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White Paper
ELECTRIC VEHICLES AND SMART

MANUFACTURING - A METAMORPHIC
AUTOMOTIVE SHIFT
A WARDS INTELLIGENCE WHITE PAPER PRODUCED FOR ROCKWELL AUTOMATION
AUTHOR: STEVE BELL, DIRECTOR, FORECASTING & DATA ANALYSIS

INFORMA TECH AUTOMOTIVE GROUP
Information Classification: General

EXECUTIVE SUMMARY
Prior to the COVID-19 pandemic, the major North American vehicle manufacturers had been slowly
embracing the move to electric vehicles and had been selective in embracing Industry 4.0/smart
manufacturing. The impact of the pandemic on supply chains, as well as consumers’ rapidly shifting
expectations around sustainability, has resulted in a global reset for the industry. There is a new
emphasis on cooperation and realignment of the industry supply chain to bring new technology and
innovation to market as efficiently as possible, and to be best positioned to adapt to rapidly changing
market requirements and new business models.
This whitepaper is based on a North American survey, completed in early 2021. It explores the degree to
which planning and strategy have manifested in real changes to the industry’s approach; specifically, the
technical challenges associated with the introduction of smart manufacturing and shifts in the supply
chain, as innovation is embraced to deliver an increasing portfolio of electric vehicles (EV) over the next
five years.
MARKET PERSPECTIVE
Historically, the low price of gas in the U.S. has acted as a drag factor on the acceleration of EV adoption
relative to the rest of the world. However, as the chart below indicates, this trend may be beginning to
change. COVID-19 has reemphasized the need for personal vehicles and has brought first-time younger
buyers into the market who are more concerned about climate change and low carbon emissions. The
shift in demand is reflected in the growth rates, even if the absolute alternatives’ [battery-electric vehicles
(BEVs) plug-in hybrids (PHs) hybrids (HBs) and fuel-cell electric vehicles (FCEVs)] numbers are still small
relative to gas vehicles.
Figure 1 North American Powertrain Sales 1st Half 2019 to 2020 & 2021 comparison
N.A Powertrain Sales

349,431
146% 691,602
8,055,699 7,598,490
281,181
6,131,299
1ST HALF 2019 1ST HALF 2020 1ST HALF 2021
Internal Combustion Engine (ICE) Alternatives (BEV, PH, HB, FCEV)
Source: Wards Intelligence
© WARDS INTELLIGENCE | EV’S AND SMART MANUFACTURING - A METAMORPHIC SHIFT | SEPTEMBER 2021 2

This trend shift will be reinforced by the federal government’s investment plans around nationwide
charging infrastructure to achieve a cleaner environment in the U.S. and contribute to the global initiative
to ensure carbon-dioxide reduction. This will start to address concerns about range anxiety and
availability of charging options.
Additionally, the major OEMs are ramping up their product portfolios with 34 BEVs scheduled for this year,
including General Motors’ Hummer and 44 additional BEVs identified for 2022. Overall, the major players
have publicly said that from 2025 to 2030 anywhere between 30% to 50% of sales will be BEVs. The
Wards Intelligence forecast for the U.S. and global markets predicts alternatives will account for 19% of
U.S. sales and 24% of global sales by 2026. So, although it’s currently only a small part of the U.S. market
(7%), the scene is set to change very rapidly, and all the global OEMs will need to address the challenges
of producing a mixed portfolio of platforms and products.
Figure 2 Global and U.S. Penetration of Alternative Powertrain Vehicles
30%
Alternative Penetration
25%
24%
22%
20% 20%
19%
17% 17%
15% 15% 15%
13%
12%
10% 10%
9%
7%
6% 5%
5% 5%
4% 4%
0%
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
GLOBAL Allternative % U.S Alternatives %
Source: Wards Intelligence
CHALLENGING TODAY’S PARADIGMS

The COVID-19 crisis has exposed the fragility of the current business models to the evolving supply chain.
Although the bulk of vehicles produced are still traditional internal-combustion-engine (ICE) based, they
have become far more software- and electronics-dependent over the past few decades. The disruption
that the pandemic created has revealed that the historic just-in-time supply chain is heavily dependent on
the semiconductor vendors. However, the semiconductor industry does not work to the same model and,
while previously it could accommodate the automotive industry’s vagaries of demand, the pandemic-
induced “seesaw” in demand was too much to absorb given an uptake in demand for consumer
electronics. The forecasting, ordering, stocking systems and expectations of both sides were totally
misaligned and out of sync.
As the diversity of technologies and materials increases and the complexity of chips accelerates, the
variety and newness of semiconductor suppliers will continue to rise. Under these conditions, the

requirement for a holistic view of the supply chain with a unified interconnected data model will become
the backbone technology for the industry.
In summing up the challenges the industry faces, there has been a compression of the much articulated
four trends - connectivity, autonomous, shared and electric (CASE) - into two trends that are driving a
rapid shift in future platform strategies. Namely, BEVs and sensor fusion for advanced driver assistance
systems (ADAS), both of which drive platform software and electric/electronic architecture simplification.
Battery and electric-motor technology, manufacturing and packaging are strategically critical to OEMs.
There has been an increasing commitment to R&D and capital expenditure to ensure that these become
core competencies, either in-house or within a tightly coupled supply chain.
In 2019-2020, the top 20 automotive OEMs spent just shy of $100 billion on R&D and capital expenditure
for EVs; this was on top of nearly $470 billion over the previous five years. The top five OEMs have all
made statements about EV investment and sales this decade. Ford is committing $22 billion between
now and 2025 for EV investments, and to achieve 40% of sales with EVs by 2025; GM is spending $27
billion for EVs. Stellantis, parent company of the Chrysler, Dodge, Jeep and Ram brands, is spending $34
billion on EVs and predicts 40% of sales will be EV by 2030. In Europe, Volkswagen is committing $83
billion to its EV development program. Overall, by 2025, the industry is anticipated to invest $120 billion in
EV production.
Designing and producing these EV and ADAS platforms is not just about R&D and capital expense
commitment; it also requires a mindset change at the top of the OEM organization. Perhaps Herbert
Diess, chairman of the board of management at Volkswagen Group, summed it up best when he said:
“There is strong evidence that many parameters, paradigms, rules of thumbs, heuristic knowledge and
experience we have accumulated over the past 100 years of automotive history will fundamentally
change. So, it is time to reinvent.”
How do you overcome 100 years of inbuilt resistance? From an engineering perspective, there’s a
requirement for a culture change to think of development in terms of speed. The core ICE technology
hasn’t fundamentally changed in decades, but now the new EV and ADAS technologies are innovating on
a very rapid cycle of months and years; incorporating this into existing design processes without
sacrificing efficiency, cost and safety requirements is a huge challenge.
Instead of the traditional single-purpose production line, the mixed-portfolio manufacturing operations
need to be built with variety, scale, flexibility and adaptability in mind in order to adjust to changes in
demand, as well as continuous battery and packaging technology advances.
Utilizing the power of cloud compute with simulation and mixed reality in combined computer-aided
design and manufacturing (CAD/CAM) systems, it’s now possible to configure and reconfigure
production processes and test dynamic routing plans for shop floor assembly cells. While contract
manufacturers such as Magna and new players such as Foxconn are adept at these concepts, and lean
startups working with cloud providers are moving swiftly up the learning curve, these changes are
momentous for automotive OEMs, with hundreds of single-purpose ICE brownfield sites scattered across
the globe.
The industry has a good idea of its future but implementing change in a fast and sustainable manner is
challenging. Although Industry 4.0 and digital transformation were concepts that most in the industry
were aware of, there is now a realization that embracing them may be the key to who survives and who
doesn’t. Acceleration of digital automation and connected cloud systems, linked to IoT in plants, is
essential for a business in terms of meeting ESG commitments and delivering profitability in the
traditional business while embracing disruptive, fast-moving technology and consumer shifts to
sustainable products and systems.

Biggest Challenges in EV Development and
Manufacturing
NEW PLATFORM-BASED DESIGNS REQUIRE NEW MANUFACTURING METHODS,
MACHINERY AND TRAINING 40%
SHORTAGE OF REQUIRED SKILLS 33%
LACK OF UNIVERSAL STANDARDS FOR DESIGN & ENGINEERING, TEST OR
PRODUCTION 33%
SILOED DESIGN AND ENGINEERING DISCIPLINES EG. NVH, VEHICLE DYNAMICS,
AERODYNAMICS 30%
APPLYING NEW MANUFACTURING TECHNIQUES 23%
LACK OF SUPPLIER CAPABILITY 21%
LACK OF COLLABORATION BETWEEN DEVELOPMENT AND PRODUCTION 17%
SCARCE SUB-CONTRACT MANUFACTURING EXPERTISE IN THE MARKET 17%
MAKING OPTIMAL USE OF THE LARGER, MORE VARIED DESIGN SPACE VS ICE
VEHICLES 16%
PRODUCTIVITY 11%
OTHER 6%
0% 10% 20% 30% 40% 50%
Source: Wards Intelligence Survey Q1 2021 - 262 respondents
Against this background of unprecedented change, in February 2021 we surveyed 262 automotive
professionals in the North American automotive industry. Of those surveyed, 24% were with OEMs and
40% were with Tier 1/Tier 2 suppliers. Another 27% were from consulting/engineering companies.
We wanted to understand what the North American industry sees as its biggest challenges in EV
development and manufacturing today. There is a clear concern (40%) among respondents about the fact
that the new platforms require new manufacturing methods, machinery and training. This is reinforced by
33% being concerned about the shortage of required skills and a lack of universal standards for design,
engineering, testing and production. These challenges are unlikely to be helped by siloed engineering
disciplines, which worries 30% of those surveyed. Along with applying new manufacturing techniques
(23%), these top five challenges all reinforce the magnitude of change in engineering and manufacturing
technology, and of mindset highlighted earlier.
SUPPLY CHAIN AGILITY

The EV challenge extends beyond the OEMs, deep into the much-vaunted tiered supply chain that has
evolved over the past century to feed a very stable business model. Now, new players and technologies
are disrupting the cozy relationships. Traditional development processes, where the OEM was an
assembler of outsourced subsystems, are fundamentally changing with increased vertical integration,
particularly of electronic architectures and software. Additionally, there is tension in the system because
there are fewer parts within an EV, and so the size of the tiered supply chain will shrink.
Compounding this is a requirement for speed, adaptability and flexibility as EV design and development
evolves. A startup’s mindset is required, versus an established player’s traditional approach, to drive
faster launches and frequent refreshes. The build-once-and-optimize production approach has to be
replaced by new, flexible production processes and continuous improvement to deliver to a reframed
automotive value chain.

Today’s supply chain requirements are to reduce silos between existing entities and enhance agility by
leveraging multi-party cloud solutions to span the disparate IT systems and overcome antiquated
processes by leveraging common systems. Initially, focusing on new platforms and technologies, rather
than the deeply rooted systems supporting traditional ICE vehicles, enables momentum and builds a
network effect that allows sharing of apps and data, as well as adds value to the emerging EV ecosystem.
The cost and scale of the change is forcing more collaboration. As an example, a GM-Honda JV was
created to focus on sharing design teams and manufacturing technology to streamline the production of
both electric-powered and combustion-engine vehicles. As part of the project, GM will help develop two
new EVs for Honda, which will be built at GM plants and powered by GM’s Ultium batteries. In another
example, Ford and VW have an alliance to produce up to 8 million commercial vehicles and, separately,
the companies confirm they will produce a new Ford electric vehicle for Europe, to be based on
Volkswagen's Modular Electric Drive architecture (MEB). Another sign of the competitive turmoil and risk
associated with the EV challenge is that some U.S. OEMs have tried hedging their bets by partnering with
startups with mixed results: GM with Nikola, which appears doomed, and Ford with Rivian, which is
forging ahead.
Key EV components changed in the past 2 years
IT HAS NOT CHANGED SIGNIFICANTLY 58%
CHANGED KEY SUPPLIERS 10%
HAVE SOURCED COMPONENTS LOCALLY 10%
INVESTED IN DEVELOPMENT TO REDUCE DEPENDENCE

10%
ON IMPORTED MATERIALS
AUTOMATED PROCESSES TO PRODUCE COMPONENTS

6%
ON-SITE
OTHER 5%
0% 10% 20% 30% 40% 50% 60% 70%
Indicators of supply chain issues related to EVs were tested in the survey. The question was posed about
the impact of COVID-19 on sourcing of key EV components and what had changed in the past 2 years.
The good news is that 58% said nothing has changed significantly. This could be that volumes are still
relatively small and the suppliers are strategic, therefore accommodating the dynamics of demand and
technology change. Of those that had sourcing changes, 10% had changed suppliers, another 10% had
sourced components locally and a further 10% had reduced reliance on imports. A smaller number (6%)
had invested in developing automated processes to produce components on-site. This reflects the early
stages of adaptive manufacture and 3D manufacturing where the benefits are only now making their way
into the supply chain.

Changes to sourcing key EV components
MY ORGANISATION HASN’T CHANGED HOW IT SOURCES
46%
EV COMPONENTS
MATERIAL SHORTAGES 30%
COVID-19 23%
CHANGES TO GLOBAL TRADE AGREEMENTS 19%
OTHER 6%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Another measure of EV supply chain volatility examined in the survey was to understand why
organizations changed how they sourced key EV components. Again, there was relative stability, with 46%
stating there had been no change in how components were sourced. For 30% of respondents, material
shortages were the prime reason for change and a further 23% stated that COVID-19 had forced changes.
Although relatively low (19%), changes to global trade agreements were seen as having had an impact. It
can be assumed that, since EV and battery technology is increasingly being determined as a strategic
imperative by those nations where automotive is a significant economic contributor, the impact of global
agreements and restriction will increase.
In a 2018 interview with Wards Intelligence, GM noted that 60% of the its electricians and 85% of its
diemakers were approaching retirement. The company had instituted a new apprentice program for
advanced training to maintain the new equipment being introduced, such as robots, controllers and the
automaker’s quality-focused Global Manufacturing System. Skills shortage was already emerging as a
problem area in a traditional industry, where R&D and manufacturing had been built to absorb gradual
technology evolution from tiered suppliers and cascade it into long lifecycle products.
As the industry rejigs itself for EV development and manufacturing, there’s a requirement to boost not
only traditional skills but also the new skills required to rapidly develop, deliver and continuously iterate
EV and ADAS platforms with enhanced electronics and software. This must occur throughout OEMs’
engineering and manufacturing departments, as well as the tiered supply chain.
To determine where the skill gaps are within the industry, the survey asked respondents if they felt there
was an adequate base in the North American market for a range of skill sets. On a weighted average
basis, where 5 represents “strongly agree,” 3 is “neither agree nor disagree” and 1 is “strongly disagree,”
we found there was generally a passive perception of the challenges. Across 12 identified skill areas, the
respondents ranked traditional areas such as Infotainment (3.71) and Aerodynamics, Thermal and
Computational Fluid Dynamics (CFD) 3.70 as the areas where they had most confidence in skills
availability. The midpoint of the weighted averages is 3.46 and software development at 3.47 is close to
this, which is a positive indicator of what is a fundamental capability for the industry now and in the
future. However, the core technologies that are critical to the future platforms ADAS (3.31), battery/fuel
cell technology (3.14) and cybersecurity (3.13) are seen as areas where respondents had the least
confidence.

Assessment of Adequate Skill Base
INFOTAINMENT 3.71
AERODYNAMICS, THERMAL AND COMPUTATIONAL FLUID DYNAMICS (CFD) 3.70
FUNCTIONAL SAFETY AND CONTROLS 3.63
AUTOMATION AND ROBOTICS 3.62
TELECOMS, CONNECTIVITY 3.56
ELECTRICAL AND POWER SYSTEMS 3.55
SOFTWARE DEVELOPMENT 3.47
ELECTROMAGNETICS AND EMC 3.39
DATA SCIENCE AND MACHINE LEARNING 3.37
ADAS 3.31
BATTERY OR FUEL CELL TECHNOLOGY, CHEMISTRY 3.14
CYBERSECURITY 3.13
2.80 2.90 3.00 3.10 3.20 3.30 3.40 3.50 3.60 3.70 3.80
While the survey was not screaming skills shortages, it did indicate impending challenges in key areas.
The question that will increasingly be posed is, how to address them? Without doubt, a comprehensive
workforce strategy to address looming skills needs will be a part of not only OEMs’ and Tier 1 suppliers’
strategies but also supply agreements from the partners that feed them. It will be expected that partners
will help with a strategy that includes specific training services and remote support.
One advantage of the move to cloud-based, multiparty platforms is a common set of accessible training
and support material for services, processes and tools. In addition, one of the positive benefits of COVID-
19 has been the explosion of online video training mechanisms and content that everyone, from shopfloor
to C-suite, has access to. It can be anticipated that both training and remote virtual support will utilize
collaborative mixed-reality systems combining both virtual and augmented reality headsets and systems.
SMART MANUFACTURING
Industry 4.0 is about the application of smart practices and technology in manufacturing. It represents a
major shift in outlook and operations, particularly for the automotive industry. It builds on the use of
intelligent connected cloud technologies that enable diverse things and systems to work together. This
creates a manufacturing framework that delivers consistently refined and scalable process
improvements.
The smart automotive plants of today and tomorrow are leveraging robotics, industrial IoT sensors and
machines, together with analytics, to gain a competitive advantage. However, there is an increasing
requirement for low-latency and compute-intense decisions to be made near the points of operation. For
this reason, there is a growing use of private and hybrid 4G/5G networks to support edge computing and
AI on the plant floor. The use of private wireless networks using 5G technology enables the concept of
small-footprint, low-latency robots and cobots that can be easily reconfigured without any expensive
wiring to work safely in close proximity to workers in assembly cells.

As the growth of real-time data collection progresses throughout the OEMs’ manufacturing plants and
along the supply chain, this will feed and create a rich continuum of data from the cloud to the machine
edge. This requires a data tiering strategy that classifies, actions and stores data and will be the
feedstock for the emerging use of digital twin software. A digital twin is a virtual representation of a
physical object. At the lowest level this can be a machine, but this can scale to represent a real-time
digital counterpart of an entire production facility and the products produced. This tool has huge potential
for simulating new configurations and for predicting the impact of changes of processes in the plant.
Another application area is keeping track of components, software variations and updates over the
lifetime of a vehicle and its digital twin, which can be used for tracking and tracing across the connected
supply chain.
The survey looked at the degree to which smart manufacturing is being considered for EV production in
the North American market. We focused on the extent to which organizations are investing and found
that 72% have some plans and that a further 45% anticipate investing more in smart manufacturing.
EV and Smart Manufacturing

WE HAVE NO PLANS 28%
WE PLAN TO INVEST SLIGHTLY MORE 27%
WE PLAN TO INVEST THE SAME 23%
WE PLAN TO INVEST SIGNIFICANTLY MORE 18%
WE PLAN TO INVEST SLIGHTLY LESS 2%
WE PLAN TO INVEST SIGNIFICANTLY LESS 1%
0% 5% 10% 15% 20% 25% 30%
As has been emphasized throughout this paper, the increasingly close linkage between R&D and
manufacturing will be a critical capability for these new platforms. Additionally, rapid developments in
technology require a digital-native and startup mentality to be inculcated in the development process. The
ICE barriers to entry that prevented startups from competing with OEMs are tenuous to nonexistent in the
EV world. For this reason, we wanted to explore the extent to which automotive OEMs are investing, to
optimize their engineering and manufacturing processes toward Industry 4.0 as they move from ICEs to
EVs.
We asked respondents to assess 11 engineering and manufacturing processes and then scored their
responses on a weighted average basis, where 5 represents a “significant increase,” 3 indicates
“investments stayed the same” and 1 means “investments were significantly reduced”. Very few
respondents indicated they either significantly reduced or increased investment levels. The responses
were very anchored around no change. The ranked scoring may be considered a priority list for the
industry, and the fact that there is not significant change reflects the billions of dollars already committed
or planned. The highest scoring priority (3.20) was Multiphysics Computer Aided Engineering (CAE) and
co-simulation; the lowest score (3.04) was the introduction of digital twins in design and manufacturing.

Investment Plans For Engineering &
Manufacturing Processes Towards Industry 4.0
MULTIPHYSICS COMPUTER AIDED ENGINEERING (CAE)
3.20
AND CO-SIMULATION
MATERIAL MODELLING AND MATERIAL LIFECYCLE
3.20
MANAGEMENT
PRODUCT LIFECYLE MANAGEMENT (PLM) 3.19
INTELLIGENT MACHINE CONTROL (APPLYING QUALITY
3.18
DATA ANALYSES TO AUTOMATE CELL PRODUCTION)
AI/MACHINE LEARNING (IN ANY STAGE) 3.17
MODEL-BASED SYSTEMS ENGINEERING (MBSE) 3.16

SMART MANUFACTURING / DIGITAL THREAD
3.16
(INTEGRATING ENGINEERING AND MANUFACTURING…
VIRTUAL TEST DRIVE SIMULATION, ADAS SYSTEMS TEST
3.15
AND DEVELOPMENT
USE OF METROLOGY INSPECTION (IN ANY STAGE) 3.09
VIRTUAL MANUFACTURING (WELDING, FORMING, CNC,
3.08
MOULDING, ADDITIVE ETC)
INTRODUCTION OF DIGITAL TWINS IN DESIGN OR
3.04
MANUFACTURING
2.95 3.00 3.05 3.10 3.15 3.20 3.25
What may change the status quo of some of these processes is if EV demand and production process
radically changes. The concerns related to sustainability and carbon footprint are already making OEMs
pay attention to the sourcing and packaging of battery raw materials and components. Combined with
the cost of shipping, it is forcing a review of the benefits of smaller local manufacturing and supply
ecosystems. The requirement to differentiate offerings against multiple players and adapt to local market
requirements could also drive the use of additive manufacturing, to allow more variation later in
production on a more build-to-order basis but with local delivery.
A FOCUS ON EVs
“Never let a good crisis go to waste” is a mantra that change agents often have used to
achieve the fundamental shifts in behavior required for survival. All the top OEMs are
answerable to their constituent stakeholders, and the ramifications of COVID-19 on the
psyche of customers, employees, regulators, shareholders and government can’t be
underestimated. Seeing cities with significantly reduced pollution due to lack of traffic
congestion was a real eye-opener for many people. Combined with changes in work and
travel patterns, rapid advances in digital technologies and now the planned federal
investments in charging infrastructure, the scene is set for a faster than anticipated shift to
EVs in the U.S. markets as well as globally.

OEMs based in the U.S. that want to remain as top 10 players can’t ignore the fact that EVs
will now act as a catalyst for change for the entire industry business model. By 2030, when
combined with accelerating digital transformation, this momentum will result in an industry
that will be totally different from the industry that entered 2020. Only the most agile will
survive this metamorphic process.
In the survey we wanted to understand which drivers of EVs in North America were of most
concern to the industry. We asked, what developments were likely to play an important role
in enabling global automotive electrification?
Electrification Drivers
WIDESPREAD NETWORK OF HIGH-SPEED PUBLIC
68%
CHARGERS
BREAKTHROUGH BATTERY TECHNOLOGY (SOLID STATE OR
62%
OTHER)
BATTERY REUSE AND RECYCLING 39%
RANGE EXTENDERS (HYBRID) 26%
FUEL CELLS 26%
REDUCED RARE-EARTH MOTORS 17%
HYDROGEN PRODUCTION AND DISTRIBUTION 13%
ELECTRIFIED HIGHWAYS 12%
0% 10% 20% 30% 40% 50% 60% 70% 80%
The single-biggest development (68% of respondents) was seen to be a widespread

network of high-speed public chargers. So, the Biden Admin.’s recent infrastructure plan
should significantly boost the prospects for BEVs in this decade. The other area seen as
making a significant impact (62% of respondents) is a battery cell technology breakthrough,
especially solid-state technology. This already has been identified as a strategic imperative
for this pillar industry, with both government and industry R&D funding being directed at
the challenge. This is on top of the funds already being poured into building 80 new
gigafactories within the next five years. With this level of investment, it’s likely that there
could be both technology and process disruption. Battery cell reuse and recycling, seen by
39% as a key driver, reemphasizes stakeholder interest in circular economy and
sustainability strategies.

Biggest Risk To The Automotive Industry In
Pivoting From ICE To EVs
FAILING TO MEET CONSUMER EXPECTATIONS (E.G.
47%
RANGE, CHARGING TIME)
NOT MEETING THE NECESSARY PRICE POINT FOR
27%
CUSTOMERS
REDUCED PROFIT MARGINS 8%
PURE-PLAY EV COMPANIES WIN MARKET SHARE 7%
DELAYED PRODUCTION/TIME TO MARKET 6%
OTHER 5%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
There’s little doubt that there are significant risks associated with pivoting from ICE
technology to EVs. However, as the point was made earlier, the industry may not have a
choice in the matter; in reality, it could pose an existential threat to the existing players.
Given this, we posed the question as to what the industry saw as the biggest risks in
pivoting from ICEs to EVs. With absolute clarity, 47% of the industry believe that failing to
meet consumer expectations, particularly regarding range and charging time, is the biggest
risk. Significantly behind this, 27% were concerned about meeting price expectations. Other
aspects relating to profit, pure play competitors and delayed production gained significantly
smaller scores. It must be concluded that the incumbents clearly have their eye on the ball
and know what needs to be done.

EV Development & Manufacturing Process-
Greatest Inefficiencies
DESIGN COMPLEXITY AND OVERENGINEERING 41%
EXTENT OF COLLABORATION WITH OTHER OEMS 35%
SUPPLY CHAIN 32%
EXTENT OF PLATFORM SHARING ACROSS RANGE OF… 30%
MANUFACTURING OF COMPONENTS OR PARTS 28%
DESIGN & ENGINEERING PROCESSES 24%
SUB-ASSEMBLY INTEGRATION 11%
ASSEMBLY (AUTOMATION) 10%
OTHER 6%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
An industry that has focused on cost for more than a century is going to hone its talents on
efficiency savings anywhere possible in the evolving EV development and manufacturing
process. Given that high battery cell costs are driving manufacturers to find efficiency
savings elsewhere, we posed the question: Where in the development and manufacturing
process did the industry think the greatest inefficiencies lie?
Interestingly, 41% have significant concerns that design complexity and overengineering
will result in cost inefficiencies. This is truly a reflection of the self-doubt the industry is
struggling with. Do OEMs really have the design, development and manufacturing capability
to compete with a lean, fast and constantly increasing universe of startups?
Compounding this challenge is the conundrum of the extent to which OEMs should
collaborate and cooperate with decades-old competitors. This is, of course, not ignoring that
the industry, particularly in Europe, is sensitive to the challenges of collusion when OEMs
cooperate. At least 35% of respondents see this as the second greatest challenge for the
industry. Not only do you need to pick your partner astutely from a technical perspective,
but you also need to know that your dreams and aspirations are aligned. An old analogy of
merger, acquisition and collaboration initiatives is that just because you share the same bed
it doesn’t mean you have the same dream. The technicalities of production are not seen as
being a significant issue.
One of the most important points that needs to be made is that no OEM is an island. They
now operate within an expanding and dynamic ecosystem, and therefore the regulations
and expectations of them may need to be rapidly revised and globally aligned if this pivot
industry is to continue to thrive.
For those on the edge of this changing industry, it means partners need to take a holistic
approach to the ecosystem and be willing to be flexible in order for both OEMs and Tier 1s
to accelerate and de-risk the transition strategy.

CONCLUSION
The shift in EV demand is reflected in sales growth rates, even if the absolute numbers are
still small. This trend shift will be reinforced by the federal government’s investment plans
around nationwide charging infrastructure.
As a result of the pandemic, there is a compression of the CASE trend into two core trends:
battery-electric vehicles and sensor fusion for ADAS. Producing these BEV and ADAS
platforms is not just about R&D funding and capital expense commitment; it also requires a
mindset change both at the top of the OEM organization and across the supply chain.
The industry has a good idea about its future but implementing change in a fast and
sustainable manner is difficult. There is clear concern among survey respondents about the
fact that the new platforms require new revised manufacturing methods, machinery and
training. Additionally, there is concern about the shortage of required skills as well as a lack
of universal standards for design, engineering, testing and production.
The survey looked at the degree to which smart manufacturing is being considered for EV
production in the North American market and found evidence of plans to invest. By 2030,
when smart manufacturing is combined with accelerating digital transformation, this
momentum will result in an industry totally different from the one we saw at the onset of
2020. Only the most agile will survive this metamorphic process.
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Informa Tech Automotive Group

ELECTRIC VEHICLES AND SMART

AUTHOR: STEVE BELL, DIRECTOR, FORECASTING & DATA ANALYSIS

Information Classification: General

N.A Powertrain Sales

1ST HALF 2019 1ST HALF 2020 1ST HALF 2021

Internal Combustion Engine (ICE) Alternatives (BEV, PH, HB, FCEV)

Source: Wards Intelligence

Information Classification: General

Figure 2 Global and U.S. Penetration of Alternative Powertrain Vehicles

GLOBAL Allternative % U.S Alternatives %

Source: Wards Intelligence

CHALLENGING TODAY’S PARADIGMS

Information Classification: General

Information Classification: General

0% 10% 20% 30% 40% 50%

Source: Wards Intelligence Survey Q1 2021 - 262 respondents

SUPPLY CHAIN AGILITY

Information Classification: General

Key EV components changed in the past 2 years

IT HAS NOT CHANGED SIGNIFICANTLY 58%

CHANGED KEY SUPPLIERS 10%

HAVE SOURCED COMPONENTS LOCALLY 10%

INVESTED IN DEVELOPMENT TO REDUCE DEPENDENCE

AUTOMATED PROCESSES TO PRODUCE COMPONENTS

0% 10% 20% 30% 40% 50% 60% 70%

Source: Wards Intelligence Survey Q1 2021 - 262 respondents

Information Classification: General

MATERIAL SHORTAGES 30%

CHANGES TO GLOBAL TRADE AGREEMENTS 19%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Information Classification: General

Source: Wards Intelligence Survey Q1 2021 - 262 respondents

Information Classification: General

EV and Smart Manufacturing

WE PLAN TO INVEST SLIGHTLY MORE 27%

WE PLAN TO INVEST THE SAME 23%

WE PLAN TO INVEST SIGNIFICANTLY MORE 18%

WE PLAN TO INVEST SLIGHTLY LESS 2%

WE PLAN TO INVEST SIGNIFICANTLY LESS 1%

0% 5% 10% 15% 20% 25% 30%

Source: Wards Intelligence Survey Q1 2021 - 262 respondents

Information Classification: General

MODEL-BASED SYSTEMS ENGINEERING (MBSE) 3.16

Information Classification: General

RANGE EXTENDERS (HYBRID) 26%

FUEL CELLS 26%

REDUCED RARE-EARTH MOTORS 17%

HYDROGEN PRODUCTION AND DISTRIBUTION 13%

ELECTRIFIED HIGHWAYS 12%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Source: Wards Intelligence Survey Q1 2021 - 262 respondents

The single-biggest development (68% of respondents) was seen to be a widespread

Information Classification: General

REDUCED PROFIT MARGINS 8%

PURE-PLAY EV COMPANIES WIN MARKET SHARE 7%

DELAYED PRODUCTION/TIME TO MARKET 6%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Source: Wards Intelligence Survey Q1 2021 - 262 respondents

Information Classification: General

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Source: Wards Intelligence Survey Q1 2021 - 262 respondents

Information Classification: General