SOUTHFIELD, Mich. — Auto suppliers may confront a shakeout as the industry shifts to more “electrified” vehicles.
Suppliers are “all groping around in the dark,” Michael Robinet, managing director of automotive for research company IHS Markit, said at a media briefing today. “We know electrification is coming. Nobody has a real pulse when it is happening.”
Electrification refers to all-electric and gasoline-electric hybrid vehicles. The industry is moving toward electrification to meet fuel efficiency and emissions regulations. China and the European Union are pressuring automakers toward electrification.
For suppliers, Robinet said, one problem is automakers vary in approach.
“Nobody is following the very same pattern,” he said. “It’s really the wild west. It will leave some suppliers on the outside.”
Automakers are cutting back on development of new versions of traditional internal combustion engines as they boost their electrification efforts. That reduces opportunities for suppliers of parts for traditional powertrains to gain new business from automakers. Electric vehicles, in the meantime, have fewer parts than traditional engines and transmissions.
“It’s going to be more of a moat for existing suppliers,” Robinet said. “OEMs won’t have time to re-source (parts) in the middle of a (production) cycle.”
Robinet also said a group of “super tier 1” suppliers are likely to emerge because of electrification as well as the development of self-driving vehicles.
That evolution will “put pressure on players who haven’t kept pace,” he said. “That will probably generate some consolidation in our industry.”
Differences in regulations among the U.S., China and Europe may generate another complication.
The Trump administration wants to tap the brakes on tougher fuel efficiency standards set by the Obama administration. However, China and Europe aren’t relenting.
Those regulations will force automakers who want to sell vehicles in China, and their suppliers, to keep up with changes in technology, Robinet said.
“China will be a technology driver, a compliance driver,” he said. “North America is really the third horse in a three-horse race.”