European auto parts suppliers, particularly those making internal combustion engine parts, are facing an existential crisis as the continent prepares to switch to electric cars. Because battery-powered cars have yet to realize their full sales potential, suppliers are in a situation where they need to invest heavily in new equipment to meet EV production, while seeing their current revenue decline due to slower sales of conventional cars.

In the case of Evtec Aluminum, a supplier of engine components Jaguar Land Rover with two plants in the UK, investing millions of pounds in equipment to produce diesel engine parts (because diesel has been the dominant fuel in Europe for the past decade) has only resulted in idle machines and huge losses because the EU turned its back on the fuel after the Volkswagen scandal with “Dieselgate”.

Electric cars are now in the spotlight, with many EU countries considering a complete ban on internal combustion engines by 2035. Evtec managed to survive because it was taken over by a group of investors led by David Roberts, who thought it was “unwise” to invest in it. that business,” because the company’s ability to produce complex aluminum components will almost certainly attract business from manufacturers seeking parts for electric vehicles.

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Other companies, such as German transmission supplier Vitesco Technologies Group AG, are looking to shift their focus from internal combustion engines to electric vehicles, expecting to account for 70 percent of the car market by 2030, according to Reuters. To this end, their business will be divided into two main divisions; one for electric vehicle components and the other for high-value technologies that can be used in internal combustion engines and can bring more profit in a declining segment.

Manufacturers warn that because electric motors make up about a third of internal combustion engine parts massive job loss in component manufacturing. For example, Stellantis is in the process of converting its engine plant in Tremery, France, to produce motors for electric vehicles, and has already cut its workforce from 3,000 to 2,400 and expects further cuts.

According to automotive industry consultant Bernd Bohr, the bigger and wealthier suppliers are likely to be last. Smaller companies, on the other hand, will have to adapt, consider diversification, or face the very real possibility of going out of business.