On Your Behalf

On Your

Behalf

As the industry continues to recover from the impact of the coronavirus pandemic and recent material shortages, suppliers should be planning for additional industry disruptors. Specifically, ongoing vehicle technology changes require automotive suppliers to evaluate their product lines and manufacturing processes to ensure their long-term competitiveness and financial viability.

Below are a few of the industry’s major technology trends and supplier considerations.

Electrification and Hybrid Vehicles (BEVs, PHEVs, and HEVs)

By now we all know “the EVs are coming.” For suppliers however, many items need to be examined to ensure success as the market evolves. These items include: • The speed at which BEVs will become cost competitive with internal combustion engine (ICE). Vehicles and this dichotomy will impact the success of BEVs in the marketplace. • OEMs are becoming more dependent on BEV sales to meet increasing fuel economy standards. • While hybrid powertrains may be a cost-effective and near-term answer, global governments are incenting BEVs. • Consumer demand for BEVs remains a question – especially in the U.S. • There are many BEV models competing for a relatively small slice of the light vehicle market, particularly in North America for the next 5 to 7 years.

Suppliers need to carefully decide which BEV platforms they invest in to minimize risk, as it is unlikely all new BEV models will meet or exceed initial program volume assumptions. It is also important to plan for existing internal combustion engine technologies, as volumes for these products will decline in the coming years.

Safety Technology (ADAS, SAE L1 and L2)

Safety technology is of increasing importance for all vehicles. Suppliers working in these product lines need to maintain a careful watch on regulations regarding these technologies. • The market continues to grow for Advanced Driver Assistance Systems (ADAS) – especially automatic emergency braking (AEB) and the related adaptive cruise control (ACC). • More vehicle models are becoming available with highly integrated SAE Level 1 and 2 “driver assist” automated systems.

The accuracy of volume and take-rate assumptions will significantly impact both capital and engineering costs. Proactive management of this risk needs to be an integral part of program management for these products.

These new vehicle technologies offer both opportunities and challenges for suppliers. It is a must to fully analyze opportunities to maintain profitability and return on capital, all while ensuring timely participation in the growth of these technologies.

With the continued pandemic-related issues, parts/raw material shortages, labor shortages, and shipping/logistics issues, it is difficult for suppliers to add these longer-term issues to their list of to-do’s. Yet, now is the time to plan for these emerging technology opportunities.

As always, please feel free to contact me at 248.430.5963 or jfream@oesa.org.

Julie A. Fream President and CEO OESA