Electric vehicles generate less than 2 percent of U.S. light-vehicle sales, but the fledgling segment is triggering a shakeout among vendors of powertrain components.
IMG01RSuppliers are selling, spinning off or reinventing divisions that produce parts for internal combustion engines in anticipation of EV growth, according to an analysis by Paul Eichenberg, founder of Paul Eichenberg Strategic Consulting, of suburban Detroit.
Over the next five years, the 10 largest automakers will introduce 158 battery-electric vehicles worldwide. Suppliers see the writing on the wall, Eichenberg told Automotive News.
"The automakers have really accelerated their strategies for vehicle electrification," he said. "Nobody wants powertrain assets because this business is going to go through a long, slow death."
The spinoff trend, which began a couple of years ago, is picking up steam:
- Honeywell spun off its turbocharger division into a company called Garrett in October.
- Continental will spin off its powertrain division next year into a separate $8.2 billion company.
- Tenneco Inc., which just completed the acquisition of Federal-Mogul, will spin off its powertrain unit next year into a $10.7 billion company.