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1、Its Time to Power-Up the Electric Vehicle(EV)Supply Chain2Its time to power-up the EV supply chainIntroductionThe electric vehicle(EV)space is rapidly expanding,with production of EVs having gained considerable momentum in the past few years and poised to make huge leaps in the next few.Two types of
2、 companies are locked in a fierce battle for EV market share.In one corner are the established car manufacturersthe“giants”.Theyre trying to pivot to EVs and create an entirely new business,while continuing to support their core business of traditional internal combustion engine(ICE)vehicles.Its not
3、 an easy change to make,as these companies are finding out.In the other corner are the startups,trying to be“disruptors”to the giants by creating technology companies that moonlight as car companies.These newer entrants are discovering that while having great technology and innovation at their core
4、is essential to breaking into this market,their staying power rests in being able to executeactually manufacturing the vehicles people want to buy.Both the giants and disruptors,as well as their suppliers,are at a critical juncture in this industry.And one of the biggest keys to their success will b
5、e learning how to quickly build or adjust their supply chains to create a business that can profitably capitalize on the growing preference for EVs over ICE-powered vehicles.Supply chain challenges across process/structure,organization,and technology must be addressed.The challenges are similar and
6、different for giants and disrupters,however the companies who address these challenges quickly put themselves in position for long-term success.Thats the real battleground for EV dominance.According to BloombergNEF,EVs will account for about 30%of all vehicle sales by 2030.1Its time to power-up the
7、EV supply chain3The electric vehicle markets rapid growthAs illustrated in Figure 1,and highlighted in Accentures latest thought leadership,the EV market is projected to skyrocket in the next 10 to 15 years,with significant momentum really beginning to build within five years.Whats driving this grow
8、th isnt really a secret:Consumers around the world have become more aware of and interested in sustainability and climate change,while governments in numerous countries are pursuing ambitious environmental agendas,including heightened restrictions on fossil fuels and their associated emissions.Calif
9、ornias governor,for example,made news recently with his executive order directing the state to require all new cars and passenger trucks sold in California by 2035 to have zero emissions.2 Another accelerant is technologyspecifically ongoing advancements in battery technology to improve the driving
10、range on a single charge and reduce costs.In fact,in the past ten years the cost per KW/H has dropped from$1,110 down to$137,and analysts predict it should fall below$100 in the next few years,3 making EVs more affordable to many more people.Figure 1:Worldwide plug-in vehicle populationOEMs have to
11、move fast now to win the early majority of the marketSource:The EV Charging Market:Internal Knowledge Repository-Accenture2035020342033203220328Corridor depending on data source(MarkLines,EV Volumes,IEA,Bloomberg)Global plug-in electric vehicles on the road(in millions)20272026
12、202520242023202220218Early majority20122013Innovators200170.190.400.721.262.033.23+227%+109%+79%+75%+61%+59%Early adopterIts time to power-up the EV supply chain4Giants,disruptors and suppliers:Strengths,weaknesses,and challengesHowever,rapid industry growth and changing market
13、 dynamics are stressing EV supply chains,in turn creating both common and specific challenges for giants and disruptors(Figure 2).How these companies act in the next few years will largely determine who become leaders in the EV manufacturing,battery,and charging markets.GiantsGiants,of course,have l
14、ong-established,sophisticated operations in vehicle production,supply chain,and supplier management.In other words,they know how to build cars and have the supply chain to do it.But now they need to balance the simultaneous production of ICE-powered vehicles and EVs.This requires developing EV batte
15、ry and powertrain partners while continuing to foster relationships with current powertrain suppliers.DisruptorsDisruptors face an even more daunting task.They have the technology thats essential to EVs and a culture of innovation that enables them to continually push their thinking.However,they nee
16、d to build an entirely new supply chain and supply base from scratchsomething thats taken the giants decades to doand put the structure in place to manage suppliers and their performance.Figure 2:Two different OEMs,each with unique challengesOperation CostsManufacturing CapabilityGiants151812685Disr
17、uptorsSupply Chain Maturity5Its time to power-up the EV supply chainSuppliersTrying to keep pace with both the giants and disruptors are the industrys suppliers.If they want to stay in business for the long term,traditional ICE powertrain suppliers will have to evolve to support both current and fut
18、ure development and production needs across ICE-and EV-related products.One way to do that is to split their business in two,with one part serving the traditional ICE market and the other focusing on the rapidly emerging EV/CASE(Connected,Autonomous,Shared,Electric)sector.Several leading suppliers h
19、ave already taken steps in that direction.4 Adding to the disruption is the entry of companies that traditionally havent been considered automotive supplierssuch as LG,Panasonic,and Samsungthat have found an opening in the industry via batteries and battery technology.5 Even traditional energy compa
20、nies such as Shell and BP have entered the market as early leaders in building out the EV charging infrastructure that will be a key factor in vehicle adoption.6Traditional ICE powertrain suppliers will have to evolve to support both current and future development and production needs across ICE-and
21、 EV-related products.6Its time to power-up the EV supply chainDigging Deeper on EV Supply Chain Challenges Its clear that there are plenty of supply chain challenges to go around across giants,disruptors,and suppliers.Some of these are common across the three groups,while others are more specific.Le
22、ts take a closer look at where these groups are feeling the pressure in supply chain process and structure,organization,and technology.Process and StructureThe macroeconomic challenges facing the EV industry are well documented.Many of these challenges have to do with consumer adoption,charging time
23、s,and EV charging infrastructure.However,EV supply chains for both Giants and Disruptors have specific process and structure challenges as well.Given uncertainty of supply,Giants and Disruptors both must place bets on how to best secure continued supply to build their products.This could include sev
24、eral strategies to consider such as producing batteries through vertical integration:development/production partnerships,joint ventures,and/or buying directly through suppliers.Understanding the end-to-end supply chain is critical to creating value for the enterprise.How do companies make the transi
25、tion from prototype manufacturing to full-scale production?Here are some of the keys,all of which have ramifications for all three groups:Identify the new suppliers to partner with.Certain suppliers will remain relevant as the transition from ICE to EV begins,although new suppliers will also emerge.
26、This is especially true as traditional ICE vehicle systems such as body/frame,drive train,and electrical will be displaced to accommodate EV requirements.OEMs need a process in place to effectively vet these new companies and technologies before placing the first order to ensure they can deliver.Mak
27、e vs buy decisions.There are many big decisions that both the giants and disruptors will face as they transition into the EV marketplace.Disruptors making the transition from prototypes to production vehicles must decide whether to build manufacturing capabilities or buy them using a contract manufa
28、cturer,as they work to build a customer base and control operating costs.7 Giants face similar decisions on whether they should be converting existing ICE production lines to EV production.It seems most are considering hybrid options where existing ICE production lines are being converted and partne
29、rships are being explored to increase and accelerate production capacity.There are many big decisions that both the giants and disruptors will face as they transition into the EV marketplace.Its time to power-up the EV supply chain7Reimagine metrics for supplier management and risk.Giants already ha
30、ve well-established supplier performance programs in place,but these may be foreign to disruptors.As they think about creating a supplier performance program,disruptors should resist the temptation to do a“copy and paste”from legacy OEMs.This is an opportunity to think creatively and change the conv
31、ersation with strategic suppliers and how OEMs manage them.Giants,for their part,could also take a page from that book and think about new ways to partner with suppliers that are more relevant to the EV supply chain.Develop a localization strategy for battery pack assembly and other key components.E
32、V battery manufacturing is segmented into three main areas:battery cells,modules,and battery packs.Cell manufacturing mostly occurs in Asia,primarily because of reduced production costs(which is significant,given cell production accounts for 75%of the overall EV battery cost),8 but because the large
33、st markets for EVs are in Asia.Pack manufacturing,on the other hand,tends to happen closer to OEM assembly facilities because the packs final assembly weight and hazardous materials composition make it expensive and potentially dangerous to ship packs long distances.In an ideal world,cell through to
34、 pack production would be as close as possible to the OEM assembly plant.But thats unlikely to change,at least in the near term,so both giants and disruptors need to figure out the most cost-effective way to source,ship,and assemble batteries.Secure supply for critical materials.This would include m
35、aterials with supply challenges such as conflict minerals(for example,cobalt)which are not widely available and can have important ethical procurement considerations.9 Blockchain applications can help bring transparency to the proper sourcing of such materials,while new or creative sourcing strategi
36、es such as“take or pay”arrangements can help ensure continuity of supply for materials OEMs cant do without.These agreements are often used when market demand greatly outpaces supply(think frac sand during the most recent oil boom).These agreements essentially involve buyers taking on risk by agreei
37、ng to buy a set volume of the materials at a discounted price over a given time period.If the buyer doesnt keep its commitment,the supplier simply invoices the buyer for the full amount contractually allowed.These agreements obviously have a high risk/reward structure,but they highlight the fact tha
38、t in a new market companies need to consider new strategies to maintain supply chain continuity.Its time to power-up the EV supply chain8The natural components of the lithium ion battery are only found in certain parts of the world.With the demand for EVs only seen as increasing so will demand for t
39、hese rare materials.This presents challenges to both Giants and Disruptors in terms of supply,cost,and long-term availability.Similar to the argument against fossil fuels,mining and extracting the components for lithium ion batteries not only harms the earth but also raises the real concern over rep
40、lenishment or completely wiping out our supply.An additional component to consider is the inherent location of these materials.There is not wide-spread access to these materials,they are largely located in Africa and China where geo-political instability will likely cause supply disruption or extrem
41、ely high entry/acquisition costs levied by these countries.A trending toward Giants and Disruptors looking at near-shoring opportunities to reduce risk due to supply chain distance and help manage transportation costs.This all points to the fact the lithium ion battery is not the long-term solution
42、for the electric vehicle market.Giants and Disruptors need to have both long-and short-term strategies in place to manage these critical components.The short-term solution will be anchored on the fact that lithium ion batteries will be the primary power source for these vehicles.How each company pla
43、ns to acquire these materials,ship,assemble,and retire the batteries need to defined and operationalized.The long-term strategies need to be a cohesive effort between supply chain and engineering to source,design,and acquire their future state power source.Whether its developing a solid-state batter
44、y or an alternative,both groups will need to work together to ensure their solution is both performance neutral and cost effective to the lithium ion batteries in use today.The strategies deployed by these companies will be a key component into their long-term viability in this market.Environmental
45、Factors(Sustainability).The other challenge both Giants and Disruptors are facing with lithium-ion batteries is dealing with them as they come to the end of life.EV enthusiasts love them because of their minimal pollution and use of fossil fuels,however,EVs could create a new environmental issue if
46、the batteries are not consistently and safely recycled or disposed of.Today,auto manufacturers are taking steps in that direction by dedicating space within their own factories to recycle batteries,they are also developing partnerships with third parties to support the effort.The challenge here isnt
47、 just about making recycling/disposing a priority,its mainly about the process itself.Today,much of this process is manual and time intensive.As more and more EVs hit the road,the need for automation will be key in scaling up this capability and keeping it cost effective.Both Giants and Disruptors n
48、eed to see this as a priority moving forward.A choice to ignore this problem will likely affect the publics perception of how“green”a company is and could impact the overall markets impression of electric vehicles.Its time to power-up the EV supply chain9OrganizationSwitching from building prototype
49、 vehicles to full production has created massive hiring swings and made companies question which skillsets are relevant in an EV manufacturer that may not be in legacy automotive companies.Disruptors and giants have some concerns unique to their own operations and a few that are common to both.Disru
50、ptors need to:Shape and build an effective procurement organization.Logic would say disruptors could benefit from hiring procurement people from legacy ICE OEMs or suppliers.While this may be true in some areas,looking outside the automotive industry could be a way to inject new life and different p
51、erspectives into the industry.Having a procurement talent strategy that thinks outside the box could pay dividends as the EV industry grows.Prioritize which functions to build.Disruptors typically begin with engineers and designers,but quickly shift to creating important business functions to suppor
52、t their growth.As they do,disruptors need to think carefully about where they start and question whether functions and practices in the legacy automotive industry are still necessary in the EV industry.Giants need to:Determine how to modify their existing supply chain to support EV production.This i
53、s one of the most important things giants need to get right to be successful in EV.Most have already begun developing transition strategies for EV production,but the extent to which these are well developed varies.As part of the transition,giants need to understand whats necessary to retrain their p
54、eople and where they can find the relevant learning paths and talent strategies to successfully reskill their workforce.Both groups should:Determine the unique skill sets valued in the EV supply chain.Certain skills and backgrounds are table stakes as giants and disruptors build an EV supply chain o
55、rganization.However,opportunities also exist for companies to differentiate,such as reducing the need for some skills by automating parts of back-office functions;identifying the category management expertise thats most critical;and looking to other industries,whose logistics models mirror whats evo
56、lving in the EV space,for guidance on the most important skills.Develop a formal plan for transitioning legacy ICE suppliers to new critical parts for EVs.The procurement and supply chain teams will have to shift their focus to a supply chain dynamic in the early phases of producing and shipping new
57、 technologies.Procurement and supply chain teams will need to have an improved command of vehicle module-based Just-in-Time(JIT)execution,hazardous material management,and global and local supplier management practices.Switching from building prototype vehicles to full production has created massive
58、 hiring swings and made companies question which skillsets are relevant.10Its time to power-up the EV supply chainTechnologyTechnology is a key element of the EV strategy and should play a central role in the design of new EV supply chainsespecially for disruptors.Disruptors should:Explore how to ap
59、ply process automation to back-office functions.Companies automating the back office have dramatically driven greater efficiencies and fostered scalability through the organization.With significant flexibility in developing their organization,essentially from scratch,disruptors should think about ho
60、w they can use automation and whether it should be central to their story from day one.Create a comprehensive vision of their procurement and supply chain technology stack.Data and data management are at the heart of the EV industry and central to its development.Similarly,supply chain data is just
61、as valuable to disruptors operations.Building a supply chain technology ecosystem that marries upstream and downstream activities and includes advanced analytics for operational transparency and decision making,should be a priority.All three groups need to:Consider how blockchain can improve supplie
62、r Tier visibility.Integrating supply chains has been a challenge for legacy OEMs for years.By working closely with Tier 1,2,3 and beyond suppliers to introduce blockchain concepts into new EV supply chains,giants and disruptors can create full visibility and transparency of supplier quality,cost,and
63、 delivery performance.Blockchain can also enable OEMs to keep tabs on suppliers ESG practicessuch as ensuring materials are sourced as sustainably and ethicallywhich stakeholders of all kinds increasingly expect.10Certainly,many other challenges compete for OEMs and suppliers attention.But the ones
64、discussed are arguably the most critical supply chain issues that companies need to address as the EV market gains steam.ConclusionMoving aheadquicklyTheres no doubt the EV industry is in extreme growth mode.In fact,the eye-popping growth projections weve highlighted may be conservative,as momentum
65、for EVs continues to build and new developments accelerate broader adoption.Thats why the companies with aspirations to be major players in the EV market need to pick up the pace in building a supply chain that can help them achieve their goals.Giants need to quickly determine which of their legacy
66、ICE suppliers can make the transition to EV suppliers and find replacements for those that cant,while determining which of their traditional supply chain practices arent necessarily relevant to EVs.Disruptors need to put in place all the supply chain capabilities necessary to create order from the c
67、haos in which theyre operating todayworking from a clean sheet to define the mix of traditional and innovative practices,and internal and third-party resources,they need to go from website hype to scalable production.And both legacy suppliers and newcomers must figure out what their role is in the e
68、xpanding EV market a challenge thats magnified for legacy suppliers that also need to continue to support their ICE-focused business.The fact is,challenges abound in the EV market,but so are the opportunities.The companies that move swiftly to address the former and capitalize on the latter are the
69、ones that will have staying power and grow in concert with an incredibly dynamic market.11Its time to power-up the EV supply chainAbout AccentureAccenture is a leading global professional services company,providing a broad range of services in strategy and consulting,interactive,technology and opera
70、tions,with digital capabilities across all of these services.We combine unmatched experience and specialized capabilities across more than 40 industriespowered by the worlds largest network of Advanced Technology and Intelligent Operations centers.With 569,000 people serving clients in more than 120
71、 countries,Accenture brings continuous innovation to help clients improve their performance and create lasting value across their enterprises.Visit us at This document is intended for general informational purposes only and does not take into account the readers specific circumstances and may not re
72、flect the most current developments.Accenture disclaims,to the fullest extent permitted by applicable law,any and all liability for the accuracy and completeness of the information in this presentation and for any acts or omissions made based on such information.Accenture does not provide legal,regu
73、latory,audit,or tax advice.Readers are responsible for obtaining such advice from their own legal counsel or other licensed professionals.This document may contain descriptive references to trademarks that may be owned by others.The use of such trademarks herein is not an assertion of ownership of s
74、uch trademarks by Accenture and is not intended to represent or imply the existence of an association between Accenture and the lawful owners of such trademarks.Copyright 2021 Accenture.All rights reserved.Accenture and its logo are trademarks of Accenture.This content is provided for general inform
75、ation purposes and is not intended to be used in place of consultation with our professional advisors.210092Contact the authorsAdam M.Robbins Strategy Supply Chain&Operations Principal Director Paul Sullivan Strategy Supply Chain&Operations Senior Manager References1“A Behind the Scenes Take on Lith
76、ium-ion Battery Prices,”Logan Goldie-Scot,BloombergNEF,March 5,2019.2“Governor Newsom Announces California Will Phase Out Gasoline-Powered Cars&Drastically Reduce Demand for Fossil Fuel in Californias Fight Against Climate Change,”State of California,Office of the Governor,September 23,2020.3“EV bat
77、tery prices plunge 89%in ten years”January 2,2021.4“Suppliers:Dividing to Conquer,”Peter Sigal,Automotive News,April 9,2018.5“A Look At The Top 5 Lithium-Ion Battery Manufacturers In 2019,”Matt Bohlsen,Seeking Alpha,September 4,2019.6 https:/ Group Shifts,Rides Wave of Rising eCommerce,”Dustin Walsh
78、,Crains Detroit Business,November 1,2020.8“The Supply Chain for Electric Vehicle Batteries,”David Coffin and Jeff Horowitz,Journal of International Commerce and Economics,United States International trade Commission,December 2018.9“Manufacturers Are Struggling To Supply Electric Vehicles With Batteries,”Ariel Cohen,Forbes,March 25,2020.10“Volvo Turns to Blockchain to Check EV Batteries Are Responsibly Sourced,”Sean Szymkowski,Road Show,November 6,2019.11“G.M.Accelerates Its Ambitions for Electric Vehicles,”Neal E.Boudette,The New York Times,November 19,2020,Updated November 23,2020.