Supplying Electrified Options

The future is far from settled when it comes to powertrain technology. Hybrids, plug-in hybrids, full electrics and fuel cells are all making inroads, albeit slowly, against internal combustion engines (ICEs), which themselves are becoming increasingly efficient, to meet changing consumer preferences and next-generation fuel economy and emissions standards. This has created a host of new opportunities and challenges as companies try to pick the winners and make future product and investments plans accordingly.  

With many automakers taking an all-of-the-above strategy, suppliers increasingly have to compete on multiple fronts along the electrification spectrum. A recent Bosch survey indicated 62 percent of new car buyers in the U.S. believe they will own at least one EV within 10 years. To support the trend,

Bosch is readying several new products, including an integrated electric axle drive, 48-volt battery technology, brushless electric motor actuator and a thermal management system. Bosch says its “eAxle” can cut costs 5 to 10 percent compared to hybrid and all-electric drivetrains using standalone motors and transmissions. The thermal management system promises to extend driving range by as much as 25 percent during cold weather driving. 

While Bosch and other mega-suppliers such as Continental, Delphi, Denso and Magna have been diversifying their portfolios for some time, other suppliers are now accelerating their electrification efforts. Germany’s Rheinmetall Automotive, which specializes in engine parts, air systems and emission control products, predicts that components used in electrified vehicles will grow from 40 percent of its sales today to more than half of the company’s volume by 2020, with such things as battery boxes, aluminum housings for electric drive units, electrically powered auxiliary units, lightweight structural parts, heat-pump components and hybrid range extenders. 

BorgWarner, which added electric and hybrid motors to its core line of turbochargers and transmission components with its 2015 purchase of Remy International, expects to derive 16 percent of its sales from components for electrified vehicles by 2023. Last year such sales accounted for just one percent of its business.

Citing IHS Automotive forecasts, BorgWarner expects the global production of light vehicles to grow from an estimated 91 million units in 2016 to 107 million in 2023. Of that number, 18-million will be hybrids and 2.3-million will be full EVs, which are increases on the order of six and more than four times current volumes, respectively. ICE-powered vehicles are expected to dip from 88 million to 86 million units over the period. 

It doesn’t matter where the growth comes from. The goal, BorgWarner CEO James Verrier says, is to position the company for success regardless of the future vehicle mix. BorgWarner currently has content on about 44 percent of all new ICE-powered vehicles but only is sourced on 20 percent of new hybrid models and just three percent of EVs. Targeting across the board increases, Verrier envisions BorgWarner products on 53 percent of conventional models, 42 percent of hybrids and 29 percent of EVs within seven years. Moreover, he expects the company’s average content per vehicle on programs it supplies to jump from $185 to $215 on ICE models and from $140 to $225 on hybrids by 2023. 

The company’s average content for its EV programs already is $620 per vehicle because most of these contracts are for big-ticket items such as electric motors. As the company wins business for less pricey components—and overall costs are reduced as volumes increase—the average content per EV is expected to fall to a still robust $285. 

The transition already has started. BorgWarner inked deals on electrified vehicles with more than 20 customers in 2016, and later this year the company will begin supplying an electric drive module for two EVs in China. The supplier also aims to become the largest provider of electrically driven compressors this year and more than triple the use of turbochargers on hybrid vehicles over the next decade.

While technologies will continue to evolve, Verrier notes that vehicles will always need a propulsion system. But suppliers must continue to innovate and differentiate themselves to stay relevant.