Tier 1 supplier Marelli wants a bigger slice of the automotive value-added business by providing customers with complete systems rather than a mixture of components.
The aim is to turn the recently created company into a so-called Tier 0.5, Marelli CEO Beda Bolzenius told Automotive News Europe.
Marelli -- formed after Fiat Chrysler Automobiles sold its parts unit Magneti Marelli to Japan's Calsonic Kansei in a $6.5 billion deal in 2019 – is now the world's 14th largest supplier, with original equipment sales to automakers of $14.9 billion, according to figures compiled by the Automotive News Data Center.
Prior to the merger, Magneti Marelli ranked 28th and Calsonic Kansei was No. 32, with sales of $8.7 billion and $8.2 billion, respectively, in 2018.
The new company is 100 percent owned by U.S. venture capital company KKR.
The automotive supplier industry is divided into Tier 1, Tier 2 and Tier 3 suppliers, with Tier 1s being the biggest, led by No. 1 Robert Bosch with $46.6 billion in sales.
The concept of a Tier 0.5 supplier is more than 20 years old (see box, below).
How Marelli aims to become a 'Tier 0.5' supplier
It will take a sequence of small steps to make Marelli a Tier 0.5 supplier, CEO Beda Bolzenius said.
Defining a Tier 0.5 supplier
The Oliver Wyman consultancy gives the title to a supplier that "takes over responsibility for major systems and modules from a vehicle value-creation perspective. Often co-located at automaker facilities, it offers system-level R&D, integrating the ecosystem of suppliers and partners, and providing system integration and program management expertise."
Bolzenius, whose full interview can be read by clicking here, said he believes Marelli is already in the Tier 0.5 league because of the combined strengths that resulted from the merger.
"Our e-powertrain business is seeing significant synergies in the area of the e-axle because we can combine our knowledge of electrical motors -- coming from the former Magneti Marelli team -- and inverters from Calsonic," he said.
The e-axle combines the electric motor, power electronics and transmission to propel an electric vehicle.
Another subsystem that Marelli is developing is called the "smart corner." The highly advanced headlamp includes detection and perception systems such as cameras, radars and lidar that are fully integrated through fusion software.
Bolzenius added that Marelli also has a unique position in thermal management, calling battery plates and cooling systems for the power distribution core competencies.
"We are also booking good business for heat pumps -- the thermal systems for future electric vehicles," Bolzenius said. "These are areas where we want to grow as well, and where we are better than Bosch and Continental and the other suppliers."
The CEO said that it will take a sequence of small steps to make Marelli a Tier 0.5 supplier, adding that semiconductor makers, which play a key role in the creation of electronic architecture, will also gain in importance. This could leave automakers in a difficult position.
"At that point, the question becomes: Where is the money flowing in from? Is it still from building cars or is it from the services, the connectivity and the idea of cars becoming more like mobile phones on wheels?"
Nvidia CEO Jensen Huang shared a similar view with Automotive News Europe in a recent interview. The head of one of the industry's leading chipmakers believes that "a tremendous amount of the user experience, capability and functionality in the car will come through software." He added that being excellent at software "is the only way to capture value again."
