Administrations, society and the market demand sustainable vehicles and manufacturing processes. This has forced automakers to reinvent themselves, but is putting many suppliers in a sticky spot.
More and more car manufacturers are embarking on the path of sustainability. And we are not referring only to the power trains, that is, to the hybrid systems (plug-in or not) and to the electric ones.
The transition to sustainability goes through reinvent the way to make a car, as well as the materials with which it is configured. The Mercedes EQXX is an extreme example of this, but it is not the only one that gives us a glimpse of the future. And it won’t be the first either, as there are currently many vehicles on the market that have begun the path of sustainability in materials.
“Carmakers are not willing to pay more for new, greener products, even luxury brands”
Suppliers, the weak link in the chain
That a manufacturer decides to modify its way of doing things inevitably influences its supplierswhich are sometimes just as powerful, as is the case with Bosch, but also small and vulnerable.
These are the ones who are suffering the most from the ecological transition, since they are forced to adapt to a new way of doing things that, moreover, is much more expensive. And all this in a climate of exaggerated inflation and exorbitant energy prices.
It might be thought that manufacturers, aware of the situation, relax their margins and conditions to give their suppliers a little air, but the reality is quite different in most cases. The argument is that they themselves have before them a monumental task if they want to reach the ecological objectives set by public administrations and their own boards of directors.
In this situation, providers have only one option: bear the additional costs to make its components sustainable and meet the aforementioned environmental objectives.
“If they don’t, they won’t have a business in five or six years supplying major automakers”, tells Reuters Shane Kirrane, commercial director of Autins Group, which has manufacturing plants for acoustic and thermal insulation in Great Britain, Sweden and Germany.
And, although the large providers have a greater margin and financial muscle, the truth is that they are not exempt from suffering the consequences. According to its CEO Emanuele Buscaglione, the manufacturer of plastic and rubber components Sigit invested 10 million euros between 2019 and 2020 to create a research center in Turin with the aim of developing a recyclable thermoplastic compound that is 90% lighter than the metal part it was supposed to replace.
“The problems in the supply chain that began during the pandemic, plus the skyrocketing costs, They have killed our margins and created the perfect storm for the industry.”says Buscaglione.
Now, after three years of development, the Swiss-Italian company already has its first contract with Stellantis for its vans. “We are trying to concentrate the few resources we have available on innovation”points out before revealing another paradox.
“Until now, Sigit’s automaker customers were unwilling to pay more for new, greener products, even luxury brands”, reveal. “The challenge of passing on additional costs to customers is anything but trivial.”
A titanic task for manufacturers… and suppliers
Absolutely all current car manufacturers have made environmental commitments, there is no other option to survive in an industry that is being scrutinized in the midst of the decarbonization and sustainability race.
While BMW aspires that all its batteries and most of the steel and aluminum used be made with renewable energy, Volvo It sets a goal that 25% of the plastic in its cars be recyclable by 2025.
Mercedes Benzmeanwhile, also aims to widely use recyclable material and green steel made from renewable energy in its cars, though it admits this is “a monumental task” for suppliers.
volkswagen, with the goal of reducing carbon dioxide emissions from its vehicles, including its supply chain, by 30%, has reported that it has a collaborative relationship with suppliers. He even cited a joint program he created to tackle rising energy prices, though without providing details, Reuters reports.
“We use the term disruptive all the time, but it’s so much more than disruptive,” says Joe McCabe, CEO of AutoForecast Solutions. “We are going to see a huge shake-up in the next 5 to 10 years in the auto supply chain”.
“Suppliers are being asked to develop new technologies to support EVs and invest in a greener supply chain with volumes we don’t think are achievable based on actual RFQs” McCabe adds. “But automakers are also telling suppliers: “If you want to be part of this new green revolution, give me the best possible price so I don’t go to the competition”».
Photos: Freepik