Given the automotive industry’s highly integrated supply chain network, disruptions from the coronavirus crisis have had a ripple effect across the industry.
However, car makers have long committed to multiple parts suppliers in case issues arise, which will help delays to some degree. On the other hand, it will also take time to ramp up supply to address the backlog created over the past few months, due to the industry’s lean manufacturing approach.
Peter Wells, an industry expert at Cardiff University, says: “The industry has worked hard to get rid of stock, as it’s expensive to hold. It’s great for driving down costs – until you hit this kind of problem.”
The biggest problem will be sourcing components for battery-electric vehicles. Wells explains: “It was already a pressure point pre-virus. The supply chain is relatively narrow and goes all the way back to cobalt production. These are major investments.
“I know of investment plans already postponed by big players in the battery production supply chain because they don’t have the money. These firms are battening down the hatches at a time when the car industry is trying to build. Some manufacturers won’t be able to produce the electric product they want.”
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