The consequences of electrification on the automotive supply chain: the case of Porsche

Abstract

This thesis aims to analyze the implications of the electric transition in the automotive industry along the different levels of the supply chain, from the procurement of raw materials to the delivery to the final consumers.

The idea of studying this radical change in the sector stems from the curricular internship that I was lucky to do within the Centro Porsche Padova, one of the biggest Porsche dealers in Italy. This work environment, already exciting in itself, was even more stimulating for me because the same building as the Porsche dealership in Padua is also home to the Italian importer of the German manufacturer, Porsche Italia S.p.A., together with the financial company Porsche Financial Services.

This involving context took me to consider the enormous change, driven by electric propulsion, that a luxury sports car manufacturer like Porsche needs to face in this historical period characterized by climate change (as a consequence of human environmental damage), industry collapse, interstate conflicts, commodity shocks, geopolitical contestation of resources, and infectious diseases. These are known as "global risks, and they represent global elements that have a negative impact on people's lives. They have followed one after the other in the last few years in a very intensive way and have highlighted some newly available opportunities for car makers, but, most importantly, they have shown the great fragility of a historical industrial sector that now needs to revamp itself as it has never done before.

Therefore, in order to provide an overview of the current scenario, the first chapter will focus on the main global risks that have contributed to the reshaping of the supply chain of the car manufacturers in terms of the sourcing of raw materials and components, production and assembly, distribution, and final use. This chapter will illustrate how the manifestation of a given event, be it economic, environmental, geopolitical, social, or technological, can create unpredictable and disruptive scenarios in a given sector or even on a global scale. With a focus on the automotive industry, some examples of global risks that have occurred in recent years and have had a significant influence on car brands will be examined.

The second chapter will be dedicated to the electrification of the automotive sector to ensure greener mobility in the future and halt global warming. This chapter aims to study the implications of the development of electric cars at all the different stages of the supply chain, from the procurement of raw materials to the final delivery to customers. In this part of the thesis, important theoretical concepts will be considered, among them supply chain management, make-or-buy decisions, the just-in-time approach, and joint ventures. These concepts are useful for understanding the implications deriving from electric mobility, as well as the best strategies to adopt to better modulate the organizational set-up of the new supply chain. It will then be easier to understand the geopolitical role of China as the main global player in terms of battery production and the market for electric cars.

The third chapter will explore Porsche's empirical case study with regard to the configuration of its supply chain already introduced for the Taycan model, its first fully electric vehicle. It will be about the choices made by the German manufacturer in relation to the procurement of batteries and semiconductors, together with the related alliances, the production plants, and the future prospects of the brand.

Finally, in the fourth and last chapter, this work will be concluded by summarizing the concepts learned during the course of this research in the hopes that they will be useful for those who want to understand everything behind the supply chain of the electric mobility of tomorrow.