The Shift to EVs - Part 1

Auto Supply Chain Prophets

No one can predict the future. Even if we can plan and prepare for possible outcomes — like a war in Europe or a historic heat wave in China — there will always be unexpected challenges.

The automotive industry is the same way. The pandemic was unpredictable, and subsequent supply chain issues led to lower-than-usual quality ratings. Even bigger changes are coming soon as the industry shifts its focus to electric vehicles. Suppliers need to be ready, says Gary Vasilash, an editor with Gardner Business Media who has been writing about the automotive industry for 30 years.

In this first episode of a special two-part series of Auto Supply Chain Prophets, we talk with Gary about what the industry looks like today as it gets ready to make the big leap toward EVs and new technology.

Themes discussed in this episode:

• What the aftermath of the pandemic can tell us about contingency planning within the automotive industry.
• The hidden reason behind unusually low JD Power quality ratings.
• What automotive suppliers should do now to prepare for the shift to EVs.
• Why Original Equipment Manufacturers (OEMs) are beginning to “insource” more parts.
• Why improving visibility into your company will help you survive the future of the automotive industry.

Featured on this Episode

Name: Gary Vasilash

Title: Transportation Editor, Gardner Business Media

About: Gary Vasilash has been working for Gardner Business media for 30 years, where he writes about design, engineering, manufacturing, and management within the automotive industry. He also co-hosts Autoline After Hours, a weekly podcast for car lovers and auto industry enthusiasts.

Connect: LinkedIn

At the heart of The Prophets’ vision are “The 24 Essential Supply Chain Processes.” What are they? Find out, and see the future yourself. Click here

Episode Highlights

Timestamped inflection points from the show

[1:37] Unpredictable: Today’s guest, Gary Vasilash of Gardner Business Media, weighs in on current auto supply chain disruptions and what they say about risk assessment and contingency planning within the industry.

[5:11] An alarming trend: One of the consequences of the pandemic on the auto supply chain industry has been a dramatic increase in recalls alongside poor JD Power initial quality ratings. Gary explains why this happened and what to expect in the future as we move toward electric vehicles.

[7:01] The hidden factor: Gary explains a hidden, non-pandemic reason behind the lower-than-usual JD Power ratings this year: new and unfamiliar technology.

[10:00] Changes are coming: Even before the pandemic, suppliers had a hard time tracking down parts needed to repair conventional ICE vehicles. Will the shift to EVs exacerbate this trend, and what should suppliers do to be ready?

[12:26] The big shift: A major transition to EVs is coming, and suppliers for ICE engine parts should start thinking about transition or exit strategies, Gary says. In this segment, he offers suppliers some advice on how they can be best prepared.

[14:55] Blast from the past: The shift to EVs has come with an unexpected side effect for OEMs: a rise in insourcing for additional parts like seats. Could this mark a shift back toward vertical integration? Gary and host Cathy Fisher weigh in.

[16:36] The one thing: Gary offers his most important piece of advice for auto supply chain leaders who want to regain stability in the supply chain: allow visibility into your company.

Top quotes

[3:14] Gary: “How can you plan for this? I would submit that you just simply can't. It would be nice to say, yes, if we had perfect visibility everywhere, we wouldn't have these problems, but you know what? Things happen.”

[4:09] Gary: “The problem with COVID is that no one had a manual that told people what to do. Suppliers and car companies literally had to write those manuals. They had to figure out, how do you deal with a workforce that may not show up on a given day? [...] And so you have the companies that knew what they needed to do and how they needed to do it. You had those who are saying, I'm really at a loss here. I need some help.”

[12:13] Gary: “If you're a supplier and what you're doing is making parts for internal combustion engines, you've got to start thinking about what your strategy is going to be going forward, and that strategy may be an exit strategy.”

[14:11] Gary: “What you're going to be seeing here is not necessarily a balance of the tier suppliers as much as OEMs taking a look and saying, Okay, what is it reasonable for us to be making? And what that may be in 2022, going forward to 2030, is going to be a whole lot different than it was in 2021 going back to 2010. It's a different game. So there is certainly an awareness that they need to keep their eye on the outsource part, and the insource part, which is a big change.”