Electric vehicles could transform role of tier 1 suppliers in manufacturing
As OEMs look to reduce production costs and manage more complexity, automotive suppliers will face challenges. But with more EV models in the pipeline, many have the opportunity to grab a larger piece of the pie both for manufacturing and the total value chain
With the global automotive industry experiencing stagnating volumes and simultaneously transitioning to electrified powertrains, automotive tier 1 suppliers are facing a squeeze. Many will see lower manufacturing volumes and will need to look carefully at ways to reduce factory and labour costs.
However, automotive suppliers also have an opportunity to play a larger role in the manufacturing process for their OEM customers. Some suppliers are responding to the erosion of their margins by taking over more parts of the automotive value chain. That includes transitioning to ‘full service’ supplier relationships, such as ‘build-to-suit’ processes with automotive OEMs, alongside more standard ‘build-to-print’ services.
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