According to a recent analysis
from Transport Intelligence (Ti), when the internal combustion engine is phased
out in favor of sustainable fuel technologies, vehicle supply chains will
undergo a dramatic transition. There is no question that there will be a
significant effect on supply chains in the quickly accelerating EV industry. In
2018, global EV sales rose to more than two million units, a year-on-year
growth of 63 percent. The entire powertrain supply chain will be changed,
shifting the types of products, the distribution systems used to transport
them, the markets of origin and destination, as well as the tiered character of
the supply chains of the automotive industry.
There is a paradigm change from mechanical engineering to electrical and computer engineering like the materials used. The economics of constructing these components and manufacturing them is somewhat different. This has enormous consequences for how the supply chain for vehicles is ordered. The varying existence of the interconnection of components is one important distinguishing feature of every An EV supply chain that will separate it from IC supply chains. Whereas the relationship between components is primarily kinetic in IC cars, the relationship between electrical and electronic components is dependent on the electron movement. This suggests that the essence of the interfaces of various modules is very distinct. This has serious supply chain effects.
It is also necessary to bear in mind that not only the components required for the vehicles themselves but also the components needed to have an adequate number of charging points for the EV infrastructure. An essential part of the move to EVs would also be wires, sockets, and other accessories. Lithium-ion batteries are one factor that is actually in high demand, and this causes a major burden on supply chains. Producers and retailers need to face these problems head-on to ensure the success of the EV industry. Aside from supply, another major issue is that cobalt extraction, the main battery ingredient, is currently concentrated in one region, the Democratic Republic of Congo. As well as the environmental effects, there are questions about the morality of the cobalt mining industry. The hunt is on for replacements to the already commonly used cobalt-containing batteries, so we might well see manufacturers in the future exploring some of these. EV giants Tesla has recently made an investment in lithium phosphate batteries, which demonstrates a big shift in the global battery supply chain for EVs.
Besides, however, the method of producing batteries has grown beyond the major automotive superpower economies in terms of materials, capabilities, and current processing systems. Moreover, China is the main manufacturer of lithium hydroxide used in electric car batteries, but it is also embroiled in trade disputes with the United States at present. This has been compounded by the fact that the COVID-19 outbreak is triggering manufacturing costs and logistics problems, so the worldwide supply of lithium hydroxide has been stopped. In general, in the supply chain, there must be a more coordinated strategy, with both stakeholders working together to develop the market. In their approach to producing EVs, producers would need to be agile by evaluating their supply chain and searching at substitutes in terms of vendors. Both the supply chains will need a long-term plan to ensure that the supply of batteries to EVs continues at a reasonable rate.
References:
https://www.pwc.com/us/en/industries/industrial-products/library/electric-vehicles-supply-chain.html
