Time to Turn ‘BEV’ into a Verb

‘To BEV’ means more than just increasing capacity to build vehicles, batteries and e-drive systems.

February 1, 2022

Michael Robinet

Toward a BEV future: 2023 Cadillac Lyric under test. (Cadillac)

Happy trails to 2021. While vehicle dealers made record profits, most of the industry is overjoyed to place this chip-starved, labor-deprived, and cost-escalated year in the rearview mirror. Despite the constant supply line interruptions and the erratic schedules impacting vehicle output the world over, it was a critical year for the future of the battery-electric vehicle. Virtually every global vehicle OEM significantly built upon or upwardly revised investment plans for future propulsion battery and BEV production and development, with billions in capital devoted to the foundation for the BEV’s future.

Though my Grade 2 (that’s Canadian for 2nd grade) teacher would surely cringe, I’m officially turning ‘BEV’ into a verb. To ‘BEV’ is the activity of increasing Battery Electric Vehicle production or building components/systems for this emerging propulsion format. BEVing is more than just increasing capacity to build BEVs, batteries and e-drive systems. It entails a wholesale shift in the value chain, the cadence/lifecycles, skills and alliances required, how the dealer network fits into this complex equation, and downstream revenue opportunities for all players within the ecosystem.

In light of this shift, virtually every supplier now must determine its trajectory from a perspective within the electrified propulsion supply chain. Strategically, each supplier has or will need to establish whether its technology, relationships and processes are BEV-Negative, BEV-Agnostic or BEV-Positive. Now more than ever before, ensuring that strategy is optimized for the growth of BEV volume and the commensurate shifts in value-add and lifecycles is key to future competitiveness. OEMs are using this transformation to ensure they control those aspects of the BEV which can truly differentiate, and bolster value.

Let’s delve into this further. The classic BEV-Negative sectors are fuel, exhaust and powertrain/ driveline. While there are other sectors heavily impacted by this new propulsion format these are either eliminated or altered substantially as an organization BEVs. Basic questions emerge: What is the trajectory of the remaining ICE volumes? Will the lifecycles lengthen, and the associated technologies stagnate? Can the production processes or material capabilities transfer to BEV associated systems?

In the end, all suppliers need to understand their prospective role in the new ecosystem. Specifically, those in BEV-Negative sectors need to establish if 1) they are going to shift to a new, more BEV-focused system; 2) sustain the current path and limit capital/new resources to ‘cash cow’ their position for the next few cycles; 3) become a consolidator in their space by eliminating capacity and reducing the number of players, or 4) or simply sell off or close up shop when the volumes and or financial returns become unsustainable. These considerations will determine their long-term fate.

While the true trajectory of BEV volume through the balance of the decade will surely be debated, we are well past a simple small investment or skunk-works-level initiative when BEVs are considered. Massive investments, structural shifts in development capabilities, new alliances and commitments underscore that we are past the point of no return for many participants. The industry is going to BEV; the question is the pace and how the industry conforms to this new reality.