An Outlook on Automotive OEMs’ Positioning in the Value Chains for Power Electronics Systems

Abstract

The automotive industry is undergoing a major transformation due to electrification. Original equipment manufacturers within the industry are not exempt to this transformation. The shift toward production of battery electric vehicles will change how value is created in the automotive value chains. New value chains need to be formed, and the original equipment manufacturers need to ask themselves which activities they should perform in these value chains. Also, power electronics systems suppliers originating from the consumer electronics industry are entering the industry, which requires new relationships to be formed between original equipment manufacturers and these suppliers. Given this background, this study’s research questions are (i) how is the bargaining power distributed between an OEM and its tier 1 suppliers in the value chains for power electronics systems? and (ii) How should an OEM organize its value chains for PE systems? This research is a case study of an automotive OEM, and semi-structured interviews, conversations, and internal documents were used as data collection methods. The study concludes that the studied OEM is in an unfavorable bargaining power position in relation to its tier 1 power electronics systems suppliers. In addition, premium OEMs are expected to backward integrate in their value chains for power electronics systems and start to perform the development activities in-house.