TRAVERSE CITY, Mich. — For midsize and regional suppliers, the proliferation of electric and autonomous vehicles might pose a problem, as global Tier 1s consolidate and invest in advanced new technologies.
But the developments also provide opportunities if suppliers start identifying them now, says Michael Robinet, managing director of automotive advisory services at IHS Markit. One area worth considering: temperature regulation.
"Thermal, in our opinion, is a major growth area, but also a market that's very fragmented," Robinet said this month at the Center for Automotive Research's Management Briefing Seminars here. "There are interesting opportunities here."
Industry experts predict massive product changes in the next 20 years. Electric vehicles will make up 15 to 30 percent of new vehicles in 2030, according to Bloomberg New Energy Finance. Boston Consulting Group predicts that 12 million fully autonomous vehicles — which won't require traditional driving controls — will be sold annually by 2035.
The changing fleet dynamic isn't a reason for smaller suppliers to panic, Robinet said. The growing volume of electronics in electric and autonomous vehicles, including the computer driving the cars, will require intensive temperature regulation, he said.
Additionally, temperature regulation for passengers is becoming increasingly localized — or catered to individual riders — requiring heating and cooling to come through seats, the floor and door panels.
In addition to electronics and passenger temperature regulation, electrified vehicles will also need to maintain battery and motor temperatures.
Flexible suppliers will be able to take advantage of the heating and cooling demands of these vehicles.
But suppliers must be willing to let go of traditional models and product offerings to profit from the changes, Robinet said.
"We need to help suppliers understand the level and the gravity of the changes that are coming in the market," he said. "Some of the midsize suppliers stand the chance of being left behind if they aren't proactive in how they address the number of changes we see."
Megasuppliers such as Continental AG, ZF Friedrichshafen and Robert Bosch are investing heavily in major trends such as electrification, advanced driver assistance systems, connectivity and autonomous technology. That means midsize suppliers must be more aggressive about emerging automaker demands, invest more in innovation and collaborate on technologies in which they have less experience, Robinet said.
Changes in the supplier segment are inevitable, he said, but it won't necessarily spell doom for smaller companies.
"The sky is not falling," Robinet said. "The number of changes over the next five years are going to be tremendous. That's going to set you up for the decade after that."