What it Takes to ‘Win’ the Unstoppable Electrification Race
It’s too early to place bets on the ultimate winners of the great vehicle electrification race, but the best odds are on automakers and suppliers that embrace disruption and empower innovation to fulfill customer expectations. The accelerated pace of invention and transformation across the entire electrified vehicle (EV) ecosystem is creating countless opportunities and obstacles, as reinforced in Molex’s recent survey, Innovation in Automotive Electrification.
The majority of automotive stakeholders polled believe the EV market is on the cusp of a major breakthrough despite a host of lingering challenges. Both legacy automotive OEMs and upstart EV companies are closing gaps in expertise and experience while seeking creative solutions to stem the pain of continued constraints in semiconductors and raw materials.
EV momentum is thought to exacerbate chip shortages, which makes sense considering that a Ford Focus typically uses roughly 300 chips whereas one of Ford’s new EVs can have up to 3,000. Supply chain constraints will continue to hamper go-to-market strategies worldwide but shouldn’t halt the wheels of progress in terms of ecosystem alignment and the emergence of new business models to realize global leadership.
A Time of Disruption and Transformation
Legacy and startup carmakers, along with the suppliers that support them, are stepping up their game to drive differentiation. Tesla’s rapid ascent kicked off a new era for the global auto industry and challenged many long-held views about car manufacturing. Meanwhile, China moved with speed to attain and retain dominance in the EV market by moving nimbly to deliver new EVs while quickly building out the charging infrastructure for a rapid EV transition. Meanwhile, tech-driven German automakers continue to gain ground while setting standards for EV performance and precision. Amid constant change and encroaching competition, the Big Three automakers are picking up the pace as new entrants threaten to grab market share.
Over the past 18-to-24 months, U.S carmakers have been generating lots of EV activity. Pent-up demand for the Ford F-150 Lightning pickup has put the U.S. market in the spotlight, with momentum growing for the electrified version of the best-selling vehicle in America. In fact, reservations for the EV model surpassed 160,000 in less than six months after its debut.
While expectations are high that Ford’s first electrified truck will be a growth catalyst for the domestic EV market, the meteoric rise of up-and-comers, including Rivian and Fisker, is altering the competitive line-up. Rivian’s RIT EV pickup – which was just named the Motor Trend Truck of the Year for 2022 – rolled off the production line in September for being a “remarkably original take on the pickup truck.” This emerging trendsetter went public in November in the sixth-largest IPO ever on a US stock exchange, according to Bloomberg. The company’s rapid growth trajectory is bolstered by investments from Ford and Amazon, as well as an order from Amazon for 100,000 delivery trucks to be shipped through 2030.
To support its aggressive market ramp, Rivian is investing in state-of-the-art manufacturing facilities, as well as developing showrooms, service centers and a national network of charging stations. Meanwhile, Fisker is entering the market with high-end EV models sporting a solar roof and 17.1-inch touchscreen display that rotates from portrait to landscape orientation. The company’s decision to outsource production to manufacturing juggernauts Magna and Foxconn is a disruption that takes a page from the production playbooks of mobile and consumer device companies. This approach could leapfrog the competition in bringing volumes of vehicles to market in the fastest and most efficient way possible.
These changes will have a profound impact on the automotive ecosystem. Within a decade, the list of traditional automakers and tier 1 and 2 suppliers may look vastly different than today. The companies that understand and adapt to market dynamics will flourish while those who falter could disappear altogether.
New Business Models Emerge
As visions of the burgeoning EV market come into focus, companies are getting clarity on new business models that can accelerate market adoption and profitability. Some adjacent opportunities, such as investing in battery factories and charging-station infrastructure, will overcome current barriers to market entry. Expect collaboration among automakers, along with increased partnerships with hotels and restaurants, even a reimagining of traditional gas stations, to make charging more readily accessible. Also on the rise: portable EV chargers and innovative services, such as SparkCharge’s on-demand EV charging network.
The introduction of bundled services is intended to help automakers sell more cars. GM announced a decision in 2020 to sell use-based auto insurance through Onstar, which represents a ripe opportunity to leverage data collected by connected cars. In particular, software-driven services are becoming more prevalent, especially in enabling new capabilities that go beyond updating vehicle features and functionality. While BMW, Daimler and Volkswagen were among the first to try and re-invent themselves as tech companies, other automakers are following with plans to become more tech- and software-savvy.
On December 7th, Stellantis announced plans to embed AI-enabled software in 34 million vehicles across 14 brands as part of its transformation into a “sustainable mobility tech company.” In doing so, the world’s sixth-largest automaker wants to win over consumers with Internet-based features and services, such as voice commands to activate navigation, make payments and order products online.
Several days later, Bosch, the largest car-parts supplier, furthered its focus on evolving in-vehicle features with its information domain computer announcement. Bosch’s high-performance infotainment domain computing system is designed as the ultimate control unit for managing in-vehicle technology, encompassing in-car communication, in-car payment, video streaming, voice assistants and more.
Molex is proud to be included in this endeavor and join other leading tech companies, including Qualcomm and Texas Instruments, to collaborate with Bosch. Together, we will support this powerful platform to enhance the development of in-vehicle displays, user interfaces and infotainment features on tomorrow’s cars.
It’s Still All About the Consumer
The German word for driving pleasure, “fahrvergnüegen,” represents much more than a memorable marketing slogan for Volkswagen. It’s the essence of what every legacy and new carmaker needs to keep in mind as new EVs roll off production lines. While a plethora of new business offerings and car models will provide consumers with plentiful choices, the ultimate decision is always dictated by the customer’s desired driving experience.
Some consumers simply want to get from Point A to Point B as safely and efficiently as possible while others want to transform travel. There’s a lot more space to work with in an EV, so carmakers are getting creative with how they use it. Rivian is billed as the “electric adventure vehicle,” and is using its additional space to create secure storage for gear like snowboards. Owners of the Ford F150 Lightning, on the other hand, can turn the front trunk into a cooler and be the envy of all tailgaters. Another attractive feature is the ability to power an entire average home for about three days through the truck’s bi-directional battery.
Time will tell which carmakers emerge at the front of the EV pack. It will come down to those with the clearest vision and most compelling plan to bring intriguing EVs to market. Rooted in the automotive sector for more than 30 years, Molex is well-positioned at the forefront of the EV revolution. We continue to refine contact physics while exploring new chemistries and metal compositions to work toward ensuring critical car connections can withstand rugged applications for a million miles.
We will continue to leverage our automotive experiences with engine control and powertrain connectivity while strengthening trusted collaborations with both legacy and emerging automakers and their top suppliers. Equally important is Molex’s ability to capitalize on expertise in high-speed networking, mobile and consumer devices, connected mobility and vehicle antenna systems as well as power and signal integrity.
Striving for the ultimate driving experience is in Molex’s DNA, so we’re ready, willing and able to put the pedal to the metal as part of our winning strategy for vehicle electrification.