Electric and connected —roadblock or opportunity?

The automotive industry is experiencing a mobility revolution even greater than that seen during the early 1900s, when mass production of cars began. Disruption caused by geopolitical challenges, including the war in Ukraine and the aftermath of the pandemic, along with the challenges brought by sustainability goals, mean that manufacturers have to adopt innovative approaches to navigate the demands and capitalise on the opportunities.

The electric vehicle (EV) market is seeing exponential growth, with a 35% year-on-year increase in sales expected by the end of 2023. However, there are still question marks around whether automotive manufacturers are ready to support wide-scale adoption. In a Protolabs study of 150 automotive manufacturers, 49% felt the automotive industry has not done enough to keep up with the demand for affordable EVs.

If they get their approach right, manufacturers have an opportunity to grab a slice of a very large pie. For example, the World Economic Forum predicts that global demand for lithium-ion batteries, which power EVs, will increase fourteen-fold by 2030, with the battery market set to be worth €250bn (US$263bn) a year by 2025. Currently, most batteries are produced in China, Japan and South Korea­—but with demand growing, OEMs will need to rethink their capabilities by either working with suppliers closer to home or bringing battery manufacturing in house.

Many businesses recognise the value that a more localised supply chain strategy can offer, when time to market and volume of production are of the essence. The pandemic played a big role in shifting the mindset to one that involves less risk and stronger links with suppliers. 53% of respondents in Protolabs’ research viewed recent supply chain disruption as a ‘wake-up call’ and 55% highlighted ‘friend-shoring’, in which production is moved to a country where values are aligned, as a focus.

There is also a regulatory incentive for this. In the UK specifically, post-Brexit rules mandate sourcing more EV components locally to avoid tariffs on UK-EU trade, which start in 2024.

Another factor underpinning automotive innovation is the need to integrate technologies that can accelerate production processes, reduce costs and improve employee wellbeing and productivity.  One-third of automotive businesses in the study are already using collaborative robots (cobots) and believe that this figure will double in the next few years. By taking on heavy and repetitive tasks, cobots free up workers to be more creative and reduce the physical and mental burden placed on them. They also have an important role to play in plugging the ongoing skills gap, providing support to manufacturers struggling with labour shortages.

Human machine interfaces (HMIs)—dashboards that connect a person to a machine, system or device—will also create opportunities for innovation. This technology is central to the development of new features within connected vehicles, such as driver monitoring and climate control systems.

For manufacturers, the ability to move quickly and flex their operations will be key to keeping up with the pace of change, as vehicles and their features become more complex. By leveraging new technologies, collaborating with complementary third parties and bringing their supply chain closer to home, the global automotive industry can seize the opportunities presented by the new era of mobility.

The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.

Peter Richards is Vice President of Marketing and Sales EMEA at Protolabs

The Automotive World Comment column is open to automotive industry decision makers and influencers. If you would like to contribute a Comment article, please contact [email protected]