Tom Cullen, chief analyst at Transport Intelligence told us, this week that the automotive sector has to reconsider its supply chains in light of the rising demand for electric and autonomous vehicles.

There have been several reports of supply chain changes among automakers (OEMs), but Mr. Cullen claimed that something more fundamental was going on.

"The big shift is not only electric propulsion, but automatic guidance systems," he added. "They are completely changing the nature of the motor car and with that comes a completely different supply chain - failure to recognize this will lead to a crunch in sourcing of parts.".

In essence, according to Mr. Cullen, conventional automakers' suppliers have come to depend increasingly on one specific auto sector for business. OEMs will start to face increased competition for battery and guiding technology as the market shifts to electric and autonomous vehicles, which Mr. Cullen claimed had already happened.

The Semiconductor Shortage

"We know this is going to happen because it already has with the semiconductor shortage, with just 10 per-cent of demand coming from car makers," the guy said. "Semiconductor manufacturers haven't given priority to automobiles, and I don't see that changing very soon. An auto industry accustomed to having suppliers answer to it will find this confusing.

Mr. Cullen is still sure that a shift is on the horizon, but that few people are paying attention to it. He points to the recent surge in electric vehicle production in China, which has turned the nation from an importer of cars to an exporter.

"It's all about scheduling of plants that manufacture parts, as a fixed asset requiring a very high level of utilisation, they won't work on just-in-time," he added. They will pursue optimal scheduling, which will differ greatly from the just-in-time paradigm that OEMs are accustomed to and anticipate.

However, since their suppliers would no longer be subject to them, the automobile industry will need to adjust to a new region, product, and client base.

Despite acknowledging that new OEMs would suffer because they lack established supply networks, one OEM source said it was unlikely that the industry's power dynamics would shift.

"For new start-ups it may be different, but their volumes are insignificant when compared with those of the large established car manufacturers," the speaker remarked. But from my vantage point, the bigger guys continue to control the game.