WOKING, England, Jan. 23 (Reuters) – The global auto industry has committed $1.2 trillion to the development of electric vehicles (EVs), presenting a golden opportunity for new suppliers to win contracts supplying everything from battery packs to motors and inverters.
Startups specializing in batteries and coatings to protect EV parts, and suppliers traditionally focused on niche motorsports or Formula 1 (F1) racing, are chasing EV contracts. Automakers design platforms to last ten years, so high-volume models can generate large revenues for years to come.
The next generation of EVs will be out around 2025 and many automakers have sought help to close gaps in their expertise, presenting an opportunity for new suppliers.
“We’ve gone back to the Henry Ford days where everyone was asking ‘how do you make these things work properly?'” said Nick Fry, CEO of F1 engineering and technology company McLaren Applied.
“That’s a huge opportunity for companies like us.”
McLaren Applied, bought from McLaren in 2021 by private equity firm Greybull Capital, has adapted an efficient inverter developed for F1 racing for EVs. An inverter helps regulate the flow of electricity to and from the battery pack.
The silicon carbide IPG5 inverter weighs only 5.5 kg (12 lb) and can increase the range of an electric car by more than 7%. Fry says McLaren Applied is working with about 20 automakers and suppliers, and the inverter will appear in large-scale luxury EV models from January 2025.
Mass-market automakers often prefer to develop EV components in-house and own the technology themselves. After years of pandemic-related parts shortages, they are wary of over-reliance on suppliers.
“We just can’t afford to depend on third parties to make those investments for us,” said Tim Slatter, head of Ford (FN) in the UK.
Traditional suppliers, such as German heavyweights Bosch and Continental (CONG.DE), are also investing heavily in EVs and other technologies to stay ahead in a rapidly changing industry.
But smaller companies say there are still opportunities, especially with small manufacturers that can’t afford huge EV investments, or luxury and high-performance automakers that want an edge.
Croatian Rimac, an electric hypercar maker part-owned by Germany’s Porsche AG (P911_p.DE) that also supplies battery systems and powertrain components to other automakers, says an unnamed German automaker will use a Rimac battery system in a high-performance model – with annual production of about 40,000 units – from this year, with more signed up.
“We have to be 20%, 30% better than what they can do, and then they will work with us,” said CEO Mate Rimac. “If they can make a 100-kilowatt-hour battery pack, we should make a 130-kilowatt pack in the same size for the same cost.”
NO TIME TO LOSE
Some suppliers, such as Cambridge, Massachusetts-based Actnano, have longstanding relationships with EV pioneer Tesla (TSLA.O). Actnano has developed a coating that protects EV parts against condensation and its business has expanded into advanced driver assistance systems (ADAS), as well as other car manufacturers including Volvo (VOLCARb.ST), Ford, BMW (BMWG.DE) and Porsche.
California-based startup CelLink has developed a fully automated, flat and easy-to-install “flex harness,” instead of a wire harness to group and route cables in a vehicle. CEO Kevin Coakley would not identify customers, but said CelLink’s harnesses were installed in about a million electric cars. Only Tesla has that scale.
Coakley said CelLink was working with US and European automakers and a European battery manufacturer on battery wiring.
Others target small manufacturers, such as British start-up Ionetic, which develops battery packs that would be too expensive for smaller companies to make themselves.
“At the moment it just costs too much to electrify, which is why you see some manufacturers delaying their electrification launch,” said CEO James Eaton.
Since 1971, Swindon Powertrain has been developing powerful motorsport engines. But it has now also developed battery packs, electric powertrains, e-axles and works with about 20 customers, including car manufacturers and an electric aircraft manufacturer for vertical take-off and landing (eVTOL).
“I realized that if we don’t embrace this, we will end up working for museums,” says general manager Raphael Caille.
But time may be running out.
Mate Rimac says major automakers have been pushing to roll out EVs for the past three years and have now largely put their strategies in place.
“For those who have not signed projects, I’m not sure how long the opportunity will remain open,” he said.
($1 = 0.8226 pounds)
Reporting by Nick Carey Edited by Mark Potter
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