Automotive procurement teams working on EV programs must hit cost targets on components with limited benchmark data, negotiating against suppliers who know their manufacturing processes, labor rates and overhead structures well and build quotes they can't see into. That's a sourcing problem. But its root is upstream.
The design phase accounts for 80% of a product's cost, before anyone requests a supplier quote, writes a sourcing strategy or lets procurement weigh in. ICE programs built workarounds over decades: deep supplier relationships, mature cost benchmarks and experienced commodity managers. Those workarounds are thinner on EV programs, where components are newer and suppliers are fewer.
The manufacturers making progress on EV costs aren't solving this at the negotiating table alone. They're connecting cost intelligence into the design process, so procurement makes a sourcing decision with the same view suppliers have when building their quotes.
Savings start in design, not at the negotiating table
One Tier 1 automotive supplier, shifting driveline and sealing product lines to electrification, embedded cost and design for manufacturability (DFM) analysis into vehicle development. The company identified cost-saving opportunities of 8% of total spend within two years, realizing 4% in the first year. It found those savings not at the negotiating table, but when design engineers could see the cost impact in real time, before cutting tooling and locking in suppliers.
One design engineer used it to consolidate components and cut redundancies on a single program, delivering a 5% cost reduction. The purchasing team used the same detailed, process-level cost breakdowns to negotiate with suppliers, achieving over $2 million in annual savings on one component by identifying where costs exceeded what manufacturing should require.
That sequence (cost shaping design, the same data guiding procurement) is what changes the conversation with suppliers. Not a tougher negotiation posture. A factual one.
No standardized baseline for EV costs
For established ICE components, procurement has decades of benchmarks. For EV-specific parts such as battery modules, e-motors and power electronics, that cost history is shallow or nonexistent. Suppliers build those quotes drawing on their own process knowledge and cost structure. Most procurement teams evaluate them against a previous quote, a finance target or a gut feel, without an independent view of what manufacturing should cost.
A leading U.S. EV manufacturer scaling production across multiple platforms had no standardized starting point, weakening procurement's negotiating position. Teams couldn't compare estimates, validate assumptions across programs or make progress on BOM cost reduction. Templates existed for common processes like sheet metal and plastics, but EV components involve castings, extrusions and machining; inconsistent cost models meant every quote comparison started from a different baseline.
By standardizing estimation across process groups, using part geometry and manufacturing data, procurement and cost engineering teams gained one baseline for every supplier conversation. Turnaround times for estimates dropped, quote comparisons held up across manufacturing methods and procurement engaged suppliers with precision rather than approximation, on new platforms with no prior baseline to fall back on.
What this means for EV procurement strategy
The playbook for EV cost management differs from ICE, not because the fundamentals of procurement have changed, but because that intelligence has been absent. A U.S.-based EV startup pursuing a $25,000 price point used manufacturing simulation to eliminate a $150,000 prototype cost overrun and cut tooling expenses on a single part from $400,000 to $154,000, a 62% reduction through rapid design iteration before production.
The savings didn't come from negotiation strength alone. They came from knowing what the part should cost early enough to change how the team designed, tooled and sourced it and keep the program on schedule. Late cost decisions don't just hurt margin; they create the engineering change orders and supplier renegotiations that push launch dates. The manufacturers hitting their cost targets and launch windows have that intelligence before circumstances force the decision, not after.
For automotive procurement teams navigating EV programs without that cost history, that's the shift that changes what's possible at the negotiating table. A supplier quoting an EV component builds deep knowledge of its own manufacturing costs into every line of the quote. The manufacturers closing the EV profitability gap give procurement that same foundation: cost intelligence based on the product's geometry, available before the quote arrives and defensible when the supplier pushes back.
aPriori delivers product cost intelligence across design, source and make, giving automotive manufacturers and suppliers visibility to reach better decisions earlier, across every platform and program. See how it works →
