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Due to the pandemic and ongoing supply chain challenges, the automotive industry has seen one of its most significant transformations and disruptions in recent years. But as more automakers shift to producing electric vehicles, new innovations and meaningful partnerships are beginning to emerge.

A panel of industry leaders joined Electric Autonomy Canada to talk about Canada’s automotive supply chain and how it needs an overhaul based on partnerships and a circular EV economy

Due to the pandemic and ongoing supply chain challenges, the automotive industry has seen one of its most significant transformations and disruptions in recent years. As more automakers shift to producing electric vehicles, new innovations and meaningful partnerships are beginning to emerge.

But in order to thrive in this EV transition, OEMs will need to scale up operations by building new connections with suppliers, customers, and trading partners while also learning to be adaptable in the face of unexpected changes and challenges to developing a healthy, circular ecosystem.

Those were some of the key points featured in a panel discussion on the future of Canada’s automotive supply chain, hosted by Electric Autonomy, featuring Eva Ames, vice-president of Electrification & Mobility Competence Center at DSV, a Denmark-based transport and logistics company; Jarred Knecht, president of ProEV, a division of Electrical Components International; John Laughlin, chief technology officer at Next Generation Manufacturing Canada; and Shawn McEwen, regional vice-president at TrueCommerce-DiCentral.

You can watch the full discussion in the webinar sponsored by TrueCommerce-DiCentral at the link above.

Here’s a summary of the highlights.

Canada’s automotive supply chain

The market share in Canada for electric vehicles is moving at a rapid pace, says Laughlin.

In the next few years, he estimates the EV share of the market will jump from nine per cent today to around 45 per cent, while the internal combustion engine (ICE) vehicle market share is expected to fall from 91 per cent to 55 per cent.

“There’ll be a volume shift, there’ll be a product shift. When we think about manufacturers, what they need to be ready for [is] quite a big transition — pivoting away from the components they make today,” says Laughlin.

A large part of the current automotive supply chain is dominated by big companies. A full 50 per cent of all revenue within the Canadian auto supply chain comes from just 10 major companies.

Despite this, there are opportunities for new players to enter into the supply chain and bring with them innovative technologies in order to “reinvent what these vehicles can be capable of,” says Knecht.

Supporting new companies and keeping agile

During the panel discussion, Knecht stated that his company, ProEV, works with a range of startups, medium-sized businesses and large OEMs, to help them electrify their vehicles for commercial, industrial and recreational uses.

Knecht notes that while several companies across North America’s manufacturing and engineering sectors in aerospace, defence and medical could offer the EV industry vital expertise to develop new types of technology, many are hesitant to put their hand up due to the newness of the EV market or their lack of experience in the industry.

“We’re trying to change that narrative,” says Knecht. “We’ve talked to a lot of companies and tell them, ‘Look, jump in and we’ll try to help you navigate [and] give you some insight.’ You need to work with the prototypes in small volume and work with these companies to help them scale up.”

As automakers and suppliers transition to EVs, DiCentral’s McEwen says they will need to work equally fast towards becoming more agile and visible in the EV space — or risk becoming obsolete in a fast-moving industry.

“We’re now in a digital transformation where we can basically digitize a workflow, a process [and] we can shorten operations,” says McEwen.

“Folks that are still stuck in spreadsheets or in ad hoc or data silos, to me, frankly, may be in the graveyard of death. It’s all about shortening those cycles, getting immediate visibility and being agile. I don’t think we have to be as reactive, it’s about anticipating the changes before they happen.”

Greater integration and collaboration

McEwen also sees a greater opportunity for Canada and the U.S. to collaborate in order to build up the different components of an EV supply chain.

NGen’s Laughlin believes the “window of opportunity” for that integration is right now. ProEV’s Knecht says his experiences show that many OEMs try to develop the various components of the supply chain in-house until realizing it’s not feasible to accomplish their business goals.

“Whether they’re a startup or an established OEM, the majority are coming to the realization that they need partners to work with them because they, themselves, even though they might have been around for the last 40-50 years, they admittedly say that [they] don’t know that much about this specific component of this type of vehicle,” says Knecht.

“We see this from the U.S. and we see this in Canada, [OEMs] are so happy when they find suppliers willing to partner with them, when the going is tough, as well as when the going is good and help them develop these solutions collaboratively.”

Eva Ames, from DSV, agrees that there is a huge demand for partners and collaboration, but there is fundamental lack of trust between established OEMs and the new players.

She adds that the market is currently seeing new companies with “amazing ideas” but that end up “falling flat” because they underestimate the complexity of building a car and the complexity of the supply chain and therefore fail to strategize and understand how the supply chain will affect operation success.

“Car[s] have unique challenges, not only from a performance standpoint but from a regulatory requirements standpoint that are pushing the OEMs to think a little bit differently and try to figure out what is the best strategy for in-sourcing this,” says Ames.

“You see a variety of different strategies from a bunch of the different OEMs… I think that there’s a huge propensity to find the answer and right now there simply isn’t one.”

Developing a circular supply chain

Traditionally the automotive supply chain has been linear, says Ames. First, parts come into a production facility; then the vehicles are built, sold; and OEMs provide some after-sale services and support. But with the market moving towards EVs, “there’s an opportunity to shift the mindset to create a supply chain that is circular.”

A circular economy would mean OEMs look beyond the rush to build and sell EVs and invest in collecting used batteries and other components of the vehicle once it reaches its end-of-life. Repurposing those items for second-life applications or recycling the materials will loop them back into the supply chain.

Knecht commented during the discussion that “integrating [recycling] as part of the strategy of the OEM is very interesting.” 

“That’s coming up more and more as the OEM really gets control and understanding of all the components of their vehicle architecture and how they’re going to continue to supply that, reuse that and grow their scale over time. It’s definitely something that’s on the radar.”

Moving forward, Ames explains that it will take time for the industry to pivot and find new efficiencies, “but there are an awful lot of really smart people working on this and even though there are a lot of challenges to the recycling techniques today, they are coming.”