Companies supplying components for electric vehicles are poised for growth. But those that aren’t will not necessarily be in decline, however. At least, not yet.
Suppliers making products that support propulsion using an internal combustion engine (ICE), are either stagnant or declining, according to a new automotive supplier report from Deloitte. But they’re still making parts for a massive part of the market.
On the other hand, electric vehicle component suppliers may have a smaller customer base at the moment, but business is picking up, reported Jason Coffman, Raj Iyer, and Ryan Robinsonin Deloitte’s 2021 Automotive Supplier Study.
They point to analysis of financial data from almost 300 top global automotive suppliers. When projecting out until 2025, “exponential growth” is expected in segments such as electric drivetrains (up 475 per cent); batteries and fuel cells (up 475 per cent); and ADAS1 and sensors (up 150 per cent).
Though calling these figures “eye-popping,” the report warned that the industry and its investors shouldn’t dismiss just how important legacy component parts still are.
“Simply put, fossil-fueled engines are not going away anytime soon, so there is still a lot of mileage left in these parts,” the authors wrote. “Not only will internal combustion engine vehicles continue to be sold in significant numbers for the foreseeable future, but the market for replacement parts to keep these vehicles going well into the next decade is also expected to be very robust.
“In addition, hybrid powertrain systems, including both an ICE and electric motor, should continue to play an important role for consumers that still see a fully electric vehicle as a step too far.”
Putting this into dollar values, Deloitte predicts the electric drivetrain market size will grow from $11 billion in 2020 to $64 billion in 2025.
The ICE market size will drop 15 per cent in that same timeframe, going from $144 billion down to $123 billion. That’s still the biggest segment of automotive components, though. Other areas expected to see a drop in market share include brakes (5 per cent), transmission (10 per cent), exhaust systems (15 per cent) and fuel systems (15 per cent).