How automotive supply chains must evolve for electric vehicles

With sales of electric vehicles (EVs) increasing each year, and new models making inroads in the market, it may seem to consumers like the future has finally arrived, or that a tipping point is just around the corner. But original equipment manufacturers (OEMs) know that the reality is far more complicated.

Across the industry, OEMs are facing pressure to innovate and invest in today’s products while carving out money to develop future vehicles with advanced technologies and unique parts. And they must confront plenty of hurdles.

For instance, not enough magnets have been mined to make all the electric powertrains that we need. It’s going to take 10, 15, 20 years — which is why you see a lot of the regulatory mandates for EVs set for 2030, 2040 and beyond.

EVs need to be able to stand on their own from a financial viability perspective. But as of now, the supply base for pure electric powertrain is not yet available to achieve global scale. There will be a transition period not only because of the scalability but because of the cost. Right now, the cost of an EV is significantly higher than a regular internal combustion engine.