CANADA'S LEADING INFORMATION SOURCE FOR THE METALWORKING INDUSTRY

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CANADA'S LEADING INFORMATION SOURCE FOR THE METALWORKING INDUSTRY

CANADA'S LEADING INFORMATION SOURCE FOR THE METALWORKING INDUSTRY

INSIDE THE NUMBERS: Which vehicle components will represent the greatest revenue potential by 2030?

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The value of EV components and advanced electronics components, such as powertrains, advanced driver assistance systems and infotainment electronics are forecasted to account for 36% of the market by 2030 compared with 11% in 2022, growing from $116 billion in revenues to $591 billion, according to a report by McKinsey & Company. PHOTO courtesy Schaefller.

North America’s automotive parts suppliers are entering a long period of upheaval, marked by formidable challenges and risks with no easy answers. To prosper they must manage with poise and precision the transition away from their decades-long allegiance to the parts, processes, and partners of the internal combustion engine (ICE) market and align their capabilities with the new demands of electric vehicle (EV) production.

In its report Work the core: How auto suppliers can get fit for the EV transition McKinsey & Company provide estimates for how the global vehicle component market will transform from 2022 to 2030. Of concern to suppliers currently focused solely on ICE related components (engine systems, transmissions, and fuel injection systems) is that the value of this market segment is expected to decrease significantly from the $219 billion reported in 2022 to an estimated $146 billion by 2030. Conversely, the value of EV components and advanced electronics components, such as powertrains, advanced driver assistance systems and infotainment electronics are forecasted to account for 36% of the market by 2030 compared with 11% in 2022, growing from $116 billion in revenues to $591 billion.

Yet, here is where things get complicated, requiring automotive suppliers to smartly strategize how they will navigate the transition. Even as electrification rolls out, the majority of parts will remain the same as they were in vehicles powered by ICE.

Core vehicle components, including the axle system, suspension, body in white, and front and rear structure, will remain a key part of the equation. McKinsey & Company estimates these will represent 55% of total market revenues by 2030, compared to 69% at present, and will generate revenues of $886 billion, compared to $748 billion in 2022.

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