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The automotive industry is one of the most influential industries in the world. The growth and innovation within this market have drastically changed how people travel. It’s not just about cars anymore; it’s also about designing, manufacturing, and distributing all of the products into each car. When you look at an automobile supply chain map today, dozens of links make up a single vehicle. With innovations on the horizon for autonomous vehicles and more electric vehicles coming onto the consumer market soon, this list will only continue to grow. Here is the forecast of the automotive supply chain for 2022.
1. Autonomous Vehicles
One of the most talked-about innovations in the automotive industry is the development of autonomous or “self-driving” vehicles. Many major automakers and technology companies are investing in this technology, and it is expected to have a huge impact on the automotive supply chain.
The components necessary for developing a fully autonomous or “self-driving” car are similar to the components used for infotainment systems, such as cameras and sensors. This means that there will be a huge demand for these products in the future. The market for these components is expected to grow by $55 billion by 2027.
2. Electric Vehicles
Electric vehicles (or EVs) have recently seen an increase in popularity due to their ability to reduce CO2 emissions and the rise of Tesla’s Model 3. This technology has already started impacting the supply chain. Still, experts predict this trend towards electric vehicles will continue until they make up over 30 percent of all new cars sold by 2022. The automotive supply chain will need to adapt to produce more electric car components with the increasing demand for EVs. Car shipping is also expected to increase in 2022.
One of the main challenges that suppliers face is that the production of EVs requires a different set of components than gas-powered cars. For example, batteries and electric motors are two key components used in EVs. The market for these components is expected to grow by $70 billion by 2025.
3. Connected Cars
Another trend that is expected to have a large impact on the automotive supply chain is the increasing popularity of connected cars. These vehicles are equipped with internet-connected features such as sensors, GPS tracking, and Wi-Fi hotspots.
The number of connected cars is expected to grow significantly in the next few years, going from just 12 percent of all new cars sold in 2017 to 60 percent by 2020. As a result, there will be an increased demand for components used to develop connected car technology. An example is a market for electronic control units (ECUs), which provides telematics services and advanced driver assistance systems. The market for these components is expected to reach $49 billion by 2022.
4. Globalization
In addition to shifting consumer preferences and innovations, globalization is another factor affecting the automotive supply chain. There has been a growing trend towards companies investing globally due to increasing trade agreements and more multinational corporations establishing themselves overseas, which has led to a shift in production. This has allowed certain companies to make the most of their global presence by producing components in foreign countries while selling other products in different locations.
For example, General Motors and Ford have recently moved their car-making facilities to Mexico and China, respectively. As a result, suppliers in these two regions will see an increase in demand because they supply materials for these automakers to use in their vehicles.
5. Automation
The automotive supply chain is also expected to see increased automation due to the advancements made with artificial intelligence (AI) and robotics. Many large automakers such as Tesla and BMW are implementing machines into their factories to reduce the cost of producing vehicles significantly.
As a result, many suppliers are moving their production facilities to countries like China and Mexico, where it is cheaper to develop automated factories. The market for robots used in the manufacture of vehicles is expected to grow by 50 percent over the next few years, thanks to increasing demand from automakers and suppliers.
Several trends are expected to significantly impact the automotive supply chain in the next few years. These include the increasing popularity of EVs, the growth of connected cars, the globalization of the automotive industry, and the increasing use of automation. Suppliers that can adapt to these changes will be better positioned to meet automakers’ demands in the coming years.
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