The automotive industry's ongoing transition to electronic systems and electrification is creating a "tug-of-war" between new and established Tier-1 suppliers, known for supplying automotive systems and modules directly to carmakers. Among them, Chinese companies, representing the new Tier-1 team, are significantly gaining ground. In contrast, established Tier-1 suppliers from Europe, the US, Japan, and South Korea are battling to defend their positions and avoid slipping in the rankings.
Based on revenues generated in 2023 by automotive parts and components suppliers in the original equipment (OE) market, notable shifts in the top 5 rankings have attracted attention. German supplier Bosch remains the leader, while Japan's Denso, previously in second place, has dropped to fifth, allowing ZF, Magna, and China's Contemporary Amperex Technology (CATL) to move up one spot each.
The top 100 suppliers listed in Europe in 2023 include 22 German suppliers, 20 from Japan, 14 from the US, 13 from China, and nine from South Korea. Compared to 2022, when China and South Korea were evenly matched with 10 suppliers each on the list, there have been significant changes in 2023, with the gap between China and the US narrowing considerably.
The Impact of Electric Vehicles on Supplier Rankings
The rise of electric vehicles (EVs) has propelled lithium battery maker CATL into the top five Tier-1 suppliers since 2022, with another Chinese supplier, Gotion High-Tech, also entering the top 100. However, an oversupply of lithium batteries in 2024 and subsequent price falls have made it more difficult for other battery makers to achieve similar rankings.
South Korean battery maker SK On saw significant production growth in 2023, moving up to 32nd place from 43rd. However, recent uncertainties about its overseas expansion plans, cost-cutting measures, and emergency management strategies have raised concerns.
The growth in demand for pure EVs in Europe and the US has fallen short of expectations, with demand shifting towards plug-in hybrid electric vehicles (PHEVs), which require fewer lithium batteries. This shift has also affected the performance of lithium battery manufacturers.
Challenges for Established Suppliers and Future Predictions
Top-ranking established Tier-1 suppliers are facing various challenges as mainstream automakers embrace the trend of going electronic and electrical. These challenges include strategic changes by carmakers, a slower-than-expected transition to electric vehicles, geopolitical issues, profit compression, and cost competition from Chinese manufacturers. As a result, these established suppliers have undergone significant organizational restructuring in recent years, addressing underperforming business departments.
Japanese carmakers have been relatively slower in their transition process, and consequently, Japanese Tier-1 suppliers are struggling to perform as well as their international peers.
Industry experts predict continued movement in the top 100 Tier-1 supplier rankings in the coming years as Chinese suppliers and automakers continue to gain ground. The pressure on European, American, Japanese, and South Korean suppliers is expected to intensify as the electrification trend continues.
In recent years, Taiwanese companies have also joined the ranks of new Tier-1 suppliers. While Foxconn focuses on whole vehicle development, other key Taiwanese electronics companies primarily focus on critical components, such as assembly, electronic control, and software. Their involvement in lithium batteries is limited, mainly due to late entry and a small domestic market in Taiwan.
The 2023 rankings for the latter part of the top 10, including South Korea's Hyundai Mobis, Japan's Aisin, Germany's Continental, France's Forvia, and the US Lear, have remained the same as in 2022. However, as the automotive industry continues to evolve, these rankings may face further disruption in the coming years.
