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Executives at five of the 25 biggest suppliers to automakers in North America have all downplayed this month expectations for electric-vehicle sales. After Volvo Car Group made a splash with its pledge to put electric motors in every new car by 2019 and Musk predicted more than half of U.S. auto production would be electric in 10 years, the parts makers have issued modest forecasts and spoken in circumspect, even defiant, tones.
“There’s a lot of buzz and a lot of talk about how the world’s going to change to electrified vehicles overnight, and I’m here to tell you it’s not going to happen overnight, and it’s not going to happen for decades,” David Dauch, Chief Executive Officer of American Axle & Manufacturing Holdings Inc., said last week at a JPMorgan conference in New York. “I’m a strong believer in the internal combustion engine. I think it’s going to continue to be here for some time.”
The parts makers have to walk a fine line. Consumers haven’t yet demonstrated a willingness to buy electric vehicles in droves, giving both carmakers and their suppliers reason to be conservative. At the same time, governments are beginning to demand cleaner cars to curb pollution in megacities from Mumbai to Mexico City. And investors seem inclined to reward those trying to transform transportation, with all-electric Tesla surpassing the likes of Ford Motor Co. and General Motors Co. by market value this year.
“Right now you have an industry that’s sort of stuck between the market and what they see from their clients,” said Matt Stover, an analyst with Susquehanna International Group in Boston. “They see Tesla with an enterprise value of $70bn, and they see what their clients are awarding to them, and they say, ‘Wow, something doesn’t make sense here.’”
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