The evolving automotive supply chain — and it is evolving, perhaps more than casual observers are aware — is forcing companies to rethink best practices when it comes to getting cars out of the factory and into customer hands. Some are focusing on making their supply chains more independent while others are trying to find more ways to work together. No one says both approaches can’t be right, depending on the situation.

VW calls batteries ‘the heart’ of EVs, moves more production in-house

Volkswagen, for example, fits into the first category. The German automaker issued a press release Monday talking about the battery system that lies “at the heart” of the company’s new electric vehicles, the ID.3, ID.4 and ID.4 GTX.

The reason this may matter to Transmission readers is because VW is taking more control of the battery production process, calling packs a “core component.” VW knows that building its own batteries is vital as the EV industry moves forward, and Thomas Schmall, member of the Group Board of Management for Technology and CEO of Volkswagen Group Components, said in a statement, “The battery is the technical heart of the electric vehicle as it determines driving pleasure, costs, range and charging experience. For this reason it plays a key role for ensuring sustained customer satisfaction in our Group brands.”

When it started building the e-Golf a decade ago, VW used cells provided by outside suppliers like Samsung and Panasonic. VW still uses outside cells for its current generation of EVs — LG Chem provides the cells for the ID.4, for example — and puts the packs together at the Volkswagen Group Components facility in Braunschweig, Germany. VW also makes EV battery packs at its Foshan and Anting locations in China, with Chattanooga, Tennessee, and Mlada Boleslav, Czech Republic, soon to be added to the list. But bigger battery plants are on the way.

Just before VW held its Power Day in March, it told its cell suppliers in South Korea that their pouch cell technology would not be a part of VW’s upcoming unified prismatic battery plans. VW will still require cells and other battery components from suppliers, but it is increasing its direct involvement in the production process. The most notable change came in VW’s announcement that day in March when it said it would build six battery “gigafactories” in Europe with a total production capacity of 240 GWh by the end of the decade.

For semiconductor chips, collaboration is key

In contrast to VW’s “we want more independence” moves on the battery front, we can point to an announcement from the largest global trade association for the design and manufacture of semiconductors, SEMI, and the think tank Center for Automotive Research (CAR). SEMI and CAR signed a memorandum of understanding (MOU) last month to explore “increased supply chain collaboration between the semiconductor and automotive industries.”

CAR said this week that with electronic systems becoming critical differentiators in vehicles, there is value in having automakers, suppliers and semiconductor manufacturers work together.
“The result” of this increased collaboration “is intended to help connect larger cross sections of the supply chains and minimize the impact and risk of future chip shortages and oversupply,” CAR said.

“This MOU provides vehicle OEMs with access to innovation, the ability to influence technology direction and pace, along with greater visibility into global supply chain developments,” said Dave Anderson, president of SEMI Americas, in a statement. “Working with CAR will expand the cross-industry collaboration that is part and parcel to our automotive electronics and mobility activities, helping SEMI members in the global electronics design and manufacturing supply chain to better serve their automotive customers.”

What both of these approaches have in common is that they recognize the true value of understanding the many levels of a supply chain. As Mary Buchzeiger, CEO of metal parts supplier Lucerne International, told Automotive News over the weekend, “There’s not enough transparency in supply chains. If you get down to the nth degree of a supply chain and there’s one supplier that can’t supply a little piece of foam that goes into some large assembly, then you’re shutting down the assembly plant.”