Why these suppliers see big opportunities in EVs

Many automotive aftermarket suppliers see many opportunities for revenue growth across the entire industry with electric vehicles.

As Dave Miller, vice president of global product line management at Gates, explained, internal combustion engine vehicle design has traditionally been generally simple under the hood. But with EVs, there’s been a redesign of how things like where hoses and coolant reservoirs are placed. The aim is efficiency but that leads to more convolution when trying to do any maintenance or repair work.

“We’re seeing more and more design change and move towards kind of an efficient design,” he said during the 4 Bulls session at the MEMA Aftermarket Suppliers Vision Conference in Detroit.

Nowadays, EVs use electric water pumps instead of mechanical ones. Thinner ball tubing is being used. There’s more thermal plastic hosing, moving companies like Gates away from rubbers and into plastics.

“And then in some of the more advanced designs, you get to an optimized design where you’re really moving to more kind of lightweight thermoplastic activity,” Miller observed. “And then a lot of manifold systems that are controlling these cooling systems that are very smart with a lot of different inputs and outputs.”

The more complexity in a design, the more opportunities there are for the aftermarket. It leads to greater pricing of a job. Something that costs $200 in a traditional combustion vehicle could be much higher in an EV. That helps make up for the reduced content in an EV compared to an ICE vehicle.

“While we lose some portion of that, the content on EVs and hybrid vehicles is much more significant,” Miller said. “Lot of, again, fluid activity, more expensive water pumps moving from mechanical to electrical, high-pressure hose.”

Russ Stebbins, senior director of the global aftermarket business unit at Sensata, highlighted the increase in the cost of content that goes into an EV compared to ICE at the new vehicle level. Just how much? Twice as much revenue per vehicle by 2026.

“Well, that’s going to go to the aftermarket as well over time,” Stebbins pointed out. “So you’re going to see that expanded revenue in that channel as you move forward. Certain vehicles, more complex vehicles, we see it up to six times the revenue. And again, that’s going to go to the aftermarket over time.”

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