Auto suppliers have always walked a tightrope when it comes to getting enough profit to support their growth, but not so much that automakers abandon them in favor of cheaper alternatives.
That tightrope may be shrinking.
A new analysis by the consulting firm AlixPartners notes that supply shortages — especially for computer chips — are likely to continue in the auto industry through 2024. Suppliers also haven't yet recovered from higher material costs.
Beyond those issues, though, suppliers may find themselves cut out of some future vehicle production. Automakers are making their own investments to produce battery systems and other new parts for electric vehicles. That's a switch from current practices that see suppliers making key under-the-hood parts like ducts, tanks and engine parts.
"Suppliers are particularly vulnerable ... including battery and technology suppliers ... as automakers chose to make more of the new components themselves to transition plants and people skills to [EVs]," the report notes, adding that suppliers will have access to only 28 percent of new powertrain production.