Chemical companies have long played a critical role in the global automotive ecosystem. However, the growing shift to electric vehicles (EVs) could threaten that position unless chemical companies move quickly to adapt their business models and product portfolios to the unique requirements of EVs.
As countries invest in clean energy and introduce more and more subsidies, global EV sales are expected to soar.¹ Conversely, sales of internal combustion engine (ICE) vehicles are expected to decline. For chemical companies, this transition introduces new demands for EV-specific chemicals and materials. For example, we expect the trend toward new plastic compounds and masterbatch applications in the thermal management systems of EVs, as well as electrical power and motor components, will require more high-performance and composite materials, such as carbon fiber. Read our report.
Shifting markets require new business models
Recent Accenture analysis suggests that, with this secular shift in the market, chemical companies will need to build new strategic partnerships, joint ventures and alliances with original equipment manufacturers (OEMs) and suppliers in the automotive industry. For example, OEMs and battery makers may strike up manufacturing partnerships where chemical companies are positioned to supply key materials for battery production.
The speed of technological disruption and the investments required for differentiated products, services and sectors are also driving mergers and acquisitions (M&A) for high-growth, end-market assets, including composite materials; coatings, adhesives, sealants, and elastomers (CASE); and polymers. One recent example is a chemical company that acquired a specialty polymer business, which now grows its CASE intermediates portfolio and adds engineering polymers to its product lines.
Repositioning the product portfolio for the EV supply chain is only the first step in a longer journey toward fully sustainable and circular eMobility systems. There are compelling strategic opportunities for chemical companies to gain first-mover advantage around long-term environmental, social and governance (ESG) trends through bolt-on acquisitions of players in the downstream recycling industry. Examples include chemical companies acquiring purification solutions to help their EV manufacturing customers comply with emissions regulations, or even acquiring recycling activities to enhance polymer production.
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Through collaborative business models such as joint ventures and alliances, chemical companies can partner with OEMs and develop a differentiated plastics and materials portfolio.
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Opportunities along the entire eMobility value chain
Chemical companies will play a critical role in the entire eMobility value chain, requiring manufacturers to rethink their supply concepts. For example, battery production will mean sourcing key materials such as lithium, copper and specialized plastics. By extending their offerings to meet such market demands, chemical companies can capitalize on the opportunity to be part of these new value streams.
As they plot their course for the future, chemical companies should keep three key value drivers in mind:
- Technology and materials offer. Chemical companies should allocate an application development (AppDev) team to EV-specific product development and formulation innovation, as well as use an M&A strategy to target captive and sourced access to differentiated materials.
- Downstream value chain integration. Growth in the EV market will require both establishing partnerships with key ecosystem players and using bolt-on acquisitions to expand commercialization models and secure access to new regions, market segments, products, and technical applications.
- Go-to-market model. Dedicated regional EV OEM key account teams―including marketing, business development, sales and AppDev technical resources―will enable companies with complementary products to sell across their customer bases, thus increasing their share of OEMs’ wallet.
Through collaborative business models such as joint ventures and alliances, chemical companies can partner with OEMs and develop a differentiated plastics and materials portfolio. And with an aggressive M&A push, chemical companies can acquire assets that are critical to meeting the strategic demands of a shifting industry for advanced material systems needed in the rapidly growing eMobility ecosystem.
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We would also like to thank our contributors Ojas Wadivkar, Brett Maurer, Chase Landry and Patrick Cunningham.
¹ Accenture Research, "Utilities: Lead the charge in eMobility"