# How a cheap component could help kill off combustion cars
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-05-30
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: The Impact of Wire Harness Supply Shortages on the Auto
Meta Description: Discover how wire harness shortages caused by the war in Ukraine are pushing carmakers towards electric vehicle production. Learn more here.
URL: https://financedigest.com/how-a-cheap-component-could-help-kill-off-combustion-carshtml

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By Nick Carey and Christina Amann

LONDON/BERLIN (Reuters) – The humble wire [harness,](https://www.financedigest.com/cardstacks-new-tally-protocol-to-address-blockchain-blindspot.html) a cheap component that bundles cables together, has become an unlikely scourge of the auto industry. Some predict it could hasten the downfall of combustion cars.

Supplies of the auto part were choked by the [war in Ukraine](https://www.financedigest.com/ukraine-grants-citizenship-to-top-russian-journalist-who-denounced-war.html "Ukraine grants citizenship to top Russian journalist who denounced war"), which is home to a significant chunk of the world’s production, with wire harnesses made there fitted in hundreds of thousands of new vehicles every year.

These low-tech and low-margin parts – made from wire, plastic and rubber with lots of low-cost manual labour – may not command the kudos of microchips and motors, yet cars can’t be built without them.

The supply crunch could accelerate the plans of some legacy auto firms to switch to a new generation of lighter, machine-made harnesses designed for [electric vehicles](https://www.financedigest.com/tax-credits-for-eu-electric-vehicles-to-dominate-mondays-trade-talks-with-u-s.html "Tax credits for EU electric vehicles to dominate Monday’s trade talks with U.S"), according to interviews with more than a dozen industry players and experts.

This is just one more rationale for the industry to make the transition to electric quicker,” said Sam Fiorani, head of [production forecasting](https://www.financedigest.com/golf-apparel-market-key-players-and-production-information-analysis-with-forecast-2031.html "Golf Apparel Market: Key Players and Production Information Analysis with Forecast 2031") firm AutoForecast Solutions.

Gasoline cars still account for the bulk of new [car sales](https://www.financedigest.com/mercedes-posts-rise-in-q1-sales-boosted-by-evs-premium-cars.html "Mercedes posts rise in Q1 sales boosted by EVs, premium cars") globally; EVs doubled to 4 million last year, but still only comprised 6% of vehicle sales, according to data from JATO Dynamics.

[Nissan CEO Makoto Uchida told Reuters that supply-chain disruptions such as the Ukraine crisis had prompted his company to talk to suppliers about shifting away from the cheap-labour wire harness model](https://www.financedigest.com/nissan-renault-to-invest-600-million-to-make-6-new-models-in-india.html "Nissan, Renault to invest 0 million to make 6 new models in India").

In the immediate term, though, automakers and suppliers have shifted [harness](https://www.financedigest.com/cardstacks-new-tally-protocol-to-address-blockchain-blindspot.html) production to other lower-cost countries.

Mercedes-Benz was able to fly in harnesses from Mexico to plug a brief supply gap, [according to a person familiar with its operations](https://www.financedigest.com/half-of-small-businesses-operating-in-the-red-according-to-analysis-of-250k-sme-database.html "Half of small businesses operating in the red, according to analysis of 250K SME database"). Some Japanese suppliers are adding capacity in Morocco, while others have [sought new production](https://www.financedigest.com/skin-lightening-products-remain-sought-after-among-women-who-continue-to-account-for-80-of-sales-study.html "Skin Lightening Products Remain Sought-after among Women, who Continue to Account for 80% of Sales: Study") lines in countries including Tunisia, Poland, Serbia and Romania.

THE [TESLA MODEL](https://www.financedigest.com/tesla-cuts-u-s-model-s-and-model-x-prices-between-4-and-9.html "Tesla cuts U.S. Model S and Model X prices between 4% and 9%")

Harnesses for fossil-fuel [cars bundle together cables](https://www.financedigest.com/cable-cars-and-ropeways-market-report-size-growth-demand-scope-opportunities-and-forecast-2016-2026-fmi.html "Cable Cars and Ropeways Market Report | Size, Growth, Demand, Scope, Opportunities and Forecast 2016-2026: FMI") stretching up to 5 km (3.1 miles) in the average vehicle, connecting everything from seat heaters to windows. They are labour-intensive to make, and almost every model’s is unique, so shifting production is hard to do quickly.

The [supply disruptions](https://www.financedigest.com/digestion-resistant-maltodextrin-consumption-to-rise-at-6-7-cagr-through-2029-supply-disruptions-driven-by-coronavirus-likely-to-limit-market-growth-future-market-insights.html "Digestion Resistant Maltodextrin Consumption to Rise at 6.7% CAGR Through 2029; Supply Disruptions Driven by Coronavirus Likely to Limit Market Growth – Future market Insights") in Ukraine were a rude awakening for the [auto](https://www.financedigest.com/auto-parts-cleaning-machine-market-the-report-gives-immense-knowledge-on-the-competitive-nature-of-key-players.html) industry. Carmakers and suppliers said that early in the war, plants remained open only thanks to the determination of workers there, who kept a reduced flow of parts moving in the face of [power cuts](https://www.financedigest.com/france-strains-to-avert-power-cuts-as-cold-snap-tests-europes-energy-resolve.html "France strains to avert power cuts as cold snap tests Europe’s energy resolve"), air-raid warnings and curfews.

Adrian Hallmark, CEO of Bentley, said the British [luxury carmaker had initially feared losing 30-40% of its car](https://www.financedigest.com/top-luxury-car-brands-in-the-world.html "Top luxury car brands in the world") production for 2022 due to a [harness](https://www.financedigest.com/cardstacks-new-tally-protocol-to-address-blockchain-blindspot.html) shortage.

The Ukraine crisis threatened to [close our factory](https://www.financedigest.com/nestle-closes-french-buitoni-factory-hit-by-e-coli-outbreak.html "Nestle closes French Buitoni factory hit by E.coli outbreak") fully for several months, much longer than we did for COVID.

Hallmark said finding alternative [production sources](https://www.financedigest.com/amino-acids-premixes-market-overview-analysis-with-application-product-source-opportunity-and-region-2022-2029.html "Amino Acids Premixes Market Overview & Analysis with Application, Product, Source, Opportunity and Region 2022-2029") was complicated by the fact the conventional harnesses themselves had 10 different parts from 10 different suppliers in Ukraine.

He added that the supply [problems had sharpened Bentley’s focus and investment on developing a simple harness for EVs that will be run](https://www.financedigest.com/4-things-to-do-if-you-run-into-problems-with-your-leased-car.html "4 Things to Do if You Run Into Problems With Your Leased Car") by a central computer. The carmaker, a division of Volkswagen, plans a fully-electric lineup by 2030.

“The Tesla model, which is a completely different concept of wiring, we couldn’t change to that overnight,” Hallmark added. It’s a fundamental [change in the way](https://www.financedigest.com/three-ways-that-2022-is-going-to-change-how-you-think-about-money.html "Three ways that 2022 is going to change how you think about money") that we design cars.

The new generation of wire harnesses, used by electric natives like Tesla, can be made in sections on automated production lines and are lighter, a [key factor](https://www.financedigest.com/insights-on-the-flexible-packaging-global-market-to-2027-key-driving-factors-and-challenges.html "Insights on the Flexible Packaging Global Market to 2027 – Key Driving Factors and Challenges") because reducing an EV’s weight is crucial for extending range.

Many of the executives and experts interviewed said fossil-fuel cars, which [face looming bans in Europe](https://www.financedigest.com/explainer-why-europe-faces-climbing-energy-bills.html "Explainer-Why Europe faces climbing energy bills") and China, would not be around long enough to justify redesigns to allow them to use next-generation harnesses.

I wouldn’t put a penny into internal combustion engines now,” said Michigan-based auto consultant Sandy Munro, who estimates EVs will make up half of global new [car sales](https://www.financedigest.com/uk-new-car-sales-rise-17-in-march-best-ever-month-for-evs.html "UK new car sales rise 17% in March; best ever month for EVs") by 2028.

“The future is coming up awful fast.”

‘CHANGE OF PARADIGM’

Walter Glück, [head of Leoni’s harness business](https://www.financedigest.com/the-north-heads-south-to-mipim-en-masse-to-corner-new-real-estate-business-opportunities.html "The North heads South to MIPIM en masse to corner new real estate business opportunities"), said the supplier was working with carmakers on new, automated solutions for wire harnesses in EVs.

Leoni is focusing on zonal or modular harnesses, which would be split into six to eight parts, short enough for automation in assembly and reducing complexity.

“It’s a change of paradigm,” Glück said. If you want to reduce [production time in your car](https://www.financedigest.com/so-you-have-the-dream-job-nice-car-and-big-house-but-is-your-lifestyle-sustainable-do-you-have-the-products-in-place-if-the-worst-were-to-happen.html "So you have the dream job, nice car and big house, but is your lifestyle sustainable? Do you have the products in place if the worst were to happen?") factory, a modular wire harness helps.

Among automakers, BMW is also looking at using modular wire harnesses, requiring fewer semiconductors and less cable, which would [save space](https://www.financedigest.com/heres-how-integrated-electrical-panel-boards-help-save-space.html "Here’s How Integrated Electrical Panel Boards Help Save Space") and make them lighter, according to a person with knowledge of the matter.

The person, who declined to be named as they not authorized to speak publicly, said the new harnesses would also make it easier to upgrade [vehicles wirelessly – an area Tesla](https://www.financedigest.com/tesla-tops-battery-electric-vehicle-registrations-in-germany-beating-volkswagen.html "Tesla tops battery-electric vehicle registrations in Germany, beating Volkswagen") now dominates.

CelLink, a Californian-based startup, has developed an entirely automated, flat and easy-to-install “flex harness”, and [raised $250 million](https://www.financedigest.com/ride-hailing-app-cabify-raises-110-million-for-expansion-in-latam-spain.html "Ride-hailing app Cabify raises 0 million for expansion in LatAm, Spain") earlier this year from companies including BMW and [auto](https://www.financedigest.com/auto-parts-cleaning-machine-market-the-report-gives-immense-knowledge-on-the-competitive-nature-of-key-players.html) suppliers Lear Corp and Robert Bosch.

CEO Kevin Coakley would not identify customers but said CelLink’s harnesses had been installed in [close to a million](https://www.financedigest.com/optable-closes-20-million-series-a-financing-broadens-investor-syndicate-in-new-round.html "Optable Closes Million Series A Financing, Broadens Investor Syndicate in New Round") EVs.

Only Tesla has that scale, but the carmaker did not respond to a request for comment.

Coakley said CelLink’s new $125 million factory under construction in Texas will have 25 [automated production lines which will be able switch different designs in around](https://www.financedigest.com/5-common-mistakes-around-accounts-payable-automation.html "5 Common Mistakes Around Accounts Payable Automation") 10 minutes because the components are produced from digital files.

The company is working on EVs with a number of [carmakers and looking at building another plant in Europe](https://www.financedigest.com/euro-7-emissions-proposals-the-sequel-europes-carmakers-dont-want-to-see.html "Euro 7 emissions proposals, the sequel Europe’s carmakers don’t want to see"), he said.

While the [lead time for changing](https://www.financedigest.com/how-to-lead-organizational-change.html "How to Lead Organizational Change") a conventional wire harness can be up to 26 weeks, Coakley said his company could ship redesigned products in two weeks.

That kind [speed is what legacy carmakers are looking for as they go electric](https://www.financedigest.com/vw-to-speed-up-electric-shift-in-five-year-plan.html "VW to speed up electric shift in five-year plan"), said Dan Ratliff, a principal at Detroit-based venture capital firm Fontinalis Partners, which was founded by Ford Chairman Bill Ford and has invested in CelLink.

For decades, the industry has not needed to [move fast](https://www.financedigest.com/microsoft-unveils-ai-office-copilot-in-fast-moving-race-with-google.html "Microsoft unveils AI office copilot in fast-moving race with Google") to rethink a part like the wire harness, but Tesla has changed that, Ratliff added.

“On the EV side, it’s just go, go, go.”

(Reporting by Nick Carey in London and Christina Amann in Berlin; Additional reporting by Satoshi Sugiyama in Tokyo; Editing by Pravin Char)


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