Navigating the EV transition: Building better and more flexible supply chains

Electrification is now a primary driver of complexity in automotive supply chains. The transition from internal-combustion to battery electric powertrains is advancing at different speeds across regions. China leads on the back of decades of investment from critical minerals to new energy vehicles (NEV) manufacturing and distribution, while Europe and the US are accelerating from a lower base with uneven momentum. Across markets, OEMs are prioritising battery logistics, hazardous-goods-ready infrastructure, proximity to production, compliant data and circular aftermarket flows – to de-risk operations and scale.

“If you are an OEM now you have to provide multiple powertrains because that shift to electric vehicles (EVs) is somewhere in transition depending on where in the world you are,” says David D’Annunzio, global vice-president and vertical head for Automotive at DP World. “While an EV has fewer parts and is easier to assemble, there are multiple variants of internal combustion and EVs, often being made in the same factory, increasing the complexity of assembly.”

The need to meet demand for both internal combustion (ICE) and EV variants also impacts the provision of service parts, the volume of which has increased by roughly a third because of the need to stock parts for both types of vehicles. For EVs, aftermarket battery services have their own very specific requirements and include regulation on recycling.

Bringing home the battery

OEMs face a strategic choice: one based on whether they purchase batteries from suppliers or vertically integrate into production. Ownership of battery production, independently or via joint ventures, requires significant capital but increases an OEMs control over cost, quality, resilience and the ability to navigate restrictions on trade. Recent examples include Toyota, which started its own battery production in the US this year at a $14 billion factory in North Carolina – its first in-house plant outside Japan, supplying hybrid, plug-in hybrid and pure EVs. In Europe Stellantis is establishing a joint venture with CATL to make a lithium iron phosphate (LFP) battery plant in Zaragoza, Spain.

Vertical integration is a lesson Henry Ford learned back in the early days of car production and vehicle makers are returning to that original strategy in relation to battery production, according to D’Annunzio.

“One of the things that happened to Henry Ford was that the Dodge brothers originally provided full chassis to his company but then turned around and started their own business,” says D’Annunzio. “That irritated Henry Ford. He set up his own manufacturing and was 100% vertically integrated so no one could ever do that to him again.”

Careful handling

Crucially, lithium battery production and movement demand specialised, hazardous good logistics. EV batteries are categorised as hazardous goods under UN international dangerous goods regulations for road and air transport. Temperature, humidity and state of charge must be tightly controlled, and safeguards need to be in place to avoid any thermal runaway risks, which are difficult to extinguish. 

DP World is providing battery logistics support, including deliveries both to assembly plants and to the EV dealer/service centre networks.

D’Annunzio notes most movements are simple, short-haul deliveries because battery manufacturing is deliberately located close to assembly plants and the centre of gravity for dealer distribution to try to minimise the hazards of moving batteries. “As long as they have been stored properly and they have the right state of charge, moving them from a storage location to either a manufacturing plant or to a service parts distribution location is an easy thing to do,” he says.

However, the right equipment and training is essential. At DP World storage locations, staff must be certified to manage hazardous goods by way of ensuring compliant handling and storage. Lithium batteries are segregated in dedicated zones, equipped with appropriate fire suppression systems and specialised lifting and charging equipment. With a decade of experience moving EVs and their batteries, we maintain an unblemished safety record. 

DP World is also looking at the circular economy when it comes to aftermarket battery management. “The way the automotive aftermarket is set up for EV batteries is very simple,” says D’Annunzio. “If you take a battery and deliver it to the dealership you have to pick up the old battery and bring it back and recycle the black mass for somebody else. That is exactly what we do.”

Beyond operational changes, DP World has pledged to become carbon neutral by 2050, with interim targets for 2030, aligning with global climate frameworks. These commitments are driving investments such as electrified trucking fleets, modal shifts from road to rail, and the deployment of electric and autonomous vehicles at ports and terminals – ensuring that battery logistics is managed sustainably end-to-end.

Passport to power

In Europe, the battery passport (EU Battery Pass) will be mandatory from 2027 – a digital certificate which will enable consumers to verify the sustainability and environmental credentials of batteries used in electric vehicles (EVs). It will provide a document of data along a battery’s entire lifecycle. Today, we are seeing industry leaders collaborating to drive and advance the development of the first, trusted industry wide passport. For example, Path.Era, a collaboration between carmakers BMW and VW Group and suppliers BASF, Henkel, Siemens, working with consultant Deloitte, are currently working on the first industry-wide, trusted battery passport. China is currently working on a battery passport initiative to align with and facilitate trade with the EU’s battery regulations. However, outside of Europe, the situation is less consistent and is down to logistics providers to adhere with local and regional legislation. 

Alongside regulatory compliance, DP World applies digital monitoring to the batteries in its care. This includes real-time checks on temperature, humidity and state of charge to ensure stability during storage and movement. These measures provide early-warning safeguards that reduce the risk of incidents and support transparent, auditable supply chains.

D’Annunzio indicated that when solid state batteries become less expensive to produce, regulations will be less complex given the greater stability afforded by that battery chemistry and the concern will be focused on those lithium-ion batteries still out in the marketplace.

Keep your options open

Powertrain transition and the localisation of battery production are amplifying supply-chain complexity amid broader trade upheaval, challenging OEMs, suppliers and logistics providers alike.

“We are all grappling with that,” notes D’Annunzio. “What we are telling our customers is that the best that you can do today is have flexibility, or as Jim Tompkins [CEO Tomkins Ventures] calls it, ‘optionality in your supply chain’.” 

Building in optionality means being able to react faster to whatever the market throws your way. What is important for traditional carmakers to understand, according to D’Annnunzio, is that having options ready doesn’t always mean aiming for the one with the lowest cost anymore. “You need that little bit of extra insurance as things are changing rapidly,” he says. “That is a very difficult message to get across to OEMs in general and more importantly, OEMs that are in financial distress because of everything else that is going on.” 

China in charge

While EV growth in Europe and the United States is progressing unevenly, China remains a global leader. Chinese OEMs produce 60% of all NEVs and 70% of all batteries, with capacity outstripping local demand. This surplus is driving assertive export strategies.

China’s BYD has rapidly scaled exports from hundreds of thousands to close to a million vehicles annually, while localising NEV assembly in key overseas markets to mitigate tariffs. As BYD and others have indicated, nearshoring combined with vertical integration simplifies a carmaker’s supply chain at a time of complexity. China’s NEV makers are smashing the traditional five-year vehicle development cycle – designing, producing and testing a vehicle ready for release in 18 months.

Intensifying competitive pressure from China is forcing traditional American and European OEMs to articulate clear strategic responses. 

DP World is positioning itself to manage the complex needs of Chinese NEV customers making electric vehicles, including comprehensive services for battery handling and storage.

“As Chinese carmakers expand around the world, we want to be there to help them with their destination logistics, whether that be for the NEVs that they are exporting or in local manufacturing assistance and service parts distribution among other services,” says D’Annunzio.

DP World supports battery makers in the development of new gigafactories, alongside aftermarket contract logistics services. More specifically, for Foton, DP World is blending contract logistics and tailored market-entry and expansion services on a unified platform, managing the legal entity for Foton. 

“Foton stocks inventory in our warehouse; when an order for a part comes by, we buy it from Foton, deliver and remit the funds,” says D’Annunzio. “Rather than being a pure logistics service provider we are also their trading partner in South Africa. Those are the type of innovative solutions that we are trying to come up with for our Chinese clients as they expand around the world.”