Preparing the Automotive Supply Chain for Electric Vehicles

By Logan Wamsley

An Exciting, Challenging Electric Vehicle Future

In just a few short years, the prediction that many automotive industry analysts have had for decades finally appears to be on the cusp of reality — that electric vehicles will eventually overtake production of the internal combustion engine.

Although the complete elimination of gasoline-powered vehicles may still be a ways off, recent news shows that large-scale manufacturers see where the market is headed. In January, General Motors (GM) made the bold proclamation that they would phase out gasoline-powered vehicles entirely by 2035. Ford made a similar announcement a few weeks later, stating their intention to all of their passenger vehicles sold in Europe to be electric by 2030. Volvo has seen a bolder path than either, with plans to become an all-electric vehicle company by 2030.

“There’s no question this is one of the most dynamic and fluid times in our auto and mobility history,” said Glenn Stevens, executive director of MICHauto, a statewide auto industry association in Michigan. “This electric vehicle inflection point is very real.”

Such a massive industry shift is exciting for many, but such bold steps also put a timetable on both current part suppliers and electronic component and semiconductor suppliers. The former must expand their infrastructure to provide materials for an all-electric market or risk becoming entirely obsolete, while the latter must prepare for the massive influx of new customers who will be operating in the same space as consumer electronic manufacturers. With many component manufacturers already struggling under the weight of the demands of companies such as Apple and Microsoft, the issue will only grow more pronounced when big players such as Ford, GM, Volkswagen, and Toyota enter the picture. And this is saying nothing of the new automakers who hope to acquire market share, such as The U.K. start-up Arrival.

“If any suppliers out there are not actively courting electrification, they’ve definitely got to get on it,” said Mike Wall, director of automotive analysis with IHS Markit. “The horse is out of the gate. It’s coming.”

For both manufacturers and suppliers to make such a rapid transition, both will require the use of third parties to aid them in avoiding the inevitable disruptions that will occur as a result of either obsolescence or extended lead times.

A Seamless Transition

The Inventory Ownership Solutions offered by Partstat are one such path forward, which would allow manufacturers to minimize disruption and maintain their products through the purchase of critical electronic inventory upfront — without the need to drain working capital. These solutions would also seamlessly handle any last time buys that may become necessary during the product’s lifecycle. Suppliers, meanwhile, would realize immediate payment for large bulk inventory purchases while minimizing production costs — which could result in savings that could be passed on to the customer.

In many ways, the future is no longer coming — the future is here. The sooner the industry can evolve its process to reflect the coming reality, the better.