The Future of Automotive Manufacturing

Companies are always minimizing costs while maximizing returns. In many ways, this is one of the things that has, originally, slowed the transition to an eco-friendlier economy. That, however, has started to change.

Investments in green tech has lead to a leap in new technologies that promise the same quality of goods at a lower cost when they come from eco sources. On the other hand, there is an eco-friendly movement that actively avoids purchasing or investing in companies that are not ecologically minded.

To put it simply, in the new post-pandemic decade, it has become imperative for corporations to add a focus to the environmental side of ESG.

Going Green

The good news is that this has never been easier or cheaper. Constant investment in eco-tech has led to drops in prices in high-efficiency solar cells, while governments are investing heavily in their local production to cut costs for various technologies, including net-zero steel. Indeed, there may come a time soon when purchasing carbon-heavy sourced materials is more expensive than the alternative.

Beyond the added green tech, there are other things that will affect the future in manufacturing, including:

• Increasing automation leading to a change in how work is performed
• Improved digital technology adoption in data management and the aforementioned automation robotics
• Changes to the supply chain like onshoring and self-driving vehicles

These trends will add to changes in the way manufacturers do business.

Indeed, one of the most noticeable parts of the green revolution is the near complete commitment of car manufacturers to decrease, or completely halt, their usage of internal combustion engines (ICE). In a world of EVs, what will this mean for subcontract companies that depend on making parts for ICE vehicles?

A Decade of Preparation

There are many opportunities to the well-established supplier of automotive parts. When it comes to making vehicles, nothing gets done quickly. With companies announcing their commitment to net-zero and setting a timeline, this gives you a chance to start planning how you can adapt to your new future.

While the short term will see little change, the mid-term (5 years or less) will likely start seeing a steep decrease in sales for transmissions, engine systems, and fuel systems. If these items are your bread and butter, it can be imperative that you look to diversify your production. This means you need to review your products and start focusing on those products you make that still have growth potential. This will likely include aftermarket supplies and a focus on expanding your offerings.

Research, Merge, Build

These changes can mean sink or swim for your company. You need to invest so that you can be in a position that allows you to adjust the flow, instead of being the one reacting to the current. Considering your market, there are a few options available to you:

• Increase your research into products that the market will need
• Look for mergers and acquisitions that offer you an easy buy-in with a product line that you want to move into
• Start building your brand recognition for after-market parts, setting you up as the supplier in B2C instead of B2B

The good news is still the slow and steady pace of implementation. With enough time to prepare, you are in a position to move into a first-mover advantage. To help you understand your options, consider the following:

• Will this create value?
• How can we update the production chain?
• What is the best strategy for the business?
• What capacity changes will we need for the coming decade?
• What changes do we need to make to keep and grow staff and staff engagement?

Conclusion

These are unparalleled changes for the automotive industry. Some companies will never have seen such a drastic change to their operations or product-line. However, there are other industries that have seen this type of shake-up before. Understanding the steps those companies have taken can help you understand what you need to do to thrive with the coming EV revolution.

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