WOKING, England -- The global auto industry has committed $1.2 trillion to developing electric vehicles, providing a golden opportunity for new suppliers to grab contracts providing everything from battery packs to motors and inverters.
Startups specializing in batteries and coatings to protect EV parts, and suppliers traditionally focused on niche motorsports or Formula One (F1) racing, have been chasing EV contracts.
Automakers design platforms to last a decade, so high-volume models can generate large revenues for years.
The next generation of EVs from automakers such as BMW is due to hit around 2025 and many automakers have sought help plugging gaps in their expertise, providing a window of opportunity for new suppliers.
"We have gone back to the days of Henry Ford where everyone is asking 'how do you make these things work properly?'," says Nick Fry, CEO of F1 engineering and technology firm McLaren Applied.
"That's a huge opportunity for companies like us."
Bought from McLaren by private equity firm Greybull Capital in 2021, McLaren Applied has adapted an efficient inverter developed for F1 racing for EVs. An inverter helps control the flow of electricity to and from the battery pack.
The silicon carbide IPG5 inverter weighs just 5.5 kg (12 pounds) and can extend an EV's range by over 7 percent.
Fry says McLaren Applied is working with around 20 automakers and suppliers, and the inverter will appear in high-volume luxury EV models starting January 2025.
Mass-market automakers often prefer to develop EV components in-house and own the technology themselves. After years of pandemic-related parts shortages, they are wary of over-reliance on suppliers.
"We just cannot afford to be reliant on third parties making those investments for us," said Tim Slatter, head of Ford in Britain.
Traditional suppliers, such as German heavyweights Bosch and Continental, are also investing heavily in EVs and other technologies to stay ahead in a fast-changing industry.
But smaller companies say there are still opportunities, particularly with low-volume manufacturers that cannot afford huge EV investments, or luxury and high-performance automakers seeking an edge.
Croatia's Rimac, an electric hypercar maker part-owned by Germany's Porsche that also supplies battery systems and powertrain components to other automakers, says an undisclosed German automaker will use a Rimac battery system in a high-performance model - with annual production of around 40,000 units - starting this year, with more signed up.
"We need to be 20 percent, 30 percent better than what they can do and then they work with us," CEO Mate Rimac says. "If they can make a 100-kilowatt hour battery pack, we must make a 130-kilowatt pack in the same dimensions for the same cost."