LONDON/BERLIN (Reuters) – The humble wiring harness, a cheap component that holds cables together, has become an unlikely disaster for the auto industry. Some speculate that it could speed up the fall of combustion cars.
The supply of auto parts was interrupted by the war in Ukraine, which is home to much of the world’s production, as wiring is made there with hundreds of thousands of new vehicles each year.
These low-tech, low-margin parts—made of wire, plastic, rubber and a lot of low-cost manual labor—may not be as popular as microchips and motors, yet cars can’t be built without them.
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A supply crunch could accelerate plans by some older car companies to switch to a new generation of machine-made, lighter belts designed for electric cars, according to interviews with more than a dozen players and industry experts.
“This is just an additional rationale for the industry to make the transition to electrification faster,” said Sam Fiorani, president of production forecasting company AutoForecast Solutions.
Gasoline-powered cars still make up the bulk of new car sales globally; Electric vehicles doubled to 4 million last year, but still made up just 6% of vehicle sales, according to data from JATO Dynamics.
April (7201.T) Chief Executive Officer Makoto Uchida told Reuters that supply chain disruptions such as the Ukraine crisis had prompted his company to talk to suppliers about moving away from the wire harness model of cheap labor.
In the near term, though, automakers and suppliers shifted tool production to other low-cost countries.
Mercedes Benz (MBGn.DE) It was able to fly in groups from Mexico to plug a brief supply gap, according to a person familiar with its operations. Some Japanese suppliers are adding capacity in Morocco, while others have sought new production lines in countries such as Tunisia, Poland, Serbia and Romania.
Fossil-fueled car belts gather cables up to 5 kilometers (3.1 miles) in the average car, connecting everything from seat heaters to windows. It’s labor intensive, and almost every model is unique, so it’s hard to do a production turnaround quickly.
The supply disruption in Ukraine was a blunt wake-up call for the auto industry. Early in the war, automakers and suppliers said, factories remained open only thanks to the determination of workers there, who kept the flow of moving parts low in the face of blackouts, air raid warnings and curfews.
Adrian Hallmark, chief executive of Bentley, said the British luxury carmaker initially feared losing 30-40% of its 2022 car production due to a shortage of tools.
“The Ukraine crisis threatened to shut down our entire plant for several months, much longer than we did for COVID.”
Hallmark said finding alternative production sources was complicated because the same traditional tools had 10 different parts from 10 different suppliers in Ukraine.
He added that supply issues have sharpened Bentley’s focus and investment in developing a simple harness for electric vehicles that will be powered by a central computer. The automaker, a division of Volkswagen (VOWG_p.DE)It plans an all-electric lineup by 2030.
“The Tesla model, which is a completely different concept from wiring, we couldn’t change overnight,” Hallmark added. “It’s a fundamental change in the way we design cars.”
The new generation of wire harnesses, used by indigenous peoples for electricity like Tesla, can be manufactured in sections on automated production lines and are lighter in weight, a key factor because reducing the weight of an electric vehicle is critical to scaling up.
Several executives and experts interviewed said that fossil-fuel cars, which face imminent bans in Europe and China, won’t be around long enough to justify a redesign to allow them to use next-generation belts.
“I wouldn’t put a penny on internal combustion engines now,” said Michigan-based auto consultant Sandy Monroe, who estimates that electric cars will make up half of new car sales by 2028.
“The future is coming horribly fast.”
“Change the form”
Walter Gluck, Leoni’s business president, said the supplier has been working with automakers on new automated solutions for wiring tools in electric vehicles.
Leoni focuses on scale or modular devices, which will be broken down into six to eight parts, short enough to automate in assembly and reduce complexity.
“It’s a paradigm change,” Gluck said. “If you want to reduce production time at your car’s factory, a modular wiring kit helps you.”
Among the automakers, BMW is also looking at using modular wire harnesses, which require fewer semiconductors and fewer cables, which saves space and makes them lighter, according to a person familiar with the matter.
The person, who declined to be named because he is not authorized to speak publicly, said the new tools would also make it easier to wirelessly upgrade vehicles — an area now dominated by Tesla.
CelLink, a California-based startup, has developed fully automated, flat, easy-to-install “elastic straps” and raised $250 million earlier this year from companies including BMW and auto supplier Lear Corp. (leaning against) and Robert Bush (ROBG.UL). Read more
CEO Kevin Cockley didn’t specify customers, but he said CelLink belts have been installed in nearly one million electric vehicles.
Only Tesla has this scale, but the automaker did not respond to a request for comment.
Coakley said CelLink’s new $125 million plant under construction in Texas will have 25 automated production lines that will be able to switch different designs in about 10 minutes because the components are produced from digital files.
He said the company is working on electric vehicles with a number of automakers and is looking to build another plant in Europe.
While the lead time for changing a conventional wiring harness can be up to 26 weeks, Coakley said his company can ship re-engineered products within two weeks.
Dan Ratliff, principal at Detroit-based venture capital firm Fontinalis Partners, which was founded by Ford (FN) Chairman Bill Ford has invested in CelLink.
Over the decades, the industry didn’t need to move quickly to rethink a part like wiring, Ratliff added, but Tesla changed that.
“On the electric car side, it’s just go, go, go.”
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(Additional reporting by Nick Curry in London and Christina Aman in Berlin.) Additional reporting by Satoshi Sugiyama in Tokyo; Edited by Praveen Shar
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