The Russian-Ukrainian war has had an unexpected impact on the global auto industry, causing a shortage of cheap and often forgotten components troubling major auto manufacturers. Ukraine is a major producer of electronic cable harnesses. The Russian-Ukrainian war has affected exports and the world is in short supply. However, this may have an unexpected impact on the auto market and even push the development of electric vehicles.
Electronic cable harnesses are low-cost and low-profit components. Wires, plastics, and rubber are made with cheap labor. Therefore, Ukraine has become a manufacturing power. However, even traditional internal combustion vehicles have more and more electronics now, so a large number of electronic cable harnesses are used in cars. The total length of electronic cable harnesses in a car is as high as 5 kilometers. Whether it is the window switch or seat heating, it is powered and controlled by an electronic cable harness. This inconspicuous component is a necessary element in the car. Now out of stock, it may cause a qualitative change in the market.
At the beginning of the Russian-Ukrainian war, Ukrainian laborers still struggled to go to work under the threat of war, but then there was really no way to do it. Bentley said that at the beginning, it was worried that 30% to 40% production capacity in 2022 would be lost due to the cable harnesses crisis caused by the Ukraine war, so that Bentley may have had to shut down for several months, longer than during the pandemic. Finding an alternative supply is not an easy task, as Bentleys have cable harnesses that vary from device to device, with a total of 10 different components from 10 different manufacturers in Ukraine.
Since the wiring of traditional internal combustion engine vehicles is like this, it relies on manual manufacturing. Unlike standardized computer cables, most of which are manufactured in an automated fashion. However, electric vehicles (EV) are different. Bentley became more interested in developing EVs after struggling with cables, because when Bentley developed its EV, it invested in the research and development of a single cable harness connecting the entire car, controlled by a central computer, rather than connecting different cables to different devices. Bentley plans to launch a BEV model in 2030.
In the short term, Bentley and other traditional car companies can only rely on cheap labor to produce traditional cable harnesses. After all, an entire internal combustion engine vehicle cannot be redesigned overnight. Moreover, major countries in the world have set a sunset clause for internal combustion engine vehicles. These is an absence of interest in redesigning the remaining internal combustion engine vehicles in the market as time counts down. Therefore, the short-term solution is to move to other low-cost labor countries such as Mercedes-Benz to Mexico, Japanese carmakers investing in Morocco, and other carmakers looking at Tunisia, Poland, Serbia, Romania, etc.
Eliminating cable harness supply problem is most logical
In the medium and long term, it may be the most logical to eliminate the cable supply problem by simply developing BEVs faster. Half of new car sales in 2028 is expected to be BEVs. Investing in the future is a reasonable business. On the one hand, the demand for cables for electric vehicles is different. Leoni, a German cable company is cooperating with car manufacturers to develop modular and automated production cables for electric vehicles.
Modular cables are not only easy for automated production but also require fewer chips and reduce the total number of cables which can save space and weight in the car. In addition new modular cable connection design also makes over-the-air vehicle firmware updates easier.
CelLink, a California start-up, develops flat and easy-to-install elastic wires that take advantage of automated production. It has raised US$250 million from companies such as BMW and is currently building a new factory in Texas with a budget of US$125 million. The factory has 25 automated production lines, fully digital designs, and can switch production lines to manufacture products of different designs within 10 minutes. In a traditional cable factory, production line adjustment to switch out cable harness design can take up to 26 weeks, CelLink can complete this process in 2 weeks. CelLink also plans to set up factories in Europe.
Rather than being tangled in cable harness supply, or in order to solve the wire rod problem, to spend time redesigning internal combustion engine vehicle to only selling them for ten or twenty years. It is better to accelerate the development of EVs and match new cable harness designs. The Ukrainian war may have unexpectedly accelerated the pace of global car electrification. However, Ukraine itself may become a victim. When the war is over, cable harnesses may become the mainstream of automated manufacturing and cheap Ukrainian labor will no longer needed.