The Business of Plugging in Expo presented all types of information pertinent to electrically motivated vehicles. Speakers covered numerous topics and hundreds of industry experts were on hand. The expo, considered the largest of its type, grow each and every year as electric vehicles become a reality. One aspect covered at the recent expo was OEM suppliers. David Cole of Bloomberg spoke of OEM suppliers at length and discussed issues they face as vehicles change from ICE to electric.
According to Cole, suppliers are in a "crisis-like situation." Right now suppliers are torn between producing parts for ICE vehicles and producing parts for electric vehicles. Paraphrasing Cole, when an ICE vehicle is no longer produced, thousands of parts from various suppliers are no longer needed. ICE engines have hundreds of parts that are supplied, whereas electric vehicles have significantly less parts. This leaves suppliers with little to produce.
Additionally, long standing OEM suppliers are trying to quickly decide if they should take up production of parts for electric vehicles or maintain their production of ICE parts. If they switch to electric, and the electric vehicles fail to gain market share, the supplier takes a loss and possibly disappears from the market altogether.
As Cole said, the Nissan Leaf is already creating this problem in Japan. Two major Japanese suppliers were discussed by Cole. Tsubakimoto Chain Co. and NTN are but 2 suppliers affected by the electric car transition period. As Tsubakimoto's Toru Fujiwara said, "With electric cars, there's no way we can apply current technology. We have to come up with completely new technology."
Tsubakimoto will spend 3.5 billion yen this year to convert some production to electric vehicles. This type of spending is consistent across the industry as major suppliers try to catch up.
The risk is high, but the payoff for suppliers who convert to electric technology could pan out to be huge. This is a risk that some suppliers are willing to take while others sit back and watch the electric transition unfold.