Electrification Could Have Adverse Impact on Top 100 Auto Suppliers

The growing trend towards electrification in the automotive world could have an adverse impact on the top 100 automotive suppliers, according to automotive strategy consultant, Paul Eichenberg. Eichenberg, who is the former chief corporate strategist for Magna Powertrain and Magna Electronics said that at least 75 percent of the top 100 automotive suppliers in the world could face adverse fortunes if they do not enhance their expertise in software and electronics to keep pace with the electrification strategy.

Traditional automotive suppliers will need to rethink their strategy in order to become successful in a world where electric cars are more prevalent than petrol or diesel vehicles.

He said that suppliers are not really prepared for the impact that electrification will have as they have waited too long to focus on the changes they need to make. He added that even big OEMs lacked the technical knowledge to understand how big the disruption to the automotive industry is going to be.

It is expected that 2020 will mark the beginning of electrification and many suppliers have begun gearing up for the transformation with strategic moves. These include the Schaeffler Group, which supplies 40 to 50 bearings for internal-combustion engines and transmissions. Battery EVs would need as many bearings.

Europe is far ahead of the United States when it comes to electrification, with countries like France and the United Kingdom pledging to completely stop sale of internal combustion engine powered vehicles by 2040 and stringent norms for carbon dioxide reduction. China too is tremendously encouraging the growth of the electric car industry with sizable incentives.

Suppliers who can come up with electric components for all major automotive systems, like batteries, electric-drive motors and power electronics will have an edge over other suppliers.