Ev-proofing our business

Recent commitments by various countries to go 100% EV in the medium term join undertakings by some government agencies and companies to migrate their logistics chains to electric vehicles (EVs). Most of the major OEMs have signaled their intentions to increase EV production suggesting that the shift to EVs is likely to happen sooner than previously anticipated.

Metair first challenged itself to assess EV construction in 2012 when group companies built two EVs based on lead-acid battery technology. Our mindset is to accept the EV challenge and the possibility of a future 100% EV production scenario and then to plan the group’s path to real EV relevance and ‘EV-proof’ the business. From that point we can take action to enhance our strategy in order to facilitate a smooth and sustainable transition to EV reality.

While Metair’s energy storage vertical is already participating in the development of the new technology required to power EVs, this year we assessed the likely impact of EVs on our existing automotive component and energy storage products, the results of which are shown in the table below.

Products
Relevance
Reason
     
Wiring harnesses (Hesto) The copper required for an EV increases on average by 80% as these vehicles require two separate electrical circuits – a 12-volt system for control circuits and a 360+ volt system as an energy source circuit.
     
Lighting (Lumotech) Autonomous vehicles require additional visibility and therefore more lighting. Lights become an even more critical part of vehicle aesthetics and are also needed to meet regulatory requirements.
     
Heat exchange products (Smiths Manufacturing) Cooling for an internal combustion engine is no longer required. However, the battery in an EV requires a heat management system and energy is required to heat the cabin as there is no heat coming off the engine. Air conditioning systems will continue to be required.
     
Plastic products (Smiths Plastics and Automould) EVs are around 20% heavier than current vehicles of a similar size. Plastic parts will be necessary to reduce weight and also assist with vehicle aesthetics. Autonomous driver sensors and aids will require plastic housings and other plastic parts.
     
Ride control products (Supreme Springs) Suspension parts are still necessary and heavier EVs will require increased ride control comfort. Producing lighter but higher strength suspension will require improved technology.
   

 

Energy storage batteries (FNB, Mutlu Akü and Rombat)

Lead acid batteries are likely to still be needed in EVs for the foreseeable future. EVs have two electrical systems while hybrids can have up to four electrical systems.
These include:

  • a 12-volt system for starting the vehicle or to run the lithium-ion battery management system;
  • a 24-volt system for energy efficiency enhancements in hybrid internal combustion engines; and
  • a 48-volt system as an energy source for the power train electric energy recovery system.

There is likely to be increased electrical requirement across the full spectrum of mobility options. The size of the lead-acid batteries in EVs is half of hybrids as these batteries don’t have to provide energy to crank the engine on starting. Indications from feedback by Tesla owners is that the lead-acid batteries in EVs will need to be replaced annually.

Our conclusion is that our current range of products remains relevant in EVs, but at this stage we do not have line of sight as to when the shift to full EV will start to be felt in supply chains. Interestingly, since most of the carbon footprint in an EV is incurred during manufacture, the lifecycle carbon footprint of EVs that are charged by an electricity grid that depends on fossil fuels is higher than that of current hybrids.

 The first disruption to OEM technology is likely to come from the elimination of diesel derivatives from the export models in the next vehicle launches planned over the coming three to five years. This is likely to increase the relevance of hybrid vehicles as they and petrol vehicles fill the gap left by diesel vehicles. We believe that Start/Stop battery storage solutions are the gateway technology in the pathway to full EV technology.

We remain conservative in our approach and mindful of macro-economic conditions and technology trends. The timeline to effect the technology changes required for EVs remains fluid and will vary between markets. A smooth transition to EV technology requires exposure to the full mobility spectrum as Start/Stop technology will converse with two-wheeler energy storage solutions for future EV applications in the energy control circuit.

All indications at this stage are that Metair’s core businesses remain very relevant, even in an immediate 100% EV scenario.

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