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What motor sourcing says about a carmaker's
electrification ethos
Incumbent automakers are grappling with a big dilemma:
How fast to electrify their production capacity? And in so doing,
whether to prioritize flexibility of powertrain type (given
uncertain EV demand) or absolute scale? Furthermore, how do we know
which such strategies the various automakers favor?
Making own electric drives demands heavier up-front
investment
Automakers' decisions on 1) whether to build dedicated electric
product architectures; and 2) whether to manufacture their own
battery cells (or indeed assemble packs) are already quite well
scrutinized. However whether they make or buy their own electric
drive units (and in what ratio) is another enlightening metric. It
is a particularly interesting one due to the spread of approaches
among the major players.
Established electric players prefer to make their
own
Electric-only players tend to see electric drive units as vital
to efficiency and thus a source of competitive advantage. The units
comprise a high voltage inverter, the electric motor, and its
transmission components. Tesla and Lucid designed and build 100% of
their own and have been vocal about the benefits they achieve from
limiting energy loss in the designs. Meanwhile many incumbent
carmakers have started out sourcing drive units externally from
Tier 1 suppliers like Bosch. In between there are a range of
approaches. Hyundai (97%) and Renault-Nissan-Mitsubishi (85%) are
already overwhelmingly insourced, while Ford (2%) and Honda (21%)
are as of today largely outsourcing.
Tide shifting toward insourcing
We forecast a steady shift toward electric drive insourcing in
the coming decade driven in part by the US OEMs. However, there
will be many situations where outsourcing continues to make sense.
For example, Rivian has initially fully outsourced its electric
drive which helped accelerate its first product launch, while
subsequently developing its own. BorgWarner's recently announced
acquisition of motor supplier Santroll shows Tier 1s still see
significant volume growth in this space. Carmakers may never
insource electric drives completely. As mature as the internal
combustion engine is, that industry is 90% insourced, while 10% of
engines are externally sourced.
Posted 03 March 2022 by Demian Flowers, Automotive Financial Analyst, S&P Global Mobility and
Graham Evans, Director, Auto Supply Chain & Technology, S&P Global Mobility
This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.
