An Ordinary Wire Harness Could Help Kill the Combustion Engine Car

At BMW's manufacturing plant in Greer, South Carolina, USA, a worker attaches a wire harness to the chassis of an X-type SUV.

May 30 (Reuters) - The humble wire harness, a cheap component that bundles cables together, has become an unlikely scourge in the automotive industry. Some predict it could accelerate the decline of internal combustion engine vehicles.

The supply of auto parts has been disrupted by the war in Ukraine, which is home to a large part of the world's wire harness production. Hundreds of thousands of new cars' wire harnesses are produced in the country each year.

These low-tech and low-margin parts - made of wires, plastic, and rubber and requiring a large amount of low-cost manual labor - may not have the fame of microchips and motors, but cars can't be manufactured without them.

According to interviews with more than a dozen industry participants and experts, the supply crunch could accelerate the plans of some traditional car companies to switch to the new generation of lighter, mechanically manufactured electric vehicle wire harnesses.

Sam Fiorani, head of production forecasting company AutoForecast Solutions, said: "This is just another reason for the industry to accelerate the transition to electric vehicles."

Gasoline-powered cars still account for the majority of global new car sales; according to JATO Dynamics, electric vehicle sales doubled last year to 4 million, but still only accounted for 6% of car sales.

Makoto Uchida, CEO of Nissan (7201.T), told Reuters that supply chain disruptions such as the Ukraine crisis have prompted his company to discuss with suppliers the issue of getting rid of the cheap labor wire harness model.

However, in the short term, car manufacturers and suppliers have relocated wire harness production to other lower-cost countries.

According to people familiar with the matter, Mercedes-Benz (MBGn.DE) was able to fly in wire harnesses from Mexico to fill a short-term supply gap. Some Japanese suppliers are increasing production capacity in Morocco, while others are seeking new production lines in countries such as Tunisia, Poland, Serbia, and Romania.

Tesla Model

The wire harnesses of fossil fuel vehicles bundle up to 5 kilometers (3.1 miles) of cables in an ordinary vehicle, connecting everything from seat heaters to windows. Their manufacture is labor-intensive, and almost every model is unique, making it difficult to quickly relocate production.

The supply disruption in Ukraine was a rude awakening for the automotive industry. Car manufacturers and suppliers said that in the early days of the war, the factories remained open solely due to the determination of the workers there, who managed to keep the flow of parts going despite power outages, air raid warnings, and curfews. 

Adrian Hallmark, CEO of Bentley, said that the British luxury car manufacturer initially feared that its 2022 car production would be reduced by 30 - 40% due to wire harness shortages.

"The Ukraine crisis threatened to shut down our factory completely for several months, much longer than what we did for COVID."

Hallmark said that since the traditional wire harness itself has 10 different components from 10 different suppliers in Ukraine, finding alternative production sources has become complicated.

He added that the supply issues have made Bentley more focused on developing a simple electric vehicle wire harness run by a central computer. The car manufacturer, a division of Volkswagen (VOWG_p.DE), plans to have a fully electric product lineup by 2030.

"The Tesla model, it's a completely different wiring concept, we can't change it overnight," Hallmark added. "It's a fundamental change in the way we design cars."

The new generation of wire harnesses used by electric vehicle companies like Tesla can be manufactured in sections on automated production lines and are lighter, which is a key factor as reducing the weight of electric vehicles is crucial for extending their range.

Many of the executives and experts interviewed said that fossil fuel vehicles face imminent bans in Europe and China and won't exist long enough to justify redesigning them to allow them to use the next-generation wire harnesses.

"I wouldn't invest a penny in internal combustion engines now," said Sandy Munro, a Michigan-based automotive consultant who estimates that electric vehicles will account for half of global new car sales by 2028.

"The future is coming very fast."

"Changing the Model"

Walter Glück, head of Leoni's wire harness business, said that the supplier is collaborating with car manufacturers to provide new automated solutions for electric vehicle wire harnesses.

Leoni focuses on ribbon or modular wire harnesses, which will be divided into six to eight sections, short enough to enable automated assembly and reduce complexity.

 "This is a change in the model," Glück said. "If you want to reduce the production time in a car factory, modular wire harnesses can help."

 According to people familiar with the matter, among car manufacturers, BMW is also considering using modular wire harnesses that require fewer semiconductors and fewer cables, which will save space and make them lighter.

 The person, who declined to be named as they were not authorized to speak publicly, said that the new wire harnesses will also make it easier to upgrade vehicles wirelessly - an area where Tesla currently dominates.

 CelLink, a California-based startup, has developed a fully automated, flat, and easy-to-install "flexible wire harness" and raised $250 million earlier this year from companies such as BMW and auto suppliers Lear Corporation (LEA.N) and Robert Bosch (ROBG.UL).

 CEO Kevin Coakley declined to disclose the identities of his customers but said that CelLink's wire harnesses have been installed in nearly 1 million electric vehicles.

 Only Tesla has such a scale, but the car manufacturer did not respond to a request for comment.

 Coakley said that CelLink's new $1.25 billion factory under construction in Texas will have 25 automated production lines that will be able to switch between different designs in about 10 minutes because the components are produced from digital files.

 He said that the company is collaborating with multiple car manufacturers to develop electric vehicles and is considering building another factory in Europe.

 While the lead time for replacing traditional wire harnesses can be as long as 26 weeks, Coakley said that his company can ship redesigned products within two weeks.

 Dan Ratliff, head of Detroit Venture Partners, said that this speed is exactly what traditional car manufacturers are looking for when electrifying, and the company, founded by Bill Ford, chairman of Ford (FN), has invested in CelLink.

 Ratliff added that for decades, the industry didn't need to act quickly to reconsider components like wire harnesses, but Tesla has changed that.