New suppliers are racing to enter the electric vehicle market

Woking, England, Jan. 23 (Reuters) – The global auto industry has committed $1.2 trillion to developing electric vehicles, providing a golden opportunity for new suppliers to land contracts that supply everything from battery packs to motors and inverters.

Startups specializing in batteries and coatings to protect electric vehicle parts, and suppliers traditionally focused on niche motorsport or Formula 1 (F1) racing, have been chasing contracts for electric vehicles. Automakers design platforms that last a decade, so full-size models can generate significant revenue for years.

The next generation of electric vehicles is due to arrive around 2025 and many automakers have sought help filling gaps in their expertise, providing an opportunity for new suppliers.

“We’re back in the days of Henry Ford where everyone would ask ‘How do you get this stuff to work right?'” says Nick Fry, CEO of McLaren Applied Engineering and Technology F1. “.

“This is a huge opportunity for companies like us.”

Bought from McLaren by private equity firm Greybull Capital in 2021, McLaren Applied has adapted an active inverter developed for electric vehicle F1 racing. The inverter helps control the flow of electricity to and from the battery.

The IPG5 silicon carbide inverter weighs just 5.5 kg (12 lb) and can extend the EV range by over 7%. McLaren Applied is working with about 20 automakers and their suppliers, Frey says, and the inverter will appear in full-size luxury EV models from January 2025.

Mass-market automakers often prefer to develop EV components in-house and own the technology themselves. After years of spare parts shortages linked to the pandemic, they worry about over-reliance on suppliers.

“We can’t count on third parties making these investments for us,” said Tim Slater, Ford president. (FN) in Britain.

Traditional suppliers, such as heavy German companies Bosch and Continental (CONG.DE)is also investing heavily in electric vehicles and other technologies to stay ahead in a rapidly changing industry.

But smaller companies say there are still opportunities, particularly with lower-volume manufacturers that can’t afford huge investments in electric vehicles, or luxury and high-performance automakers seeking an edge.

Croatia’s Rimac, a maker of electric hypercars that is partly owned by Germany’s Porsche (P911_p.DE) which also supplies battery systems and powertrain components to other automakers, an undisclosed German automaker says it will use Rimac’s battery system in a high-performance model — with annual production of about 40,000 units — starting this year, with more on record.

“We need to be 20% better, 30% better at what they can do and then work with us,” says CEO Matti Remac. “If they can make a 100-kilowatt-hour battery pack, we should make a 130-kilowatt-hour pack with the same dimensions and the same cost.”

No time to lose

Some suppliers like Actano in Cambridge, Massachusetts have longstanding relationships with electric vehicle leader Tesla. (TSLA.O). Actanano has developed a coating that protects electric vehicle parts from condensation and has spread its business to Advanced Driver Assistance Systems (ADAS), as well as other automakers including Volvo. (VOLCARb.ST)Ford, BMW (BMWG.DE) and Porsche.

California startup CelLink has developed a fully automated, flat, easy-to-install “flex harness,” instead of a harness, for bundling and routing cables in a vehicle. CEO Kevin Coakley didn’t identify the customers, but said CelLink harnesses have been installed in about 1 million electric vehicles. Only Tesla has this scale.

Coakley said CelLink has been working with U.S. and European automakers, and with a European battery manufacturer on battery wiring.

Others focus on lower-volume manufacturers, such as UK startup Ionetic, which is developing battery packs that would be too expensive for small companies to make themselves.

“Right now, the cost of electrification is very high, which is why you see some manufacturers delaying their electrified launch,” said CEO James Eaton.

Since 1971, Swindon Powertrain has been developing powerful motorsport engines. But it has now also developed battery packs, electric motors, and electronic hubs, and works with about 20 clients, including automakers and an electric vertical take-off and landing (eVTOL) aircraft maker.

“I knew if we didn’t embrace this, we were going to end up working in museums,” said managing director Raphael Kyle.

But time may be running out.

Matti Rimac says that in the past three years, major automakers have rushed to roll out electric vehicles and now have strategies to a large extent.

“For those who haven’t signed projects, I’m not sure how long the window of opportunity will remain open,” he said.

($1 = 0.8226 pounds)

(Reporting by Nick Carey) Editing by Mark Potter

Our standards: Thomson Reuters Trust Principles.

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