The need for sustainability is growing, but the supply chain supporting electric vehicles (EVs) faces significant roadblocks. While the electronics industry can improve its carbon footprint in many ways, it must address supply chain emissions to become wholly sustainable. That requires the electrification of vehicles, which faces a few industry-specific challenges.
Supply chain electrification will become increasingly viable for every sector as technology progresses. However, manufacturers should consider a few unique obstacles they face to tackle the issue effectively.
Credit: Netze BW
Supply constraints
One of the most notable electronics supply chain challenges, in general, is the industry’s reliance on scarce resources. For example, over 60 percent of the world’s cobalt comes from the Democratic Republic of Congo, which is known for human rights violations. Critical components like semiconductors showcase similar obstacles, with many materials coming from just a few nations.
Such constraints make logistics restructuring difficult. Long travel times may be unavoidable in some cases. As a result, EVs become less viable, as most of today’s models have limited ranges and charging infrastructure is far from widespread.
The EV range problem affects any industry aiming for sustainability, but that could be offset by switching to domestic suppliers to shorten trips. Many electronics manufacturers do not have that luxury. Either U.S. semiconductor manufacturing ramps up and designers find alternatives for scarce raw materials, or the sector must wait until EV ranges compete with diesel.
Scope 2 and 3 emissions
Broader supply chain emissions pose another obstacle. Even if a manufacturer electrifies its logistics fleets, their supply chain would remain carbon-intensive.
Scope 3 emissions — those from other organizations across the value chain — are 11.4 times higher than operational emissions on average. This may be even more concerning in electronics than in other industries because of the sector’s complexity. Device producers often rely on a vast number of outside suppliers for raw materials and complete components, with little control over these parties.
Electrifying one fleet is challenging. Ensuring all the semiconductor fabs, mineral mines and other suppliers a manufacturer partners with also electrify their fleets is all the more so. Businesses must invest heavily in visibility and industrywide collaboration for such a feat to be possible.
Costs at scale
Upfront expenses are another prominent supply chain challenge. A level 3 direct current fast charging station can cost as much as $51,000 to install. It’s worth noting prices have decreased over time and will produce future savings. However, the initial investment may be prohibitive for some organizations, considering the sheer scale of the industry.
At first, the answer seems simple. Electrification, although expensive, will save money in the long run by eliminating fuel consumption and reducing maintenance needs, so it’s worth the spending. That justification becomes less straightforward when applying the upfront costs across the size of a fleet necessary to support the skyrocketing electronics market.
Electronics is the largest manufacturing subsector in the U.S. by a wide margin. Consequently, electrifying this particular supply chain will require far more investment than others. That certainly does not make electrification impossible, but it does slow it down.
Grid reliability
The sheer scale of the electronics supply chain introduces another concern. Power grids must become more reliable for fleet electrification of this size to be possible.
Much of the U.S. electrical grid dates back to the mid-20th century, and 70 percent of transmission lines are nearing the end of their life cycle. Consequently, placing additional strain on it through significant EV charging requirement growth could introduce blackout risks. Such incidents are already common today and would create substantial disruptions in an electrified supply chain.
Recent legislation has invested in grid upkeep, which should reduce these concerns. However, it is still uncertain whether it’ll be enough to support industrywide electrification and how long it will take to reach that point.
What can the industry do?
These electronics supply chain challenges complicate sustainability goals but don’t render them impossible. Rather, they clarify what organizations in the sector must address to ensure a smoother transition to electrification.
- First, the supply chain demands attention before the industry can switch to EVs. Manufacturers must work with their suppliers and embrace digital tools to maximize visibility and form joint sustainability goals to overcome challenges with Scope 2 and 3 emissions. Greater transparency will also make it easier to find opportunities for restructuring, which may ease EV adoption by reducing travel requirements.
- A gradual approach will also be necessary to spread out costs and avoid grid-related disruption. Businesses can start by electrifying last-mile deliveries or installing charging stations in high-traffic facilities. That way, they can reduce fuel spending and learn what power infrastructure changes are needed before applying such strategies to larger investments.
- Manufacturers should also stay current on evolving EV technologies and grid advancements. It may take time for electric trucks to reach a point where they’re viable on this scale. Future developments may make alternatives like hydrogen trucks more worthwhile. However it plays out, it will take adaptation and attention to these sectors to understand the best way forward.
Electrifying the supply chain will not be easy. The industry faces challenges other sectors may not need to weigh as heavily. Despite those obstacles, positive change is possible.
Electronics manufacturers can begin by reviewing the difficulties they face to understand how their strategies should adapt.
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