Why Automakers Are Looking for–and Leaning on–Smarter Suppliers
Despite the billions of dollars currently invested in the development of automated, connected, electric, and shared (ACES) vehicles, there are no safe bets in the automotive industry today.
In November, General Motors said that it intends to make investments in next-generation, battery-electric architectures a priority for future vehicles, and will double the resources it allocates to electric and autonomous vehicle programs in the next two years. The company said that it is "evolving its global product development workforce and processes to drive world-class levels of engineering in advanced technologies, and to improve quality and speed to market."
At the same time, the company halted operations at its propulsion plants in White Marsh, Maryland, and Warren, Michigan, as well as at assembly plants in Oshawa, Ontario, Canada; Detroit-Hamtramck; and Warren, Ohio.
The automotive industry today may be nearing an inflection point that could clarify much of the uncertainty surrounding its future.
When you consider the capital already tied up in the development of autonomous, connected, electric, and shared vehicles; the costs that suppliers are footing for increased prices of raw materials; and factor those into the costs of future vehicles, you may get an industry that either passes the price along to the consumer and reduces sales, or an industry that doesn't pass the price on to consumers and massively reduces profits, which hurts long-term viability. That's what Brett Smith, director, propulsion technologies and energy infrastructure at the Center for Automotive Research (CAR) in Ann Arbor, Michigan, recently told Design-2-Part.
"You get to a point right now, where, as an industry, you start to shake your head and you say, 'Dang, we could be in for a rough ride,'" said Smith.
Only time will tell whether ACES technologies will work well enough to safely put a vehicle on the road without a driver. But other uncertainties remain as to whether new business models will work, and what the impact of new fuel economy regulations might be. There are also concerns about tariffs, trade issues, and their impacts on manufacturers and suppliers. And with the possibility of a recession looming, how will automakers react?
Yet, despite these uncertainties, there are clear opportunities for suppliers who are smart enough to recognize them and quick enough to act on them. Automakers and high-tier suppliers to the industry are looking for suppliers who can help them navigate the new product development challenges of a changing industry. The electrification of vehicles–not just of the propulsion system, but of the vehicle's systems and subsystems, too–is revamping the design process and the parts and processes required of the supply base.
The new requirements around electrification and automation of the vehicles are forcing OEMs and high-tier suppliers to find entirely new suppliers whose capabilities closely align with the electrical and electronics functions of a vehicle's systems.
"When you introduce disruptive technology, when you electrify a system that previously had a different design approach, what happens? Suddenly, the hydraulic lines, hydraulic pump, and a master cylinder–all these things that the OEM was procuring–have now changed," said Ken Beller, vice president at Weiss-Aug Co., Inc., in an interview with D2P. "Now he has to go and buy an electric motor, and he needs high-power interconnects and wires and all these things that before weren't required in the system. So, he is forced to establish supplier relationships with a whole new set of suppliers that he hasn't worked with before."
The new ACES technologies will encourage automakers to rethink their design strategies in a number of other ways, as well.
One of the key differences between ACES vehicles and traditional, individually owned cars will be their dramatically different rates of use and occupancy within a given period of time. Shared vehicles log more miles on the road each day while carrying greater numbers of passengers than individually owned cars, which tend to sit idle for longer periods of time. That's why researchers at The Center for Automotive Research believe the move toward ACES vehicles will encourage the design of more durable components that can better withstand repeated opening and closing of doors, for example.
Also, light-weighting strategies have been a big part of automakers'efforts to meet fuel economy requirements in recent years. But the emergence of automated, connected, electric, and shared vehicles gives automotive OEMs new reasons to design parts that weigh less than their predecessors. That's because these new vehicles will carry batteries, sensors, and various other components that add weight to the vehicle, according to CAR.
Today, automakers are looking for–and leaning on–companies that can provide capabilities like prototyping, assistance in designing and developing sophisticated new products, and innovative solutions to problems they haven't encountered before. These are the things that are important in programs that are coming online for the first time.
"Advanced technology is really taking hold today at an increasingly fast pace, where, from a design perspective, carmakers are doing things that they haven't done before," said Beller. "In those areas, there's more focus on innovation and your fundamental capability to provide a product that's going to meet their application requirements. So, they're less price-sensitive than they normally would be."
When your products are innovative, it's that much more important to work with suppliers who've had experience with innovation themselves. There's no magic formula for gauging their qualifications, but they should be comfortable with advanced technologies and sophisticated products that will need to be repeatedly tested.
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