the Automotive Supply Chain, ABI Research argues that automakers 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.

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.

Supplier’s resources to manage new model launches are finite 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.

To learn more about the effects of the electrification wave on the automotive supply chain and how OEMs and Suppliers can act now to resolve the bottlenecks that may lead to substantial disruptions of their operations, download the whitepaper, The Electrification Wave and its Impact on the Automotive Supply Chain.