According to Auto News Network, for traditional auto parts suppliers, electric vehicles may prove to be the "meteorite" that wiped out the dinosaurs.

According to a recently released report, by 2030, 75 of the top 100 suppliers in the industry will be eliminated unless they can develop their own electric vehicle-related businesses.

Paul Eichenberg, the author of this report and an analyst at an automotive industry consulting firm in Detroit, said, "The electrification of automobiles is coming sooner than most analysts predicted." Many ceos are very concerned about the financial reports of the current quarter but fail to notice this industry trend.

Aikenberg pointed out that by 2030, 57% of the cars produced each year will be pure electric, plug-in hybrid or 48-volt electrical system vehicles.

These pure electric, plug-in hybrid and mild hybrid vehicles will create a battery, engine and electronics industrial market with an annual output value of 213 billion US dollars.

This week, automakers, suppliers, consulting firms and dealers gathered at the annual Management Briefing Seminars in the United States, an annual automotive industry summit hosted by the Ann Arbor Automotive Research Center. All the representatives attending the conference mentioned the trend of elimination in this industry. Many participants acknowledged that the automotive industry is shifting from speed breakthroughs to self-driving cars.

Many people believe that autonomous driving technology and the transformation towards electrification coexist, and both have triggered radical technological changes.

Ekenberg, the former vice president of strategy at Magna Powertrain and Magna Electronics, raised a question: How many companies will be eliminated as a result?

Self-driving cars will need to be equipped with technologies such as by-wire steering, by-wire automation and sophisticated on-board computers, which will significantly increase power consumption.

The gradually tightening global carbon dioxide emission regulations are also driving the trend of electrification. The new carbon dioxide emission standards in Europe and China are about to come into effect.

Aikenberg said that by 2020, the EU's Euro 6 standard will require cars to achieve a fuel efficiency of 57 miles per gallon, and by 2030, the proposed sex regulations may further raise this requirement to 73 miles per gallon.

Automobile manufacturers plan to meet this trend through electric, plug-in hybrid and mild hybrid vehicles. Car front logo

48-volt mild hybrid power

Mild hybrid vehicles refer to those upgraded with a 48-volt electrical system, starting function and regenerative braking function. This technology is providing some suppliers with a fast track to electrification.

Mild hybrid technology will increase the cost of a vehicle by $1,000 to $1,200 per unit (equivalent to a 30% increase in cost), but it can reduce carbon dioxide emissions by half.

Aikenberg pointed out: "This is a good solution - especially for larger cars." Larger cars will adopt this technology, while smaller ones will use plug-in hybrid or pure electric technology.

Some large suppliers are betting on this trend and repositioning themselves through investment. In 2012, Continental AG invested 1.2 billion US dollars in the development of electric vehicle technology and added a 48-volt mild hybrid system to its product line.

This is part of a "two-pronged" strategy, which assumes that automakers will electrify their conventional vehicles in the short term and then gradually transition to electric and plug-in hybrid vehicles.

Since Renault applied Continental AG's 48-volt mild hybrid system to the Scenic SUV, this investment paid off in 2016. In the following two years, another five car manufacturers almost applied this system to their vehicles.

Kregg Wiggins, senior vice president of Continental's transmission division, pointed out: "This provides a cost-effective path for the steering of electric vehicles and plug-in hybrid vehicles." The production of internal combustion engine vehicles is still approaching its peak at present, and there is still much room for this transformation.

By 2020 or 2021, Continental expects its electrical systems business to generate approximately $1.2 billion in sales, significantly higher than this year's $152 million. To drive this growth, the company announced in April that it would invest an additional 351 million US dollars in the development of electric vehicle products by 2021.

Wiggins said that the company is developing electric vehicle charging systems, electric shafts, AC/DC converters, battery management systems and automotive electronics.

It is expected that the market for these components will thrive in the next decade or so, and Continental predicts that the annual sales of this industry will reach 2.3 billion US dollars by 2025.

Software development

Hybrid and electric vehicles will require a large amount of professional hardware from suppliers. However, the growth point of profits will be the related software.

For instance, Delphi Automotive is developing its ability to integrate a 48-volt electrical system with a mild hybrid powertrain. Mary Gustanski, vice president of engineering at Delphi, believes that the key to this technology lies in the software that controls the car to switch between an electric engine and a gasoline engine.

Mary said, "The key is to know when it is suitable to use an electric engine." Sometimes, electrification can bring you greater benefits in terms of power. All of these were accomplished using software."

Delphi's recent project: Combining the cylinder deactivation system (also known as the dynamic jump ignition system) with a 48-volt electrical system. Mary claimed that this combination of technologies could reduce fuel consumption by 19%.

Delphi has also launched a portfolio of technologies for pure electric vehicles, but the 48-volt electrical system has a significant advantage in comparison: automakers now need it for the transition, and the demand will continue to grow over the next decade.

Aikenberg believes that by 2030, the annual sales of 48-volt electrical systems worldwide will increase to 29 billion US dollars.

Meteorite falls

By 2025 to 2030, as electric vehicles and plug-in hybrid vehicles gain dominance in the Volkswagen market, the trend proposed by Eikenberg may hit existing suppliers.

Aikenberg explained that car manufacturers will take advantage of cutting-edge technologies from the consumer electronics industry and lose patience with traditional component manufacturers. Consumer electronics suppliers such as LG Electronics, Toshiba, Bosch and Panasonic will leverage their economies of scale to reduce the cost of electric vehicle electronics.

Similarly, automakers will also turn to battery manufacturers such as LG Chem, Panasonic, Samsung, Toshiba and Hitachi to ensure a stable battery supply.

This trend has already begun to show signs. In February, Honda Motor Company announced a joint venture with a subsidiary of Hitachi to produce electric vehicle motors. General Motors is closely collaborating with LG Electronics and LG Chem to produce key components for the Chevrolet Bolt.

Future trends

In fact, Bolt might give us a clear understanding of the future. According to a report released by UBS Group in May, 87% of Bolt's power drive systems, batteries and infotainment systems come from LG Electronics and LG Chem.

However, the traditional suppliers of General Motors (GM) have not accounted for a large share in it.

It is certain that the automotive industry is making every effort to deal with disruptive technologies such as infotainment and self-driving cars.

But Aikenberg believes that electrification will prove to be an even greater disruption.

He warned, "If you don't confront this issue today." Then as time goes by, your options will become fewer and fewer.