Even though consumers still are barely tiptoeing into the waters of electrified vehicles, suppliers around the world already are profiting from the industry's move toward electrification in the face of tightening emissions standards and local pollution regulations.
Electrification—from drivetrains to smaller components such as heaters and suspensions—is shaking up the supply chain, analysts and industry executives say. That leaves an opening for small, agile companies to develop specialized components and forces larger ones to confront their future.
GKN is one of several global suppliers now on board. And it was a moose that convinced the British engineering company that electrification should be the focus of its automotive business.
Not actually a live animal but the infamous "moose test" conducted by Swedish journalists in 1997 on the first Mercedes-Benz A class. The A class—Daimler's first modern small car, which was just coming to market with much fanfare—tipped over during a maneuver meant to simulate avoiding a large animal crossing the road.
At the time, GKN was heavily involved in making viscous couplings. But the fallout from that A-class rollover led Mercedes and other manufacturers to equip their vehicles with electronic stability control systems that were not compatible with GKN's couplings. GKN was not involved with the A class, but it recognized a threat to a core product offering, and as a result started to develop mechatronic and electrified systems that were compatible, said Peter Moelgg, CEO for all-wheel-drive and electric-drive systems at GKN.
Fast-forward to 2018, and GKN now has $3.93 billion worth of electric-drive orders on its books, up from $3.36 billion a year ago. The company now is a leader in electrified axles for premium and high-performance cars such as the Porsche 918 and BMW i8, and even London taxis.
"We realized that there were problems that didn't have mechanical solutions," said Moelgg, who has been with GKN since 1979. The company, which Melrose Industries recently acquired in a hostile takeover, ranks 31st on the Automotive News list of the top 100 global suppliers—up from 37th last year.
"This is a technology disruption that is so much more significant for suppliers than autonomous vehicles or ride-sharing," said Paul Eichenberg, a former vice president for strategic planning at Magna International who is now an independent consultant. Full-electric drivetrains will use far fewer components, Eichenberg said, and power management systems depend heavily on software and semiconductors, two areas where most traditional automotive suppliers are playing catch-up. "The challenge for suppliers is having the electrical competency," Eichenberg said.
Punch Powertrain, a Chinese-owned transmission supplier based in Belgium that produces about 1 million units annually, has taken a winding route to develop those competencies. But it appears to be paying off.
The company started as a subsidiary of Dutch truckmaker DAF, then Sweden's AB Volvo, and eventually was taken over by German supplier ZF Friedrichshafen in the late 1990s, when it began to develop hybrid and electric technologies. Then, in 2006, it was acquired by Punch International, a Dutch company, with the goal of bringing a hybrid vehicle to market, said Gert-Jan Vogelaar, Punch's strategic marketing director. That never happened because of the economic crisis and other factors, Vogelaar said. The company changed hands again before being acquired by the Yinyi group of China in August 2016.
Yinyi has been "very supportive" of developing electrified components, Vogelaar said. And at the beginning of May, PSA Group announced that Punch Powertrain would be providing continuously variable transmissions for 48-volt mild hybrid applications in the group's vehicles starting in 2022. This year, Punch will be bringing to market a complete electric powertrain, featuring a motor of its own design. "By 2025, we expect that more than 50 percent of our business will be in electrification," Vogelaar said.