As automakers race to roll out new electric vehicles to meet rising demand and government rules, battery manufacturers are rising on the annual list of the world's largest auto suppliers, compiled by sibling publication Automotive News in Detroit.
The arrival of the battery-electric vehicle era is roiling the supplier market. BEVs generally have fewer components than their internal combustion engine counterparts, and many automakers are bringing the development of several of those components in-house, said Michael Robinet, executive director of automotive advisory services at S&P Global Mobility.
Massive battery plants, including those built by battery suppliers, automakers or joint ventures between the two, account for an increasingly large portion of those investments. A new joint EV battery plant by Stellantis and Samsung SDI in Kokomo, Ind., is coming with a price tag of $3.5 billion, for example. An LG Energy Solution plant near Phoenix will cost $5.5 billion. Stellantis and LG Energy Solution are also building a battery plant in Windsor, Ont.
But making major investments for the future while managing significant supply chain challenges and financial pressure in the short term has been a difficult juggling act for many companies, particularly smaller suppliers without the financial resources of the large, publicly traded companies. While sales revenue is at a healthy level at many companies when compared to the pre-pandemic period, profits have lagged pre-pandemic levels at a significant number of suppliers, both large and small. Despite lower volumes, automakers were generally able to reach high profit levels in 2021 and 2022 by raising prices and reducing incentives. But suppliers' costs have remained elevated.