3d rendering group of electric cars with pack of battery cells module on platform in a row

The next big thing in EV production

Related topics

eMobility
Automotive

Contract manufacturing is bringing a significant disruption to the electric vehicle (EV) production landscape.

Questions to ask
  • How should automobile companies navigate the complex transition from internal combustion engines (ICEs) to EVs?
  • What is the best way to address challenges related to technology, capital investment and scalability?
  • Are you prepared to win over the complexity and ambiguity in future operations and operating models?

Download the whitepaper: Addressing electric vehicle manufacturing challenges

PDF (3 MB)

The electric vehicle (EV) industry is growing rapidly, with more and more companies entering the market. However, one of the biggest challenges faced by EV companies is the high cost of building their own manufacturing facilities. EV companies need to evolve, adapt and overcome various manufacturing challenges, such as high costs, scalability and efficiency. Contract manufacturing is becoming an increasingly important strategy for EV companies to address these challenges and stay competitive in a rapidly evolving market.

How EY can help

Contract manufacturing offers multiple advantages to both traditional automobile OEMs transitioning to EVs and early-stage OEMs. For traditional OEMs, this approach may reduce the cost of manufacturing and add flexibility, in addition to reducing the need for near-term capital expenditures and leveraging production capabilities and capacity. For early-stage OEMs, it can save capital costs associated with building and equipment for their own factory, as well as increase their ability to pilot concepts and scale up production.

 

There are also potential downsides to contract manufacturing. Key among them is ensuring quality. Additionally, there may be intellectual property concerns in sharing the design and technology with the contract manufacturer. To overcome these, EV companies are exploring various business models, including shared manufacturing and electric skateboard sharing.¹

 

Despite these challenges, the trend toward contract manufacturing in the EV industry is expected to continue. Contract manufacturing can offer the EV companies, a way to quickly bring their products to market without huge capital investments. Reduced costs, quicker time to market and scalability makes the contract manufacturing model increasingly popular.

 

If you are a traditional automobile player or an OEM or pure-play EV company, are you looking for opportunities in EV contract manufacturing? This report explores various aspects of contract manufacturing of EVs, including supply chain disruption, key challenges and potential levers such as supply chain optimization to enhance profitability.

 

Download the full PDF report to learn more about how to address the emerging challenges and complexities related to the new ways of mobility, i.e., EVs and how contract manufacturing can benefit the EV manufacturers.

G B Joshi, Senior Manager, EY GDS and his team contributed to develop this article


Summary 

To maximize benefits from increasing EV demand, adoption of the right global supply chain and manufacturing strategy is important. This includes the usage of contract manufacturing and leveraging benefits associated with it. To that end, it is necessary to conduct a thorough functional and technical capability assessment of the entire supply chain ecosystem of EV contract manufacturing. The EY Supply Chain Solutions Practice helps automobile manufacturers and contract manufacturers to address and win over the complexity and ambiguity in future operations and operating models.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.