FLAT ROCK, Michigan, and TROY, Michigan — A slower-than-expected ramp-up of electric vehicle production and sales present major risks for suppliers, and major Tier 1s are tackling that challenge differently.

Suppliers are making special requests, forging new types of partnerships and prioritizing adaptability as the mix of gas-powered, hybrid and all-electric vehicles constantly shifts. Consumer demand for EVs isn't what the industry had expected as buyers hesitate over EVs' prices, the need for charging infrastructure and how it complicates travels, particularly long road trips. It's led to launch delays and changes in the number of vehicles expected to be built. As a result, suppliers say they're seeking to keep their pocketbooks flexible and are demanding greater certainty in light of fluctuating automaker plans.

How that looks differs between some of the largest suppliers, depending on the components they supply and their business models. Three suppliers who held tech events this week emphasized their flexibility when it comes to supporting production of gas-powered, hybrid or all-electric powertrains. But some are emphasizing capital sharing. Others are looking at offsets or different kind of partnerships. Another says it's moving equipment and production based on where the market stands in various regions around the world.

"You've got to spend your capital carefully at the right time," Paul Thomas, Robert Bosch GmbH's president of North America and mobility for the Americas, said this week at Bosch's proving ground in Flat Rock. "One of the primary things we do now is we look at: Are there ways to reuse capital from different parts in the world? We also think more about where we place our capital. Do we have duplicate capital that we want to put in this region versus others? So, our process of deploying capital has changed, but our commitment to investing hasn't."

How that looks differs between some of the largest suppliers, depending on the components they supply and their business models. Three suppliers who held tech events this week emphasized their flexibility when it comes to supporting production of gas-powered, hybrid or all-electric powertrains. But some are emphasizing capital sharing. Others are looking at offsets or different kind of partnerships. Another says it's moving equipment and production based on where the market stands in various regions around the world.

"You've got to spend your capital carefully at the right time," Paul Thomas, Robert Bosch GmbH's president of North America and mobility for the Americas, said this week at Bosch's proving ground in Flat Rock. "One of the primary things we do now is we look at: Are there ways to reuse capital from different parts in the world? We also think more about where we place our capital. Do we have duplicate capital that we want to put in this region versus others? So, our process of deploying capital has changed, but our commitment to investing hasn't."

Tangibly, that looks like an increasing amount of co-development and shared intellectual property with customers, such as building the next-generation electric motor with French automaker Renault SA, said Derek de Bono, Valeo's software defined vehicle product vice president and group product marketing vice president. This model is especially becoming prevalent in the pursuit of the software-defined vehicle, he said, noting additional collaborations in this area with Renault, software producer Qualcomm Inc. and Alphabet Inc.'s Google LLC.

"The way we approach it is not from a typical 'you build this, I build that,'" he said. "We're co-developing it. They're building one component of it. We're building the other component, and we're coming to market together."

Valeo is broken into three divisions: power that includes powertrain and thermal management technologies, lighting and "brain" that covers software, sensors and related products. As a result, much of the business is unconcerned with what is propelling the vehicle, Shay said. Valeo posted net income of $156 million (141 million euro) in the first half of 2024, up 18% year-over-year. North America represented 20% of original equipment sales totaling $2.03 billion (1.83 billion euro).

Still, he said Valeo is focused on global platforms where different vehicles share many of the same parts in various regions and have a standard manufacturing process.

"If a particular region around the world loses or has overcapacity, that same equipment can be moved to a different part of the world to produce where there is under-capacity," Shay said. "So, that is our way to really contribute to make sure we're not over-investing in capacity during the transformation and support our customers to be competitive. ... We do it all day every day."

The U.S. presidential election in November could have effects on energy policy and trade relations. Shay said Valeo remains focused on cleaner, safer and more connected mobility, no matter who is in office, and emphasizes local manufacturing.

Bosch's Thomas said he in particular is watching what energy policies will mean for the introduction of hydrogen and how electricity is produced as well as the tariff environment. He said whatever happens with that, he still expects there will be time to be able to adjust the manufacturing footprint, if needed.

"There are environments where localization is a good thing, and there are environments where bringing product from a foreign country is a good thing," he said. "I think finding the right balance of capital, investment versus importation is a really interesting calculation that we're doing. ... We're looking at our tariff risk and our exposure to tariffs, and we're looking at how much capital I would need to spend locally to avoid those risks if they come, and we do a very business-based discussion on that, on what we need to do to localize versus what we need to import."

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