Automakers and Suppliers Join Forces to Slash Costs and Boost Affordable EV Production

This shift is driven by the realization that failure to do so could lead to losing market share to Chinese competitors.

The emergence of affordable Chinese electric vehicles has ignited a sense of urgency among traditional automakers.

They are now turning to suppliers across various domains, including battery material manufacturers and chipmakers, to reduce costs and expedite the development of cost-effective electric vehicles (EVs).

This shift is driven by the realization that failure to do so could lead to losing market share to Chinese competitors.

Andy Palmer, Chairman of the UK-based startup Brill Power, emphasized the importance of affordable EVs for automakers.

Brill Power has developed hardware and software solutions to enhance the performance of EV battery management systems.

Their products could potentially increase EV range by up to 60% while allowing for the use of smaller and more cost-effective batteries.

The high cost of EVs has raised concerns about slowing demand, further emphasizing the need to cut production costs. Renault, for instance, aims to reduce EV costs by 40% to achieve price parity with conventional fossil-fuel vehicles.

Stellantis is partnering with China’s CATL to produce cheaper LFP batteries and recently introduced the Citroen electric e-C3 SUV, priced starting at 23,300 euros.

Volkswagen and Tesla are also working on developing affordable EVs priced at 25,000 euros. Vincent Pluvinage, CEO of OneD Battery Sciences, noted that automakers are prioritizing cost reduction over other factors in their discussions.

OneD integrates silicon nanowires into graphite EV battery anode material, resulting in improved range and reduced charging time while saving nearly 50% in costs.

Veekim, based in Hodenhagen, Germany, has developed an EV motor using ferrite (iron powder) instead of rare earth materials, cutting the motor’s price by 20%.

Legacy automakers are eager to reduce their dependence on rare earths, which are predominantly sourced from China.

To further reduce costs, chip maker NXP is collaborating with automakers to reduce the number of electronic control units in EVs, Siemens has introduced digital twin simulations to expedite EV development, and European automakers are responding to the competition from China with lower-cost EV offerings.

Even U.S. automakers, partly shielded from Chinese imports due to subsidies, are keen on producing more affordable EVs.

GM, for example, has saved billions by developing a cost-effective battery pack with LFP batteries for its revamped Bolt EV, set to launch two years earlier than planned.

Ford plans to cut costs by increasing the “in-sourcing” of parts like batteries and inverters.

Premium automakers are also striving for cost reduction. Michigan-based Our Next Energy is developing more affordable LFP-based battery packs, offering equivalent electric driving range at half the price.

Additionally, innovative suppliers like CelLink and Addionics are introducing solutions to replace costly components and materials in EV production.

In summary, the demand for affordable electric vehicles has driven traditional automakers to collaborate with suppliers and adopt cost-cutting measures across various aspects of EV production, from batteries to electronics, in a bid to stay competitive in the rapidly evolving market.