Site Loader
Rock Street, San Francisco

8. German automakers


The Automakers
govern the direction for the future of the suppliers. For German suppliers who
cater the German automakers, the direction taken by the makers is the bible to
be followed. They have to enhance their competency and be inline with the
makers plan and sustain their businesses in the future.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!

order now


Daimler and BMW the base pillars of German automotive industry are planning
their steady transformation; in acceptance of the threats to the climate change
and the ill effects of pollution from the combustion engine cars. They are keen
about the overall lifecycle of the product pollution including the
manufacturing methods. The companies are working on the transformation from traditional
to electric cars in their portfolio, while preparing various models and
platforms on large scale. However they are also skeptical about the rapidness
of the change, as a complete transformation requires a massive improvement in
infrastructure that could possibly take a longer time.


8.1 Volkswagen


Volkswagen the world’s
largest automaker by sales in 2016 has a vision of a future with zero emissions
from its products. The company is stepping up its game in electric cars with an
investment commitment of around 20 billion euros till 2030 in zero-emission
vehicles. 62


Currently Volkswagen offers e-golf and e-up! in the
electric car segment. Golf GTE and Passat GTE in the hybrid car segment. The
company plans to enter the electric car mass-market segment in 2020 with the
launch of I.D. a highly automated electric car in MEB platform capable of
delivering a range of 400 to 600 kms. 63 Volkswagen plans about 80 new
electric cars across all of its brands by 2025. The vision of the company is to
offer an electric version of each of its 300 models by 2030 across various
brands in its group.64


With this aggressive vision for electrification the
company also expects the sustenance of traditional vehicles up until 2030 with
regards to various constraints. However the company is convinced the long term
is with zero emissions.



8.2 Daimler


Daimler in its luxury brand Mercedes-Benz plans to offer
electric motors for all models by 2022. The company is also continuously
working to optimize the classic internal combustion engine, as it will continue
to be the backbone of mobility at present and immediate future once again concerning
lacking infrastructure. It is planned to move to all electric future in
multiple steps starting from advancing the hybridization of the fleet up until
reaching a point of all-electric mobility. With the heavily invested Smart
brand a lot of base knowledge has been gained on the nitty-gritty’s of electric
fleet. In the years of 2016-2018 the company plans to invest 5.4 billion euros purely
on the research and development of the passenger car electro mobility. 65


Daimler currently offers hybrid versions in its current
line up of C-class, E-class and S-class models from Mercedes brand, and all
electric car fortwo in smart brand. Daimler is planning to introduce its future
products based on an architecture developed specifically for battery-electric
models displayed as concept EQ, the all-electric model to be placed in SUV
coupe segment with an expected range of 500 kms. 66


8.3 BMW


BMW has already
launched the i3 all-electric car in 2013. The company is rapidly transforming
itself to create an eco-friendly future through its cars. BMW is preparing its
factories at Dingolfing and Leipzig for mass production of electric vehicles by
2020. The company plans a list of 25 eco friendly cars by 2025, with 12 purely
battery-powered models by 2025. 67


The company plans
to integrate fully electric vehicles into its existing models. The introduction
of all electric mini and x3 are planned for 2019 and 2020 respectively to be
produced in Leipzig plant. The fully electric “iNEXT” is to be manufactured at Dingolfing
by 2021. With the improvement in battery technology the company predicts the
range will not be a differentiating factor, however an optimum balance between
safety, range, duration and life of the battery is essential. BMW has developed
its own expertise in electric drivetrains, power electronics and battery cells.

The substantial in-house value creation in electro-mobility for BMW is better
than its competitors such as Tesla to take advantage of benefits in terms of
cost. 68



9. German Suppliers


From the
observation of future visions and plans of the automakers, the imminent shift
completely into electric cars is clear. The rapidness of the change is expected
to pick up post 2020s due to model development and infrastructure constraints. With
the concrete plans of the automakers we examine the suppliers to identify the
impact on the business fronts. For our analysis we first split the suppliers
into 2 major categories as Tier 1 and Tier 2 & 3.


The tier 1 category
consist of 15 major German suppliers representing the foundation of automotive suppliers
in Germany, they are sustainable companies with very strong expertise and
presence in global automotive industry recognized for their technological
excellence. The wave of change in the industry first starts the ripples from
the major suppliers. All the 15 major suppliers are welcoming the change and
molding themselves by exploring new business models for their sustenance.


Following the
major suppliers comes the tier 2 and tier 3 suppliers. These suppliers act as
the supporting blocks for the tier 1 suppliers and also to the automakers.

Their expertise are rather acute and narrow to follow the manufacturing and
supply of tailor made parts that support the manufacturing of the car. The
automakers consistently invest and build these suppliers to deliver the
products with highest quality in terms of precision of parts. The processes
followed by them are constantly checked and approved by the makers. The
automakers also take the responsibilities in their business sustainability, as
they are completely dependent on them.

Figure 11: Tier 2&3 Supplier segmentation Source: Own illustration


Of all the 600
automotive suppliers part of VDA in Germany, a total of 93 suppliers are associated
to the supply of engine and power train parts while the others that supply
parts such as seats, lights, glass etc will not be impacted. For this thesis,
we classify the 93 engine and power train part suppliers into 5 categories
based on the type of parts supplied by the suppliers.


and fuel management part suppliers

and Core parts suppliers

and Electronic parts suppliers

and vibration handling parts suppliers

parts suppliers


Of the 5 types,
The Air and fuel management part suppliers along with the critical and core
part suppliers will be the most impacted as these are the parts that was
developed uniquely for the combustion engine. These suppliers are delivering to
the unique component parts developed by the carmakers and can only supply to
them due to the uniqueness of the parts.


Post Author: admin


I'm Dora!

Would you like to get a custom essay? How about receiving a customized one?

Check it out