The automotive industry is currently experiencing a transformation that is reminiscent of the changes seen in the early 1900s which is being driven by the emergence of electric vehicles. Numerous factors are influencing consumer demand for sustainable transportation as a result the entire automotive supply chain is being profoundly impacted. Recent forecasts by Goldman Sachs indicate that 72% of European vehicle users are anticipated to buy an Electric Vehicle (EV) by 2025. Furthermore, this growth is projected to exceed $110 billion by 2030, in line with the regulatory changes set to be implemented as part of the EU lawmakers’ legislation for 2035.
Supply Chain Localisation
By partnering with suppliers in the same region or country to source parts and components, supply chain localisation offers a layer of security and safety for original equipment manufacturers (OEMs). In particular, EV manufacturers require convenient access to batteries and other crucial components that have limited supply, or else the costs of inventory holding becomes prohibitive.
Due to political and global events causing supply disruptions, the focus has shifted from a desire to reduce dependence on foreign markets. As a result, manufacturers are actively managing risks and ensuring a stable supply of essential components by establishing partnerships and investing in local battery production facilities near their manufacturing plants. A recent example of this is Jaguar Land Rover’s decision to construct a new battery production facility in the UK, which will secure their supply for years to come.
In order to meet the targets set by the International Energy Agency, a staggering 230 million electric vehicles need to be on the roads worldwide. To align with this objective, the European Union has made the decision to ban the sale of new internal combustion engines by 2035, mandating that all new cars must be battery electric. This move by the automotive industry is a significant step in the collective effort to achieve carbon neutrality by 2050.
Regulatory changes are now serving as catalysts for crucial innovations in product development and supply chain management. The aim is to ensure a seamless transition to the new paradigm, with a focus on sustainability and reduced environmental impact.
Remanufacturing and Recycling
With the coming changes, manufacturers face new opportunities and challenges; as the number of vehicles on the road increases, there is a growing demand for battery recycling and repurposing to recover valuable materials such as Lithium, Cobalt, and Nickel.
This aligns with the change of consumer awareness in environmental sustainability, with 60% of customers concerned and actively changing their lifestyles. By establishing efficient processes and partnerships for remanufacturing and recycling components, OEMs can develop their brand imaging and are 97% more likely to have sustainable-minded customers purchasing from them, with brand loyalty taking a back seat for the future.
Time-critical logistics aiding manufacturers
Premium logistics has its roots in the early 20th century and has evolved alongside the adoption of lean manufacturing strategies in the 1970s. It has emerged as the most efficient and effective method for OEMs to transport essential components. But what are the benefits of having a premium provider supporting a manufacturer?
- Minimising downtime: Electric vehicles heavily rely on intricate electric and mechanical systems. In the event of a supply chain disruption or component failure, it becomes crucial for production materials to be swiftly delivered to minimise downtime.
- Rapid transport: Among the most vital components of electric vehicles are the batteries, which require specific transport conditions. Premium logistics providers offer specialised handling and transport solutions to ensure prompt delivery.
- Agile supply chain management: Real-time visibility and tracking are key concerns for supply chain managers worldwide. By partnering with a logistics provider, manufacturers gain the ability to monitor the movement of components, anticipate potential delays, and proactively manage any arising issues.
These significant advantages offer improved coordination, expedited decision-making, and heightened responsiveness for OEMs to adjust their production requirements in response to shifts in consumer demand.\
SOURCE: Evolution Time Critical