Impact of the EV supply chain ecosystem

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While the world gears up to fundamentally transition from a fossil fuel-consuming automobile industrial complex to what is hoped is a greener electric vehicle one, it is important to look beyond the end products like electric cars and two-wheelers and look at the whole EV supply chain ecosystem.  Making this change will be a paradigm-redefining and even life-altering experience for everyone involved-from the manufacturers, suppliers, and dealers to the consumers and automobile repair and service businesses.

The electric vehicle (EV) supply chain ecosystem is a complex network of companies and businesses that produce and distribute the components required to manufacture EVs. The ecosystem includes companies that produce raw materials such as lithium, cobalt, and nickel, which are used in the production of batteries. It also encompasses businesses involved in the manufacturing of battery cells and packs, power electronics, electric motors, and the all-important charging station infrastructure.

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The EV supply chain ecosystem is still in its early stages of development and faces several challenges.  The most important of these is the lack of a robust supply chain pertaining to key powertrain components like motors, controllers, and chargers. Apart from that there is a lack of standardization with regard to charging infrastructure. 

That being stated, there are several initiatives being undertaken across the world to address these challenges. The Indian government, for instance, has launched a scheme called Faster Adoption of Manufacturing of Hybrid and Electric Vehicles (FAME) to promote the adoption of EVs in India.

The Impact of Transitioning to the EV Supply Chain Ecosystem

The gradual move from ICE (Internal Combustion Engine) technology-based automobiles to electric automobiles does pose a significant risk to auto suppliers. It is important to note that value addition to automobiles by component suppliers is 35 to 40% for EVs when compared to 50 to 55% in the case of conventional vehicles with internal combustion engines. 

If they don't plan for the future and find innovative ways of becoming a part of the new supply chain that will emerge in the years ahead, they will be in trouble. Many systems that are integral to conventional automobile engines are not required in the case of EVs. This means that manufacturers and makers of fuel systems, exhaust systems, and transmission will likely be negatively impacted in direct proportion to the growth of the EV industry.

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