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New suppliers are racing to join the electric car market

WOKING, England, Jan 23 (Reuters) – The global auto industry has poured $1.2 trillion into electric vehicle (EV) development, providing a golden opportunity for new suppliers to take on contracts that provide everything from batteries to motors and inverters.

Startups specializing in batteries and coatings to protect EV parts, as well as suppliers traditionally focused on niche motorsports or Formula 1 (F1) racing, are chasing EV contracts. Automakers design platforms that last a decade, so high-volume models can generate big revenues for years.

The next generation of electric vehicles is due around 2025 and many automakers have been looking for help to fill gaps in their expertise, providing an opportunity for new suppliers.

“We’re back to the days of Henry Ford when everyone is asking ‘how do you make these things work?'” says Nick Fry, chief executive of F1 engineering and technology firm McLaren Applied.

“It’s a huge opportunity for companies like us.”

Acquired from McLaren by private equity firm Greybull Capital in 2021, McLaren Applied has adapted an efficient inverter developed for F1 racing for EVs. The inverter helps control the flow of electricity to and from the battery.

The IPG5 silicon carbide inverter weighs only 5.5 kg (12 lb) and can extend the EV’s range by over 7%. Fry says McLaren Applied is working with about 20 automakers and suppliers, and the inverter will appear in high-volume luxury EV models from January 2025.

Mass-market automakers often prefer to develop EV components in-house and own the technology themselves. After years of pandemic-related parts shortages, they are wary of over-reliance on suppliers.

“We simply cannot afford to rely on third parties investing for us,” said Tim Slatter, head of Ford ( FN ) Britain.

Traditional suppliers such as German heavyweights Bosch and Continental ( CONG.DE ) are also investing heavily in electric vehicles and other technologies to stay ahead of the fast-changing industry.

But smaller companies say there are still opportunities, especially with low-volume manufacturers that can’t afford huge investments in EVs, or high-performance automakers looking for an edge.

Croatia’s Rimac, an electric hypercar maker partially owned by Germany’s Porsche AG (P911_p.DE) that also supplies battery systems and powertrain components to other automakers, says the undisclosed German automaker will use Rimac’s battery system in a high-performance model – with annual production of around 40,000 units – starting this year, with more to come.

“We have to be 20%, 30% better than what they can do and then they work with us,” says CEO Mate Rimac. “If they can make a 100-kilowatt-hour battery, we have to make a 130-kilowatt pack in the same dimensions for the same price.”

THERE IS NO TIME TO WASTE

Some suppliers such as Cambridge, Mass.-based Actnano have long relationships with EV pioneer Tesla ( TSLA.O ). Actnano has developed a coating that protects EV parts from condensation and its business has expanded into advanced driver assistance systems (ADAS) as well as other carmakers including Volvo ( VOLCARb.ST ), Ford, BMW ( BMVG.DE ) and Porsche.

Californian startup CelLink has developed a fully automated, flat and easy-to-install “flex harness” instead of a wire harness for grouping and routing cables in a vehicle. CEO Kevin Coakley would not identify the customers, but said CelLink’s harnesses have been installed in about a million electric vehicles. Only Tesla has that scale.

Coakley said CelLink is working with U.S. and European automakers, as well as a European battery maker, on battery wiring.

Others are focused on small-volume manufacturers, such as British startup Ionetic, which develops batteries that would be too expensive for smaller companies to make themselves.

“Electrification is currently costing too much, which is why you’re seeing some manufacturers delay electrification launches,” said chief executive James Eaton.

Since 1971, Swindon Powertrain has developed powerful engines for motorsport. But now it has also developed batteries, electric drives, e-axles and is working with around 20 customers, including carmakers and makers of electric vertical take-off and landing (eVTOL) aircraft.

“I realized that if we didn’t accept this, we were going to end up working for museums,” said CEO Raphael Cale.

But time may be running out.

Mate Rimac says that major car manufacturers have been trying to introduce EVs for the last three years and now they mostly have strategies.

“For those who have not signed the projects, I am not sure how long the window of opportunity will remain open,” he said.

($1 = £0.8226)

Reporting by Nick Carey Editing by Mark Potter

Our Standards: Thomson Reuters Trust Principles.

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