From ICE to EV: conceptualizing changes to powertrain sourcing

Keywords:

Abstract:

In light of the momentum towards electrification of the auto sector, it is important to understand the implications of such a shift for the geography of production, especially the distribution of assembly operations and sourcing of powertrains. The powertrain (engine and transmission) represents a large part of the cost of a vehicle (about the same as final assembly). EVs use electric motors and batteries rather than conventional engines or transmissions. Carmakers feature established supply chains for ICE powertrains, involving a number of large plants. In fact, powertrain plants are typically larger typically than vehicle assembly plants, and more spatially concentrated than vehicle assembly. Due to the large degree of vertical integration observed for powertrain production, powertrain operations are typically part of the carmaker operations.
In 2020, 5.3% of all light vehicles sold in the U.S. were either BEVs, HEVs, or PHEVs. One-half million units were produced in North America. IHS Markit forecasts sales of alternative fuel vehicles to reach around 15% in 2030 in the U.S. market. Where will these vehicles be assembled, and where will they source their powertrains?
This paper looks at early evidence of the geography of EV production. As the transition to EVs moves forward, the biggest upheaval could take place in engine and transmission production. This will invariably raise policy questions. The paper utilizes 2020 data of vehicle production and powertrain sourcing to compare the current supply chains of North American vehicle production by propulsion system (ICE vs EV), and, if available, forecasts for the 2020-30 decade. Data available from IHS Markit allows us to document the locations of final assembly of essentially every light vehicle produced in North America, and the source of every engine and transmission. That data is provided for EVs as well, though they have no transmission in the conventional sense. We offer preliminary evidence on the extent to which the distribution of EV production and powertrain sourcing might deviate from or, conversely, reinforce the current distribution of ICE vehicle production and powertrain sourcing in North America.

References:
Taking the high road: strategies for a fair EV future; UAW research department, 2020, accessed at: https://uaw.org/wp-content/uploads/2019/07/190416-EV-White-Paper-REVISED...
Klier, Thomas, Rubenstein, Jim. 2020. ICE Age Geography: Powertrain Sourcing in Europe and North America. Paper presented at the 2020 Gerpisa international colloquium