The race is on toward a viable electric vehicle market, as evidenced by the recent surge in EV introductions, powerful new ads and the Biden administration goal for up to half of U.S. new-vehicle volume to be zero emission by 2030. Succeeding, however, will require balancing two very different worlds.
While the EV market is expected to soar in the next 10 to 15 years, that doesn’t mean that internal combustion-engine cars and light trucks will fade away.
In fact, depending on market conditions and plans of some automakers, the manufacture, sale and service of ICE vehicles could remain part of the marketplace for some time. While this should not be surprising, therein lies a major challenge for automakers — simultaneously producing high-volume EVs while supporting their core business, ICE vehicles.
Auto companies will need to quickly adjust their supply chains to create an entirely new business that can profitably capitalize on emerging EV interest while continuing to serve the ICE vehicle segment. This will create new challenges across supply chain processes, structure, technology and organization that must be addressed.
In meeting these challenges, automakers may be better equipped than most, having gained decades of experience building ICE vehicles. But the transition will still be a balancing act, requiring some, if not most, to create a battery manufacturing footprint and develop EV battery and powertrain partners, while continuing to sustain relationships with ICE powertrain partners.
ICE powertrain suppliers will need to evolve to support needs across ICE- and EV-related products. One solution will be to divide their business into two areas, dedicating one side to serving the ICE market and the other to focusing on emerging trends that include connected, autonomous, shared and electric vehicles. Several leading suppliers have already taken steps in that direction.
