'Humble and hidden' auto suppliers driving the EV revolution

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The shift to electric cars may pose an existential threat to suppliers of combustion engines but for auto parts firms such as TE Connectivity the challenge is keeping up with demand.

TE has a price-to-earnings ratio of about 18, Amphenol and Sensata are in the 20s, while Continental trades at about 10.TE's Curtin said car parts suppliers and automakers alike had been caught out by an explosion in demand for EVs in Europe over the past two years - and with everyone playing catch-up TE's new facility was running at double its planned production.

TE's conventional parts have up to five components but its newer EV parts have up to 50 components. The supplier also now buys tonnes of aluminium, which is lighter and cheaper than copper, to make up portions of those larger parts. TE also makes a large connector here that sits atop an EV battery module - an EV has up to 12 modules - and serves as its brain, measuring each battery cell's performance while a tiny semiconductor measures their temperature."We're going to need more," said Matthias Lechner, TE's head of Europe, Middle East and Africa, adding that TE planned to manufacture more at a plant in Hungary and elsewhere.

Europe's auto supplier market will grow to 330 billion euros in 2030 from 216 billion now, driven by software, EVs and electronics, McKinsey estimates, as firms tackle chip bottlenecks and cost pressure while investing in growth.TE's Woert site employs 2,200 people and is adding more engineers and technicians, as well as different machines to make connectors for data in self-driving cars - because unlike EV parts, tiny connections are better for moving data.

 

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