With several territories around the world poised to phase out conventional gas-powered cars in exchange for zero-emission electric vehicles (“EVs”), the automobile sector and ancillary industries are looking at a few decades of significant change from the status quo. Electric cars are fundamentally different from internal-combustion-engine (“ICE”) vehicles, from the lithium-ion battery packs that power them to the electric drivetrain, which has nearly a dozen parts, and the proprietary software that keeps the hardware running smoothly and efficiently. As carmakers build more electric vehicles in an effort to meet emission standards and electrify their lineups, the machine industry will be drowning in work.
Robot and factory equipment manufacturers saw demand for their products fall to $361.8 million last April amid the coronavirus pandemic, as did most industries, but the auto sector’s recovery bodes well for them. The U.S. Census Bureau says that the American machinery industry saw orders surge to $506 million by June, and we can expect orders to continue to rise as more automakers go electric and EVs fill the roads. Andrew Lloyd, the electromobility segment leader at Comau, an Italian manufacturing equipment supplier owned by Stellantis, says the company expects significant demand to come its way for the next 18 to 24 months.
Consequently, EV factories have drawn considerable attention from investors looking to cash in on the demand for electric vehicle parts, which according to Lloyd has yet to hit its climax. LMC Automotive predicts that automakers will pump more than $37 billion into North American manufacturing plants with more than 77% of the funds going to EV or SUV projects. Since Americans absolutely love their pickup trucks and SUVs, building electrified versions of these vehicles is a great way to boost electric-vehicle adoption. Ford Motors has already unveiled an electric version of its best-selling F-150 pickup truck.
Equipment providers have so much work, Lloyd says, that some of them will soon be turning down contracts. According to industry officials, automakers can easily shell out $200 to $300 million on just one sector of a factory, such as the body shop. Industry consultant Laurie Harbour says that between now and 2023, suppliers will manufacturer equipment for a whopping 37 electric vehicles and this excludes all the equipment they will develop for ICE vehicles. Durr AG, a global mechanical and plant engineering firm that specializes in paint shop equipment, saw its EV business increase by 65% last year, thanks to surging demand in Asia and North America.
Several more companies in the machinery industry have seen significant demand for electric vehicle equipment. Mike LaRose, the CEO of manufacturing and automation firm Kuka Auto Group in the Americas, says the company has been completely booked for the past year and a half. The company has zero free floor space and, thanks to surging demand, the company anticipates that situation to continue.
It would have been hard to imagine decades ago that electric vehicle industry players such as Net Element (NASDAQ: NETE) would trigger growth in other sectors, including machining, but those benefits are manifesting fast.
NOTE TO INVESTORS: The latest news and updates relating to Net Element (NASDAQ: NETE) are available in the company’s newsroom at http://ibn.fm/NETE
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