Embracing Real-Time Visibility to Overcome Maritime Congestions Will be Key for Asia’s EV Industry

Automobile manufacturers are increasingly finding success in Asia Pacific for Electric Vehicle (EV) production, with countries like China, South Korea, India, and Japan leading the charge. This rapid growth is fueled by a combination of favorable regulations, manufacturing ecosystems, and increasing customer demand. As an ABI Insight EVs Gain Momentum in Southeast Asia: Are They as Green as They Seem? (IN-7502) states, increased manufacturing trends are accelerated by government tax incentives and subsidy policies. China offers various subsidies to commercial fleets for EV production and usage. One in nearly every two cars sold in China last year was an EV, as an intense price war between automakers and millions of dollars’ worth of government subsidies fueled a record boom in sales. India introduced the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme. Similarly, Thailand plans to transition around 30% of its annual vehicle production of 2.5 million units into EVs by 2030. Meanwhile, Indonesia aims to become one of the top three global producers of EV batteries within the next couple of years as a part of its industrial strategy.

This rapid expansion of the EV industry in Asia has also led to significant supply chain challenges. The Straight of Malacca, a 500-mile-long stretch between Malaysia and Indonesia is a vital shipping lane for the Asian automotive production industry. It particularly emerged as the epicenter of industry supply chain delays, with 40% of automotive executives experiencing holdups. Furthermore, over 33% reported lost cargo.

Another notable issue is the overproduction of key materials, which has led to volatile supply. A key example of this is Indonesia's nickel production. It experienced a significant drop in global nickel prices, nearly 40% over the past 2 years. To overcome this issue, Indonesia's mining ministry plans to cut the nickel ore mining quota by over 16%. Over-reliance on certain suppliers has contributed to complications as well and has created vulnerabilities within the supply chain. China-based Original Equipment Manufacturer (OEM) Polestar is one such example, as it is currently facing challenges due to the U.S. ban on Chinese software and components in EVs. As a result, it is seeking partners outside of China. Meanwhile, Nissan is attempting to stay ahead of the curve and recently signed a deal with South Korean battery manufacturer SK on to supply batteries in its assembly plants based in the United States. SK on is understood to have agreed to supply Nissan with 20 Gigawatt Hours (GWh) of batteries, enough to power 300,000 Battery Electric Vehicles (BEVs), in a deal estimated to be worth US$1.8 billion.

There is a dire need for the EV industry to take a more proactive stance to build more resilient, and technology-driven supply chains. Using AI-driven risk assessment tools like Resilinc, Kinaxis, and Shipsgo to anticipate potential disruptions is a trend on the horizon. Partner diversification is a must for building more resilient supply chains. Having multiple suppliers and carriers to work with can help OEMs and Tier One suppliers reduce dependencies on single partners. This can help them establish multi-tier supplier risk monitoring protocols to identify bottlenecks before they impact production. From a strategic perspective, it would be ideal for Tier One suppliers to opt for scalability and modularity when it comes to manufacturing product components, as they can become much more agile when it comes to swapping between suppliers when disruptions occur.

There is also a need for real-time visibility and data integration across the supply chain. Robust collaboration between stakeholders is key. Establishing shared data ecosystems between OEMs, suppliers, and carriers is important for proactive decision-making. Suppliers, OEMs, and carriers need to deploy IoT technologies for real-time tracking of components and finished products for this. Platforms like Project33, FourKites, and Qualcomm’s Aware can provide this. Cloud-based visibility platforms and control towers via providers like Blume Global, Siemens, and Palantir can provide real-time insights on inventory production and transportation. With both historical and real-time data, there are opportunities to implement predictive analytics to take a much more data-driven approach to prepare for demand fluctuations or optimize inventory levels. In addition, logistics routes can be optimized using AI-powered route planning to reduce delays with help from fleet management and mapping solutions. Similarly, leveraging standardized digital twin technologies across the supply chain to simulate disruptions and optimize contingency plans accordingly is a forward-looking approach that businesses could take. Some vendors in this space include Siemens, IBM, Relex Solutions, and ABB. An ideal mix of strategic collaborations among stakeholders, in addition to impactful technologies adoption, can help build efficient supply chains.