WCX 2024: Tier 1s Rolling with the Rocky Transition to EVs

Disruptors to business plans and production volumes have Tier 1 suppliers facing strong headwinds.

ZF has designed its fourth-generation eight-speed automatic transmission as a hybrid modular system. It’s the technical basis for the next generation of PHEVs with high “pure electric” driving ranges. (ZF)

The jagged transition from ICE-powered vehicles to EVs and shorter lifecycles for new technologies are gnawing at Tier 1 suppliers’ production volume forecasts. “It’s a difficult task for Tier 1s and our sub-suppliers,” Joe Palazzolo, Dana Incorporated’s global director for electrification, said during SAE WCX 2024’s final Leadership Summit session, which focused on issues facing Tier 1 suppliers. “Are we planning for 200,000 units or 20,000 units?”

Dana’s Joe Palazzolo speaks at WCX 2024. (SAE)

Many Tier 1 suppliers have ICE-related and electrified product portfolios. But the twist is the uncertainty surrounding volumes for ICE-powered vehicles versus electrified vehicles. “It’s tough right now,” said Harry Husted, chief technology officer for BorgWarner. “When we have product ready and a contract awarded and the volume doesn’t ramp up the way you planned, it’s a challenge.”

WCX 2024’s Thursday afternoon Leadership Summit panel featured Tier 1 suppliers. From left to right: BorgWarner’s Harry Husted, ZF’s Joerg Trampler, and Schaeffler’s Chris Shamie. (Kami Buchholz)

Chris Shamie, whose responsibilities include e-axle and hybrid systems at Schaeffler, knows that during the mobility industry’s ongoing upheaval, things can be very transient. “We really had to make sure that we weren’t giving up on the foundational business,” Shamie said. “And we’re trying to be nimble and balancing our resources both from an engineering point-of-view and a manufacturing point-of-view.”

WCX 2024’s final Leadership Summit session spotlighted Tier 1 suppliers. From left to right: Amazon Web Services’ William Foy, Dana’s Joe Palazzolo, moderator Jason Stein, and BorgWarner’s Harry Husted. (Kami Buchholz)

The uneven shift to electrified vehicles is also shortening product lifecycles as technology moves quickly with next-generation iterations. “The idea of developing a propulsion system and having it in the market for 10, 15, 20 years doesn’t exist anymore,” Dana’s Palazzolo said. BorgWarner’s Husted agreed that shorter product lifecycles are becoming the norm. “What’s challenging is when you don’t get the full program volume that was planned for and already the product is ramping down because something newer and better is replacing it,” Husted said.

Joerg Trampler, program director for electrified powertrain technology at ZF Group, noted that before ZF launched its fourth-generation eight-speed automatic transmission last year, internal discussions predicted a very short lifespan for the product. The transmission is the technical basis for the next generation of plug-in hybrids (PHEVs) with high “pure electric” driving ranges.

“But now we look at it with a different point-of-view,” Trampler said, noting the product’s lifespan could extend into the late 2030s. ZF’s lifespan prediction for its eight-speed automatic transmission got rosier with news from GM earlier this year. The automaker again will have PHEVs in North America via select vehicles. (GM’s last U.S.-sold PHEV was the Chevrolet Volt, which ended production in 2019.) Current PHEVs available in the U.S. include utility vehicles (Jeep Grand Cherokee 4xe, Jeep Wrangler 4xe, Kia Sorento PHEV, Hyundai Tucson PHEV, Ford Escape PHEV), sedans (Toyota Prius Prime), and minivans (Chrysler Pacifica PHEV).

BorgWarner’s Husted said the short shelf life for many products is a shared experience. “For us and most of the Tier 1 community, we’ve been supplying to a propulsion world that’s ICE-based with multi-speed transmissions,” Husted said. That changes with all-electric vehicles that use a single-speed transmission. “Some of your products in the new architecture just disappear.”