GKN Automotive, the world’s largest supplier of driveline technology, is partnering with Delta Electronics of Taiwan to accelerate development of power systems for electric vehicles as manufacturers prepare to launch a slew of battery powered cars to meet new emissions targets.
The automotive component supplier, acquired in 2018 by buyout specialist Melrose Industries after a bitter £8bn bid battle for engineer GKN, said the “strategic collaboration”, which will be announced on Monday, would strengthen its position as a leading eDrive supplier. Together the two companies will invest about £100m a year in developing standardised eDrive solutions for the next generation of battery powered vehicles.
The partnership with Delta, a specialist in power electronics, will enable GKN to offer a more competitive and “scalable, next-generation 3-in-1 eDrive systems” within three years, said Liam Butterworth, chief executive of the business. These combine the electric motor, gearbox and power electronics into a single package that would reduce cost, weight and packaging for car manufacturers. Competitors in eDrive such as Bosch and ZF of Germany already have their own power electronics units.
The move comes as the car industry is suffering the double whammy of a global slowdown in sales and tougher emission targets from the EU.
Under EU rules, carmakers must lower average CO2 emissions from the vehicles across their fleet to 95g per km, or face penalties that could run into hundreds of millions, even billions, of euros.
The decline of diesel is forcing carmakers to embrace battery technology more quickly to avoid fines and a torrent of electric vehicles is due to hit the market in the coming two years to help them comply with the new rules.
As a result some carmakers are joining forces to speed up new electric vehicle launches. For example, Ford and VW last summer significantly expanded their existing global alliance with agreements to collaborate on electric vehicles and self-driving technology. Toyota has also joined forces with Subaru and Suzuki to invest in electric cars.
Suppliers will have to keep up with them, however and Roland Berger, the management consultancy, estimates the market for electric driveline systems could be worth more than £12bn by 2030.
GKN is already a leader in conventional driveline, which transfers power from the transmission to the wheels. The vast bulk of its business remains focused on fuel-powered vehicles but in recent years it has invested heavily in the transition to electric cars. In 2019, Melrose announced it had sold 1m eDrive units.
Taiwan-based Delta, with annual sales of $9bn in 2018, is a global provider of switching power supplies and thermal management products. It sells electric and hybrid vehicle components, including on-board chargers, as well as charging systems.
Mr Butterworth said the collaboration with Delta represented “a significant milestone” in the group’s electric vehicle strategy. It would significantly increase each company’s technical capabilities and accelerate time to market, he said. Eventually the two companies could decide to move to a formal joint venture, although this could be two years away, he added.
Within three years, the new 3-in-1 eDrive units would be available for cars across most vehicle types — from city cars to SUVs. Research and development would be done in the UK and Germany, while the systems would be built in China and Europe.