Electric Vehicle Takeover Does Not Have to
Spell Disaster for Small Manufacturers

There is no doubt that electric vehicle (EV) demand is higher than ever before.  This rising demand has resulted in strategic planning for an EV future within all areas of the automobile industry.  In October 2021, Forbes published an article titled “Every Automaker’s EV Plans Through 2035 And Beyond.”  This article describes that “Every [major] international automaker is introducing battery cars, and plug-in hybrid options are increasingly part of model lines.  But some auto companies have gone further, and actually set dates for when they will produce only ‘electrified’ cars (batteries and hybrids) and/or pure EVs.”

While the increase in EVs may be a stride in the right direction for reducing global carbon emissions and “going green,” an all-EV future could mean the end of small manufacturers that have a focus on internal combustion engine (ICE) vehicles.  With some auto companies planning for a complete phase-out of ICE vehicles, the market space for those small manufacturers will undoubtedly shrink.

In this blog, we will examine the differences in ICE vs EV components and how this difference can threaten the survival of small manufacturers in the future.  Additionally, we will dig deeper into how Team 1 Plastics, a plastic injection molding manufacturer for the transportation industry, plans to thrive in the face of a full-EV future.


This visual representation from Michauto shows an ICE automobile versus an EV.  In the ICE vehicle, there are 2000 components, as opposed to only 20 components in the EV.  For manufacturers with a focus on ICE, this change is significant; as the demand for EVs rise, this will mean less business and a shrinking market space.  For example, an ICE annual volume can be anywhere from 5,000-millions.  EV volumes, on the other hand, tend to be much lower at 5,000-10,000 currently.

For these manufacturers to survive, it is essential to have an awareness of how ICE-dependent they may be.  For Team 1 Plastics, a plastic injection molding manufacturer in the heart of Michigan, this change has forced them to take a closer look at their ICE-dependency: finding they are more than 80 percent dependent.

WHO IS IMPACTED MOST?

Earlier this year, Team 1’s President and co-owner Craig Carrel was quoted in an April 15 Crain’s Detroit Business article titled Rise of electric vehicles threatens to decimate smaller traditional manufacturers.  According to the article, “Michigan is home to more than 2,200 small and medium-size suppliers, most of which have some dependence on ICE vehicles…Unlike ICE engines, EV motors can be relatively generic among makes and models, with software being the ultimate differentiator…That means less work for manufacturers…That risk is biggest for the lowest tier suppliers…smaller firms that don’t do a lot of their own R&D, that don’t have a proprietary product of their own — they’re build to print.  They’re dependent on volume.  The volumes on the ICE side will be shrinking and not all of them are going to be ready.

Team 1 Plastics could be one of those hardest-hit suppliers.  According to Carrel, “we are considered a tier 2 or 3 supplier.  Tier 1 is a direct supplier to the OEM (car company).  Thus, sometimes our parts go to our customer, then directly to the OEM (Tier 2).  Or our parts go to our customer then to another customer, before going to the OEM (Tier 3).”

Additionally, Team 1 does not have any proprietary products of their own; making them “dependent on volume” as coined in the Crain’s article.  So, the question becomes: How does Team 1 Plastics see themselves competing in a full EV future, among a smaller number of suppliers?

STRATEGIC PLANNING FOR A THRIVING FUTURE

Carrel is confident that his company can thrive as the market shifts but does realize that they must do all they can now to start “weaning off being so ICE dependent.  This transition from ICE to EV will take time and we want to focus on diversification from ICE into other automotive applications and non-automotive opportunities.  We want to make sure we are working with customers who are not totally dependent on ICE only.  Also, a focus on customers whose systems do not depend on the drivetrain (ICE or EV).”  For example, this would mean more focus on customers within systems such as lighting and interiors.

As for non-automotive customers, Carrel shares that they have begun to incentivize their sales team to go after those projects.  “We are always open to supplying industries other than automotive.  We do currently have some activity in plumbing and other non-auto businesses.”

Despite the shrinking market, Team 1 does plan to compete within the upcoming EV market and have already won projects with their current customers with EV OEMs Tesla, Rivian, Lucid, and Fisker.  Additionally, Carrel shares that they have won other projects with current automotive OEMs with their EVs.  “We are a strategic supplier to all our major customers and will be involved in all their future projects whether ICE or EV.”  Below you can see a gallery of Team 1 Plastics’ current EV parts for existing customers MAHLE and Yanfeng – YFAI.

GROWTH MINDSET

Team 1 Plastics has been in business since 1987 and has seen their fair share of adversity along the way.  With the looming increase of EV’s, this “bump in the road” could spell disaster for some small manufacturers, if unprepared.  Team 1’s growth mindset and strategic planning for an EV future has allowed them to be prepared for a significant market shift in the automotive marketplace.

They will navigate these uncertain times by staying focused on acquiring and maintaining the right customers, while also winning projects within non-drivetrain and non-automotive sectors.  They are confident that they can not only survive this transition but thrive with new opportunities.

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927 Elliott Road
Albion, Michigan 49224-9506

Phone: (517) 629-2178