The results of a joint survey conducted by VDA and Deloitte show that automotive suppliers are currently in the middle of the transformation but still generate 85 percent of their turnover from ICE (internal combustion engine) technology. – The majority of the companies queried assume that e-mobility will assert itself as the technology standard. – VDA-President Hildegard Müller says: "Companies need support and planning security from the political sector."
The automotive industry faces what is probably the greatest upheaval in its history – the transition from the fossil internal combustion engine to new and more sustainable drive technologies. The transition and public interest are now focused on e-mobility. In a joint survey conducted in the spring pf 2021, Deloitte and the German Association of the Automotive Industry (VDA) investigated the status of the transformation underway at the German automotive suppliers.
The survey results show that the great majority of the suppliers queried are placing their bets on e-mobility as the technology of the future. Over 80 percent assume that this drive technology will assert itself as the technology standard. Moreover, a large portion (over 80 %) of the companies surveyed have already begun the transition to e-mobility. Only 10 percent of the companies interviewed see no reason to transform themselves, saying they are not affected by virtue of their product portfolio. Nonetheless, 88 percent of the companies questioned do not expect e-mobility to completely replace the ICE until 2030 or later. Some of the suppliers surveyed assume that fuel cells (about 30 %) or synthetic fuels (40 %) also have the potential to create an (additional) standard.
Suppliers counting on security
Electrical drive technology is thus clearly at the focus of the activities. The automotive suppliers queried are investing over 30 percent of their R&D expenditures in this technology. However, the contribution of this technology to total turnover, namely 15 percent, is markedly smaller. Some 85 percent of the companies use the profits from traditional ICE technology to build up their expertise in e-mobility at the same time. Only five percent of the suppliers plan – in equal parts – to either consolidate via mergers with other companies or to leave the automotive industry entirely."
"The investment behavior of the automotive suppliers shows they assume sales of e-cars will continue to rise sharply," says Dr. Harald Proff, Partner and Global/DEC/ German Automotive Sector Leader at Deloitte. "Another fact that emerged is that they are placing their bets on a strategy of moderation. A large portion favor a harvest strategy consisting of a controlled slow exit from the market for ICE technologies simultaneous with the establishment of a business area for e-mobility. Only a minority of those queried are pursuing more radical strategies such as an early and rapid market departure."
COVID-19 pandemic speeds up the transformation
Deloitte and VDA have also examined the question of which phase of the transformation the automotive suppliers currently find themselves in. The result: the majority has already covered 50 % of the distance to the era of electric powertrains. About 65 percent find themselves at steps 3 – 5 of the 7-step transformation scale. Only five percent of the suppliers queried are about to make the leap to a business model based solely on e-mobility. The COVID-19 pandemic has tended to speed up – rather than slow down – the transformation process. More than two-thirds of those queried, for example, stated that they perceived the pandemic as an accelerator of the transformation. Only 13 percent said the pandemic had slowed down the transformation at their company, presumably because the funds for the necessary investments were no longer available.
More political support desired
When asked to name the greatest barriers to rapid transformation, the suppliers cited a lack of reliable political support and an absence of planning security as the most important factors. Other factors mentioned were rising requirements for sustainability, the slower expansion of the renewable energy sector, and the shortage of specialized employees.
Finally, the automotive suppliers were asked to state which business policy measures they found especially helpful. What they needed most from the political sector, they replied, were lower taxes and energy costs, less bureaucracy, faster expansion of the charging infrastructure, and more flexibility in the employment market.
VDA President Hildegard Müller believes the automotive suppliers are on a good path. "The companies are forging ahead with the transformation," she says. "However, this brings large investments and great challenges with it, especially in the sector of automotive suppliers, which is dominated by SMEs. Many companies are now investing much more than they can currently earn; these companies need the right support and planning security. For a successful and sustainable transformation, other political and economic framework conditions are decisive; it is now up to the political sector to establish a charging infrastructure, expand renewable energies, reduce bureaucracy, train specialized employees, and create comprehensible and workable conditions for sustainability."
Deloitte and VDA conducted this transformation survey online in the spring of 2021. A total of 83 companies in the VDA Manufacturer Group III (automotive suppliers – parts and accessories) took part. The companies were allowed to skip any questions that were not relevant for their business. The percentages quoted are based on the number of answers given in each case (case number). Multiple answers were possible for several questions.
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