Designing a sustainable future for the electrified automotive value chain

Unprecedented demand, rapid market expansion and limited future resources mean OEMs need to urgently prepare for operating in a highly competitive future.

In under 20 years, Tesla has gone from a start-up to the most valuable automotive OEM in history and now every other legacy car manufacture is playing catch up. In order to compete, companies are rapidly developing their own EV product lines with a hope to try and retain market share in the electric future. This changing landscape has created new companies, with the sole focus on developing and producing batteries on a “giga” scale to keep up with projected demand. But without a collaborative approach to development from OEMs, mining companies and recycling facilities, all this development may be in vain if predicted bottlenecks in raw material supply and sustainability concerns become a reality. OEMs need to start to pre-emptively be two steps ahead of known future issues and urgently need to consider a wider holistic view of what intelligent technology and sustainable business plans will be required to underpin their automotive future.

Unsustainable supply chains look to be the next major bottleneck in the electric transition.

Volatility and shortages in supply of key materials like Lithium, Nickle and Cobalt is the major point of concern with the rapid transition to EVs. Currently, OEMs have the capabilities to make electric vehicles, but if battery materials are not produced at a comparable rate, then the just-in-time supply chain that underpins the industry could grind to a halt. The European Commission predicts these key materials to be in deficit as early as 2025, highlighting the importance of ensuring a robust supply chain and sustainable sourcing of raw materials. Already stretched due to limited supply, accelerated iterative battery design and chemistry developments will soon create significant shortages in upstream battery production. The automotive industry therefore needs to transition to more collaborative supplier relationships, allowing for flexible sourcing to mitigate fluctuations in demand caused by changes in battery design.

Cross-value chain approach to vehicle design is a necessity to create an optimised circular economy.

Not only will future battery technology changes have an impact on upstream supply chains, but they will also have a knock-on impact throughout the battery’s future lifecycle. Sustainable design engineering needs to be at the forefront of battery and EV design, with an emphasis on designing with circularity in mind as illustrated in Figure 1 (below). Recycling companies are looking to address EV circularity issues with leaders in the industry such as Glencore, Veolia & Redwood Materials expanding facilities to handle the surge of degraded EV battery packs that require disposal. But to improve the level of circularity within this ecosystem required to reach their claimed 95% recycling rate of key materials, a more collaborative approach to battery pack design is required.

At present, the sector is highly dispersed in its battery designs and charging strategies. Some companies such as NIO are concentrating on battery swaps, with their competitors like Tesla investing in fast charging. Others like Momentum Dynamics have diverged completely and are focusing on developing wireless charging technology. This makes the sector feel almost reminiscent of the handheld tech industry in the mid-2000s, with a multitude of charging cables and old batteries now confined to the bottom kitchen drawer. But unlike the tech of old, these pieces of tech won’t quite fit in a drawer and serious thought needs to be taken around the circular design of batteries, what ownership model OEMs will deploy and will they look to retain the precious metals in the cells that will be in short supply in the future. OEMs can overcome this by adapting their operating models to make strategic decisions around the level of vertical integration across the vehicle value chain, forming key strategic partnerships with recyclers, logistics companies and battery producers. Companies will have to collaborate at pace using agile principles to develop new products using whole lifecycle assessment tools, ensuring downstream and upstream activities are not impacted, but optimised for retention of product value.

Improvements in battery traceability will lead to legislative clarity and improved downstream lifecycle assessment.

With the next predicted phase of personal transportation being an autonomous, ride sharing Mobility-as-a-service (MaaS) industry, the EV value chain will continue to shift to match this future market. Supply chains and business models will have to be prepared to be ever more flexible and agile as the industry evolves, in order to open up new revenue streams and circular economy pathways; this could include battery leasing schemes, second life battery module sales and vehicle-as-a-service options for energy storage. This change of ownership model will increase vehicle utilisation, resulting in increased battery charge cycles, longer drive times and additional need for cell replacement and servicing. With new levels of use case complexity, one solution currently being explored to simplify ownership and traceability would be to issue batteries with a digital passport. Improvements to information management would provide the industry with much needed clarity on legislative procedure, whilst also giving companies access to key lifecycle metrics. OEMs could track and retain precious raw materials whilst assessing performance and sustainability information, leading to accurate predictive maintenance models and optimised circular product management. This data driven approach to operating a sustainable business model could be the key for OEMs to stay ahead of competition when costs of batteries fluctuate due to dwindling supply.

Early OEMs urgently need to redesign their value chains to be optimised for circularity in order to survive.

Changes across the new electrified automotive value chain will uncover new challenges, but it will also open up opportunities for new companies and cross-industry partnerships, giving access to novel value streams. To realise this future, OEMs need to rapidly assess their business models and look to urgently invest in resilient supply chains, life cycle assessment digital twins, collaborative sustainable by design practices, as well as strategic circular operating models, in order to survive in the new green tomorrow.

To read more blogs in the Intelligent Industry: Journey to The Manufacturer events series, see quick links below:

Still flying high after Farnborough International Airshow 2022 – Mike Dwyer reflects on the successes of the Farnborough International Airshow and looks forward to what we have planned for The Manufacturer events in Liverpool on 16th and 17th November.

The challenges of adopting Industry 4.0 – Do you have the vision? – Graham Upton explores the challenges organisations face when adopting Industry 4.0.

Enabling the future of Manufacturing by focusing on people – George Hull shares his perspective on why the future of the Manufacturing sector is exciting but complex and explores the importance of focusing on people to champion best-in-class technology and processes.