Is your automotive supply chain charged for the future?

The rising role lead logistics needs to play to support the automotive industry’s electrified future

The automotive landscape is changing at a rapid pace. And at the forefront of it all is the drive towards electrifying vehicles. With government regulations spearheading the shift, vehicle production lines will now include hybrid and electric vehicles, manufactured alongside ICE powertrains. Forcing OEM assembly plants to rethink their supply chain strategies.

At the heart of the automotive industry’s electrified future is the need for lithium-ion batteries. This crucial component currently represents 30-40% of an EV vehicle’s value. With global volumes of pure electric vehicles expected to increase by nearly 9 times over the next decade, OEM manufacturers, battery suppliers and lead logistics providers have come together to take the first steps to ensure an agile and resilient supply chain is in place to scale-up battery raw material procurement and production.

The automotive industry’s electrified future will be a long journey of transformation. The rise of battery cell gigafactories and localised battery pack production will be an important and ongoing part of this development. This supply chain regionalisation will itself spur even more complexity in global supply chains, especially as upstream components and materials continue to be sourced in far-flung locations.

Furthermore, ICE sales and production will not disappear overnight and will likely continue for decades. With multiple powertrain supply chains running in parallel – along with new technology including fuel cell and later solid-state batteries coming online – the next decade or more will likely see even greater variety of part numbers and complexity in supply chains. 

Much of the focus of the battery supply chain today is on new electric vehicle production. But as first generation EVs gradually come out of service, there will be considerable aftermarket and reverse logistics opportunities. Transporting new batteries is a complex business but moving used and potentially damaged batteries creates a whole new set of safety challenges. Battery recycling and return logistics is highly specialised and will require capable operators to manage the process safely and effectively.

These developments only reinforce how important it will be for manufacturers to pursue closer partnerships with logistics providers. In the short term, they will need these experts to ensure battery transport, packaging and storage follow the right regulations. But as regional supply chains develop, they will need fully integrated solutions that manage material and components across intercontinental shipments, regional supplier consolidation and just-in-time, sequenced flows. And with the importance of battery recycling, manufacturers will ultimately want to work with partners with a lifecycle perspective.

Logistics companies that embrace and navigate this transformation proactively will benefit. But it is OEM and battery manufacturers who stand to gain most, especially those pursuing logistics partnership that go further than is common for many ICE vehicles. For EV and battery producers, now is the time to design logistics networks and supply chains, and work together at the earliest stages in product, plant development and supply chain design. In this way, logistics will help charge the battery supply chain revolution.

Discover more about battery logistics here: Automotive supply chain management - Battery shipping | Maersk