Challenges and Opportunities in the EV Supply Chain

The generation of EVs necessitates a supply chain that brings together a wide range of companies that are not involved in the production of internal combustion engine (ICE) vehicles.

FREMONT, CA: Electric vehicles (EVs) are quickly becoming a widely-used form of transportation. The trend of EVs is spreading more rapidly in Asia than anywhere else in the world. This adoption of EVs is important to decarbonise the use of transportation and support sustainability goals.

Batteries are Important Components

The generation of EVs necessitates a supply chain that brings together a wide range of companies that are not involved in the production of internal combustion engine (ICE) vehicles. Apart from bringing in demand for conventional vehicle components, the production of EVs brings about demands for new parts, high-end rechargeable batteries, software, and semiconductors.

Technology companies and battery makers now play a significant role in the new automobile supply chain and consequently challenge original equipment manufacturers (OEMs) to create a stock of high-quality components. Such supply chain considerations carry significant importance for the development of EVs in the market. It also has significant growth opportunities that will immensely impact the industry’s value chain.

The pre-production segment of the supply chain consists of raw materials, like nickel, cobalt, and lithium, which are required to make the batteries. The demand for these batteries is predicted to rise rapidly in the upcoming decade, which will subsequently lead to an increase in demand for these metals. However, there has been a long-term underinvestment in these raw materials, which has pushed miners to cultivate the capacity to meet the substantially growing demand. One of the consequences of this growing interest in lithium is that it is bringing increased cost mining assets online.

One of the numerous important considerations moving forward will be the pricing structure for the metals, and if they can be sourced with the consideration of ESG, and more importantly, considering the carbon emissions and miner safety. Apart from the concern for raw materials, there are other technological aspects to be considered for EV batteries, as OEMs are expected to deliver batteries that are good enough for the consumers, to persuade them to make the switch to electric vehicles. Range anxiety is a major factor that is a consideration for numerous drivers, as they carry concerns that a battery will not be able to take the vehicle as far as ICE can.

The repeated improvement of the batteries will play a massive role in the advancement of the EV market, along with other factors such as sustainability, cost, and new technology, which are all of interest to both OEMs and consumers. In the long term, organisations are looking into bringing more competitive products into the market. To achieve this, however, they will have to bring R&D sectors closer to the markets and expedite their product development processes and attract and retain required talent.