If one follows the money and the national conversation circulating around auto industry leaders such as Tesla, GM, Ford, Toyota, and potential game-changers such as Byton, the ever-evolving auto industry seems to universally agree on one thing: the future is Electric.
Although electric vehicles (EVs) only accounted for approximately 2 million of the vehicles on the road globally and 0.2 percent of the total car stock in 2017, according to the International Energy Agency (IEA), all signs are pointing to an extremely bright future. As technology improves, battery density increases, costs decline, and the number of charging stations continues to grow at an astounding 72 percent annually, it’s no longer out of the question to eventually see electric-powered vehicles outnumber their combustion engine counterparts in our lifetime. At its current adoption pace, IEA predicts consumers will own and drive between 40 and 70 million electric vehicles on the world’s highways.
The biggest challenge facing manufacturers, however, is not the conversion of consumers (as Tesla has proved, people will buy a quality product), but the adoption of a new Supply Chain that can support this budding industry.
Not all the elements of an EV supply chain will face difficulties. Many EV parts, for example, such as the critical components necessary for production of an electric motor, are significantly smaller and simpler in design. As a result, many experts anticipate these components to be heavily outsourced to companies located in Asia, which have developed a strong, government-funded infrastructure suited for the mass production of commoditized electronic components. Without the need to consolidate component fulfillment around a few niche, highly specialized and technical suppliers, EV OEMs are positioned to have a distinct advantage over their internal combustion rivals.
But where some elements of a basic EV design will be simpler to acquire, others, such as the production of Electric Car Batteries, are quickly becoming more problematic. The raw materials required to manufacture electric car batteries — primarily cobalt, lithium, and nickel — are almost exclusively mined from countries with either known political instability (the Democratic Republic of Congo, Guinea) or high natural disaster probabilities (the Philippines). The potential risk in accumulating these resources is so high that Bloomberg reports many companies such as Apple have been making moves to stockpile them up to five years ahead of schedule in an effort to avoid future shortages.
The problems with batteries don’t end with raw materials, either. Assembled batteries are heavy, expensive, and contain volatile materials that make them difficult to ship. To compensate, many OEMs have opted to invest in in-house battery production and storage facilities relatively close to their auto factories — the most famous arguably being Tesla’s $5 billion “Gigabyte 1” facility in Nevada built in partnership with Panasonic. As battery performance has evolved into the primary differentiator among products for consumers, this also provides the added benefit of added IP protection. The tighter the integration of EV technologies is to the OEM source, the more distinct the OEM’s brand identification remains in a competitive marketplace.
Despite these theoretical advantages, properly maintaining such critical inventory, even so close to home, requires astronomical financial sacrifice. For automakers who wish to invest more into their research and development sectors than into storage and fulfillment challenges, EDX offers a Critical Inventory Storage Solution proven to offer OEMs a long-term, cost-effective option that keeps their inventory safe and secure within the United States. Our climate-controlled storage facilities (including our one-of-a-kind fireproof and and natural disaster-proof vault chamber) are not only suited for secure storage of critical electronic inventory, but our industry-leading desiccant ECD dry cabinets with SmartDry technology are capable of safely storing ASICs in their raw wafer form — which are becoming increasingly common in the development of autonomous driving technologies.
The transition toward electric vehicles is exciting to observe, and EDX is primed to be a valuable part in overcoming whatever supply chain challenges the next generation of automakers face.