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Electric Vehicle Supply Chain and Logistics
18/07/2024
It is estimated that electric vehicles (EVs) will represent over 60% of new global car sales by 2030. Many countries have also announced that they will ban the sales of traditional internal combustion engine (ICE) vehicles in the next decade. As the transportation of ICE vehicles and their parts has always been a major part of global shipping, companies shipping, or relying on ICE products will need to adjust their supply chains to accommodate this new development in the automotive industry.
Working with a shipping partner who understands the importance of this reactivity is crucial for any business looking to stay ahead of the curve when it comes to meeting customer demand and staying up to date with the latest industry trends.
As a relatively young industry, the electric vehicle supply chain can be impacted at different times by various factors, including:
Cost of raw materials
As lithium, cobalt, and nickel are required for producing the batteries that are the key components of EVs, a supply shortage can result in production delays or price rises. In turn, these delays can affect the overall electric vehicle supply chain.
Battery production
Manufacturing lithium-ion batteries requires advanced technology and specialised expertise, but the sourcing of cobalt and nickel is concentrated in countries like China, Indonesia and the Democratic Republic of Congo. Ethical issues, combined with the reliance on a small pool of sources can impact battery production and therefore the overall EV supply chain.
Infrastructure development
The take-up of electric vehicles is directly affected by the availability of charging stations, and ultimately consumer demand. The fluctuations in this can mean that companies involved in EV production need to have a supply chain structure that can pivot based on customer demand.
Government subsidies to consumers/manufacturers
Discounts, incentives, and subsidies can encourage the production and supply of electric vehicles. For example, in the UK the government operated a long running charge point grant strategy for households and businesses, enabling them to make significant savings on the cost of EV charging stations. In turn, this can increase consumer demand, and therefore the overall supply chain needed for electric vehicle production and transportation.
EVs vs ICE: New Opportunities for Automotive Supply Chain
The different technologies and components involved in electric vehicle production compared to ICE production, means that the overall automotive supply chain needs to adapt to successfully accommodate these requirements.
For example, EV supply chains need to incorporate the sourcing of lithium and cobalt, required to make the batteries and other parts. Conversely, ICE vehicles do not require these same resources, however their supply chains need to account for the production of a greater number of component parts compared to EVs.
EVs vs ICE: New Opportunities for Automotive Supply Chain
The different technologies and components involved in electric vehicle production compared to ICE production, means that the overall automotive supply chain needs to adapt to successfully accommodate these requirements.
For example, EV supply chains need to incorporate the sourcing of lithium and cobalt, required to make the batteries and other parts. Conversely, ICE vehicles do not require these same resources, however their supply chains need to account for the production of a greater number of component parts compared to EVs.
Another key difference is that the ICE supply chain must also factor in the distribution of the required fossil fuels, whereas for electric vehicles, the ‘fuel’ is provided by charging stations. This means that the electric vehicle supply chain needs to support the production and installation of these charging stations.
There are three distinct automotive shipping types that can be used for electric vehicle shipments.
Completely knocked down (CKD)
One of the most cost-effective methods, CKD shipping involves shipping parts of a vehicle individually and then reassembling the cargo after delivery in the country of final destination.
Medium knocked down (MKD)
MKD shipments involve unfinished pieces of automotive bodywork being transported overseas to continue the vehicle’s production in the final destination.
Semi knocked down (SKD)
With SKD shipments, car parts are dismantled and packaged up before they are shipped overseas for re-assembly.
The choice of transportation method will vary depending on the destination, quantity, type of EVs being transported, and wider logistical considerations. To ensure that your business is delivering the best products for your cargo, and to optimize your electric vehicle supply chain, it’s vital to work with a shipping partner that can offer the best support and accommodate your individual needs.
Navigating the Logistical Landscape of EV Transport
Traditionally, the most cost-effective way to transport cars overseas is using RoRo vessels, however, due to the lithium-ion batteries used in electric vehicles, a different shipping method needs to be used.
Because lithium-ion batteries are considered a fire risk, the batteries must be removed before the cargo leaves the dock. This means that EVs are usually shipped by container using racking systems and forklifts, so the cargo can be loaded and shipped without the engine needing to be switched on.
Navigating the Logistical Landscape of EV Transport
Traditionally, the most cost-effective way to transport cars overseas is using RoRo vessels, however, due to the lithium-ion batteries used in electric vehicles, a different shipping method needs to be used.
Because lithium-ion batteries are considered a fire risk, the batteries must be removed before the cargo leaves the dock. This means that EVs are usually shipped by container using racking systems and forklifts, so the cargo can be loaded and shipped without the engine needing to be switched on.
Ask MSC
Here at MSC, we provide consultation and advice on all your shipping requirements for the automotive industry, as well as a complete range of shipping and logistics services. Contact us today to find out more.
