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Will Electric Vehicles Create a Disconnect for Component Availability?

Person plugging an electric car into an energy source. Learn more about EV components at Sourcengine.

Electric vehicle production has finally caught up with initial (and at times,unrealistic) demand. Now that the automotive marketplace has had enough time to allow practical technology and production schedules to meet predictions from ten years ago, it looks like the electric vehicle era is finally here.

Charging stations are more commonplace than ever. Car manufacturers continue to change production output from traditional gas and diesel powered automobiles to electric vehicles. It’s full steam ahead (actually, a no-emission steam ahead) for electric cars.

But what does that mean for your procurement team? How willclean vehicle demand impact parts supply for the overall electronic component market?

 

Electric Vehicle Demand =Limited Availability of Electronic Components?

While the future of electric vehicles is chock-full of groundbreaking advances and exciting developments, the marketplace is still tied to traditional market factors. Take one of the iron laws of marketplace economics: supply and demand. According to the Congressional Research Service, increased global demand for electric vehicles are projected to approach 2 million automobiles (plug-in and battery) sold in 2019.This comes on the heels of over 1.5 million electric vehicles sold during 2018.

Roughly 2% of all passenger vehicle sales are now the electric or plug-invariety, and will only increase in the coming decades. Some economists are looking at the year 2030 as the true tipping point for electric vehicle demand, as many developed countries have already mandated a significant switch from traditional gas-powered automobiles to electric vehicles.

Plus, surging demand from formerly developing countries like China and India will only spike electric vehicle production into the 2020s and 2030s. Just a generation ago, there were a few hundred thousand gas-powered vehicles in China. Today, there are approximately 20 million vehicles in the country. Many of these automobiles are expected to be plug-in and electric cars by the mid-2020s, with China expected to be a major consumer market for a projected 15 million electric vehicles by 2025.What’s more, the Indian automobile market, fueled by small car manufacturer Tata, could exceed Chinese demand in less than 20 years.

If you’re in the market for electronic components – whether directly tied to the electric vehicle market or not – parts availability for the months and years ahead is suddenly a concern. From Internet of Things (IoT)sensors and electronic components to connected infrastructure support (in-cabin Wi-Fi, processing units, andmore), electric vehicle production has created unique challenges for suppliers, engineers,distributors, manufacturers, and everyone else in the electronic components marketplace.Vehicles are becoming more personalized and customized all the time, and electric vehicles will continue this trend. Get used to the term “unified digital cockpit,” as companies like Texas Instruments are leading the way toward total connectivity with tomorrow’s automobiles.

And it’s not just the actual on-board components that will increase demand. Automotive testing labs use an assortment of sub-systems and simulation equipment to improve electric vehicle design. To cite just one example, magnetic powder dynamometers are utilized by some of the top vehicle manufacturers to optimize torque, power response, and overall engine performance. Combine the finished product components with the array of testing equipment needed, and it’s easy to see how electric vehicle demand will impact the worldwide marketplace for electronic components – and in many ways, it’s already started.

 

Drive Your Electric Vehicle Supply Chain Management in the Right Direction

With demand on the rise and component supply in doubt, your organization needs to leverage the global marketplace to keep production schedules and budgets ontrack. Electric vehicle demand will require next-level planning and supply chain management to keep pace. Take your e-procurement strategy to the next level with Sourcengine™, the leading e-commerce marketplace for electronic components for the electric vehicle industry, and every industry.

Our supply chain management tools and resources empower procurement specialists, designers, and everyone else involved in component sourcing. Sign up with Sourcengine today,or see a demo of our e-commerce marketplace, complete with BOM tools, traceable sources, worldwide shipping, and much more.

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