Value Chain Wars – How to win in Electric-Vehicle Supply Chains

Authors

C. Koehler - Strategy Engineers GmbH & Co. KG

Summary

Recent shifts in the automotive powertrain market are just a token of what is to come: Electrified and fully electric (xEV) powertrains will increase their market share dramatically within this decade. This will hugely change the component market: The findings of our research suggest that the powertrain component market is expected to grow by 300 billion Euro until 2030 reaching 656 billion Euro. This growth is mainly driven by xEV components, which are expected to increase their market share from 1/6 of the total powertrain market to almost half.

Even though all the xEV powertrain components in scope are increasing by three- figure percentages, high voltage batteries remain the most important system. Batteries are not only driving the market growth but remain, due to their high per-vehicle price, also the main obstacle in reaching cost parity between ICE-based and BEV-powertrains.

Legal and statutory requirements will make internal combustion powertrains more ex-pensive, but cost parity between ICEs and BEVs will be elusive before 2030 according to our findings. In 2025 for example, a C-Segment BEV powertrain with a 60kWh battery is expected to still be 2,500 Euro more expensive than a gasoline P2 MHEV. This gap is smaller for larger and more premium vehicles which is one of the key reasons for today’s portfolio shifts which OEMs are making.

Our research suggests that OEM profitability within this decade will suffer because of increasing electrification unless cars are sold at a price premium, OEMs strategically move to larger cars, other vehicle parts become significantly cheaper or a breakthrough in battery price (and technology) is achieved. All these levers need to be pursued to defend vehicle margins. If not, increasing BEV powertrain costs will lead to drastically decreasing automotive profits in this decade.