Over the past several months, there has been increased visibility to the march of electrified powertrains (still using an internal-combustion engine) and full electrification penetrating the industry. Several Europe-based premium OEMs have signaled that one should only expect the ICE as part of larger electrification strategy into the next decade.
In prior Supplier Eye columns, we also highlighted that there will be a reduction in the pace of the development of all-new ICEs as OEMs shift capital and resources toward electrification. For most automakers, it is not a matter of if but when – the ‘when’ being the contentious part.
It is important, though, to highlight that electrification is just one cog in the drive towards reduced vehicle emissions. Other powertrain improvements, aerodynamic improvements, reducing parasitic loses and lightweighting also are critical to this mission. In addition to these major shifts, the march towards Level 4/5 vehicle autonomy will have a significant impact on the industry ecosphere—sales, service, finance and the role of suppliers of all tiers. This includes those involved in raw materials, machine/tool build, sub-assemblies and final production. Changes will increasingly be apparent—particularly for those that don’t have to manage a presence in the aftermarket.
A couple of examples should put this in perspective. Think about a component as simple as a front shock tower. On many vehicle platforms, we already have witnessed the selective shift of these from a heavier multi-piece steel assembly to an optimized one-piece cast aluminum structure. The downstream impacts are profound. The steel-to-aluminum substitution alters the manufacturing strategy for both the OEM and supplier, demands a new joining/isolating process (rivets/fasteners) away from traditional spot welding and a drastic reduction in the number and types of tools and molds, as well as sub-assembly requirements. In this case, the shift to an aluminum cast structure reverberates throughout the entire supply chain, including raw material supply, the approach to repair and ultimately, recycling.
There are other examples. Several OEMs have implemented or considered SMC (sheet-molded composite) rear decklids to drive mass reduction, tooling-cost reduction and gain the ability to paint and assemble these systems offline to reduce complexity at the final assembly plant. The lower tooling cost (and speed to market) of using molds versus dies is a significant advantage. Again, the impact of tooling, materials, specialized processes and joining technologies all have a downstream impact which requires one to think beyond the obvious.
The tooling and machine build industries should especially take note of these structural shifts. Driven by a discerning customer base, there will be a healthy cadence of all-new or major vehicle launches impacting styling for exterior and interior components and the slow but steady shift towards common platforms will alterlater the dynamics of changes beneath the skin. Another factor is the OEMs’ waning focus on powertrain investment. As the number of new engine families designed in North America (and globally) decline into the next decade as automakers focus their big-picture attention to electrification, opportunities for new tool build and machine replacement and upgrading due to process turnover will start to slip as well.
Beyond the obvious shifts towards increased electrification of the powertrain and increased levels of autonomy, virtually every functional system will be altered, enhanced or possibly eliminated in the future. Within these shifts, Tier 1 suppliers and OEMs will seek to simplify production systems, optimize value and reduce waste. Those downstream suppliers involved in high-capital-requirement industries should especially take note and understand their role in the value equation as powertrain, steering, braking, thermal and a number of other critical systems transform.
As the industry retools itself over the next couple of decades, it is doubtful the entire supply base will benefit. Scale economies, global- and major-market capability, leverageable intellectual property, value-driven partnerships and the ability to be proactive with customers will determine future prosperity. Being an active participant instead of a passive bystander will be critical.
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