The evolution of the smart electric vehicle supply chain

dr Shaoshan Liu is Founder/CEO of PerceptIn, Project Lead for Autonomous Mobile Clinics at BeyonCa, and Asia Chair of IEEE Entrepreneurship.


In the last decade, the intelligent electric vehicle (IEV) industry has evolved a lot. In particular, the IEV supply chain has matured and many new suppliers have joined. In the early days of the industry, IEV Original Equipment Manufacturers (OEMs) had to do almost everything in-house. When Tesla launched its IEV business, it had to invest billions of dollars in battery systems, E/E architectures, autonomous driving functions, and intelligent cockpits.

Similarly, the pioneers of the Chinese IEV industry, NIO, XPeng and Li Auto all spent billions of dollars developing their first vehicles due to the immaturity of the IEV supply chain. From my experience, it was common knowledge that five years ago it would have cost over $1 billion to develop a new IEV. As the IEV supply chain evolves, I believe a new IEV could cost as little as $200 million to develop today.

A recent trend is that after pouring billions of dollars into their products, these IEV pioneers are all on their way to owning the entire IEV supply chain to consolidate their established advantages in the marketplace. For example, China’s BYD is actively investing in Indonesia to ensure battery supply. Tesla developed its proprietary computing system rather than relying on outside computing solution providers.

Does this mean that there are no more opportunities for newcomers? In this article I will argue differently. I believe that the development of the IEV supply chain will allow for a more efficient and effective division of labour.

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As I discussed in my previous article, established IEV OEMs have invested heavily in electrification and intelligence, including battery systems, computing solutions, and autonomous driving. Rather than developing everything in-house, IEV novices can take advantage of the ever-evolving IEV supply chain and focus their financial resources on critical areas of differentiation such as usage scenarios, product designs and customer relationships. Several key IEV supply chain development trends hold windows of opportunity for IEV newcomers.

skateboard chassis

Electrification is the foundational technology for IEVs, and chassis development has traditionally been the core competency of automakers. The advent of skateboard chassis kills two birds with one stone while solving both the electrification and chassis development problems. A skateboard chassis includes a base platform to integrate the batteries, electric motors, and other electronic components. It also includes key automotive components such as wheels, suspension, steering, powertrain and braking functions.

The availability of skateboard chassis greatly reduces the cost and complexity of engineering and manufacturing IEVs. For example, Chinese battery manufacturer CATL recently announced the development of a skateboard chassis that integrates its battery packs, electric motors and other components, transforming CATL from a pure electrification supplier to an electrification and chassis supplier.

Skateboard chassis allow IEV OEMs to focus on product design. Instead of building a 1,000-strong car development team, a 100-strong team might be enough to integrate a chosen skateboard chassis into the product development process.

computer solutions

Many established IEV OEMs are trying to deepen their technological moat by developing proprietary computing solutions. For example, China’s NIO assembled a team of 300 engineers to develop self-driving chips. However, the semiconductor industry is investment-heavy, and as major semiconductor companies such as Intel, NVIDIA, Qualcomm, and Texas Instruments enter the autonomous driving business and gradually introduce mature computing solutions, I’m not sure if the internal semiconductor units of the IEV OEMs mainstreamed them semiconductor companies can outperform. For IEV newcomers it would be advisable to integrate existing computing solutions directly rather than investing heavily in this area.

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Autonomous driving

Inspired by Tesla’s success in autonomous driving, many IEV OEMs have built large in-house autonomous driving teams to develop autonomous driving technologies from scratch. For example, Tesla’s autonomous driving team consists of more than 1,000 engineers. IEV newcomer Xiaomi already built a 500-strong autonomous driving team before its products were defined. While it’s great to have your own autonomous driving capability, a large autonomous driving team also imposes a huge financial burden.

I believe the optimal team size should be around 50 engineers who can focus on the development of scenario-based autonomous driving based on existing mature solutions from autonomous driving technology providers. Reinventing the wheel with a large in-house team not only incurs unnecessary financial costs, but also the opportunity cost of missing the launch schedule.

In summary, although established IEV OEMs have launched many new products, the diversity of IEVs is still reticent compared to traditional internal combustion engine (ICE) vehicles. We are still at the beginning of the IEV era. In particular, the further development of the IEV supply chain enables IEV newcomers to develop their products in a cost- and time-efficient manner. This is still a golden era for IEV startups as long as these startups clearly define their products and use their financial resources effectively. My estimate is that with an investment of $200 million, a team of 300 experienced engineers and 18 months, a new IEV can be developed.

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dr Shaoshan Liu is Founder/CEO of PerceptIn, Project Lead for Autonomous Mobile Clinics at BeyonCa, and Asia Chair of IEEE Entrepreneurship. Read Shaoshan Liu’s full leadership profile here.

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