Pressure on the automotive industry continues to grow, with legislation and customer demand forcing vehicle manufacturers to aggressively cut emissions across their fleet. The result? Electric vehicles are expected to reach production volumes of around 31 million units by 2030 – a staggering figure when you consider global sales currently sit around 2.5 million for EVs and plug-in hybrids combined.
Within nine years, vehicle manufacturers will be producing 1140% more EVs. This will have a huge impact on the automotive supply chain. Existing suppliers will need to pivot to meet changing demand, new companies will be created and whole new markets will be established to meet this rapid growth. With so many new players and unknowns, will automotive supply chains remain stable or even intact?
“Despite the pressure exerted on the market by the COVID-19 pandemic, the long-term outlook for EVs is strong. The significant shift in expected volume of BEVs and PHEVs by 2030 is based on four factors: consumer sentiment, policy and regulation, OEM strategy and the role of corporate companies. All four of these factors saw major changes in direction over the last year, prior to the emergence of COVID-19, and have since been shaped further by the pandemic.”
– Michael Woodward, Automotive Leader, Deloitte (click here for the full article)
What is the scale of the change to electric cars?
This significance of this shift becomes easier to understand when you realise the ambitious commitments already made by vehicle manufacturers – Volvo will only sell electric cars from 2030; Ford will only electric car sales in Europe from 2030; General Motors plans to offer only electric light-duty vehicles by 2035; Volkswagen aims for 70% electric car sales in Europe, and 50% in China and the United States by 2030.
The rapid implementation of electrification is drastically accelerating development timescales and placing significant pressure on a burgeoning supply chain that is ill-equipped to meet these new requirements. Charging infrastructure aside, perhaps the most significant hurdle of this transition period is the development, production and, of course, transportation of lithium-ion batteries.
Expected to see a six-fold surge over the next decade, the lithium-ion battery market will be central to the ambitions of vehicle manufacturers around the world. There is a catch, though. Not only are they expensive to produce, relying on limited rare earth metal supply, but they are also classified as Dangerous Goods.
What are the challenges of lithium-ion batteries for the logistics industry?
What is the significance of that? Well, between 2006 and 2021, the American Federal Aviation Administration alone recorded 316 incidents involving lithium-ion batteries. These ranged from thermal discharge and toxic smoke to extremely dangerous fires and explosions. In the UK, batteries have been responsible for around 250 fires at UK waste processing facilities. There have also been dozens of incidents in which lithium-ion-powered EVs have suffered catastrophic failures due to battery fires.
The dangers are evident, but what is the significance for manufacturers? Well, when you take into consideration the time pressures they face, the new battery supply chain, the sheer volume of cells required within the industry and the dangers of transporting them, the magnitude of the challenge becomes clearer.
The aggressive push toward electrification and the uptake of lithium-ion batteries will introduce significant complexity and volatility to the automotive supply chain. Alongside Dangerous Goods transport and handling requirements, the impact of new suppliers, competition, and additional bureaucracy will make logistics incredibly challenging.
What airfreight solutions are available for batteries?
We have already noticed an increase in the number of clients requesting battery logistics solutions, including urgent airfreight of lithium ion batteries. Often, these projects require detailed knowledge of regional transport regulations, export procedures, approvals, and packaging requirements. One of the most recent involved the collection and air freight of a large EV battery shipment from China to the vehicle manufacturer’s factory in Europe.
As the requirement for lithium-ion batteries grows, vehicle manufacturers must be prepared to look deeper into their supply chain and prepare contingencies to recover from inevitable disruption.
