Supply Chain in Automotive: Where do the Materials Come From?

The automotive industry has always been one of the most complex and intricate supply chains to navigate. From raw materials and components to final assembly and distribution, the process involves multiple stakeholders, each with its own unique requirements and specifications. In this blog, we will explore where the materials for the automotive industry come from, the impact of recent geopolitical events, and how the rise of electric vehicles is changing the supply chain game. 

Main materials in the automotive industry 

The automotive industry relies heavily on a variety of raw materials to produce vehicles. The four main materials are steel, aluminium, plastic, and glass. These materials are used in different proportions depending on the type of vehicle, its purpose, and the manufacturer's preferences. 

Steel is the most commonly used material in the automotive industry, accounting for around 60% of the vehicle's weight. It is used for the car's frame, body panels, and engine components. Steel is sourced from various locations worldwide, including Europe, Russia, and China. However, the majority of the steel used in the UK automotive industry is imported, with around 85% coming from the EU. 

Aluminium is the second most commonly used material, accounting for approximately 10% of the vehicle's weight. It’s used for components such as wheels, engine blocks, and body panels. Aluminium is sourced from various locations worldwide, including Australia, Africa, and South America. In the UK, around 70% of aluminium used in the automotive industry is imported. 

Plastic is used extensively in the automotive industry, primarily for interior components such as dashboards and door panels. Plastic is sourced from various locations worldwide, including Europe, Asia, and North America. The majority of plastic used in the UK automotive industry is imported. 

Glass is used for the vehicle's windshield, windows, and mirrors. It is sourced from various locations worldwide, including Europe and Asia. In the UK, around 90% of the glass used in the automotive industry is imported. 

Core products in the automotive industry 

The automotive industry relies on a vast range of core products, including engines, transmissions, tyres, and batteries. These products are typically sourced from specialist manufacturers, with many of them being produced in different countries before being shipped to the final assembly location. 

Engines are a core automotive industry product typically sourced from specialist manufacturers such as BMW, Ford, and Volkswagen. These engines are produced in different countries worldwide, with Germany being one of the largest producers. In the UK, around 70% of the engines used in the automotive industry are imported. 

Transmissions are another core automotive industry product typically sourced from specialist manufacturers such as Aisin, BorgWarner, and ZF. These transmissions are produced in different countries worldwide, with Japan being one of the largest producers. In the UK, around 80% of the transmissions used in the automotive industry are imported. 

Tyres are a crucial component in the automotive industry, and they are typically sourced from specialist manufacturers such as Bridgestone, Goodyear, and Michelin. These tyres are produced in different countries worldwide, with China being one of the largest producers. In the UK, around 80% of the tyres used in the automotive industry are imported. 

Batteries are becoming an increasingly important component in the automotive industry, especially with the rise of electric vehicles. These batteries are typically sourced from specialist manufacturers such as LG Chem, Panasonic, and Tesla. In the UK, around 100% of the batteries used in the automotive industry are imported. 

The war in Ukraine and the automotive supply chain 

The war in Ukraine has had a significant impact on the global automotive supply chain, primarily with regard to the supply of critical raw materials such as steel and aluminium. Ukraine is one of the largest steel producers in Europe, with most of its production being exported to other countries, including the UK. However, since the conflict began in 2014, the export of Ukrainian steel has been affected due to trade restrictions and disruptions to transportation. 

This disruption has forced UK automotive manufacturers to seek alternative sources of steel and aluminium, leading to increased costs and potential supply chain challenges. The UK government has also been exploring options to support domestic steel production, such as investing in new production facilities and implementing tariffs on imported steel. 

The rise of the EV market and supply chain destinations 

The rise of the electric vehicle (EV) market has had a significant impact on the global automotive supply chain, primarily with regards to the destination of raw materials and components. Electric vehicles require a different set of components and materials compared to traditional Internal Combustion Engine (ICE) vehicles, including lithium-ion batteries, electric motors, and power electronics. 

The demand for these components has led to changes in the destination of raw materials, with countries such as Chile and Australia becoming major suppliers of lithium for EV batteries. The increased demand for electric motors has also led to countries such as China and South Korea becoming major producers. 

This shift in the destination of raw materials and components has the potential to create new supply chain challenges, including transportation and logistical issues, potential supply chain bottlenecks, and potential environmental concerns related to the extraction and processing of these materials. 

The automotive industry is a complex and intricate supply chain that involves multiple stakeholders and unique requirements. The industry relies heavily on a variety of raw materials and core products, with the destination of these materials and products changing due to geopolitical events and the rise of new technologies such as electric vehicles. As the industry continues to evolve, it’s likely that the destination of these materials and products will continue to change, creating new challenges and opportunities for stakeholders across the supply chain. If you want to know more, get in touch here.