EV boom is pay-dirt for factory machinery makers

The investment surge by both new and established automakers in the electric vehicle market is a bonanza for factory equipment manufacturers that supply the highly automated picks and shovels for the prospectors in the EV gold rush.

The good times for the makers of robots and other factory equipment reflect the broader recovery in US manufacturing. After falling post-Covid to $361.8 million in April 2020, new orders surged to almost $506 million in June, according to the US Census Bureau.

Growth in the EV sector, propelled by the success of Tesla Inc TSLA.O, comes on top of the normal work manufacturing equipment makers do to support production of gasoline-powered vehicles.

Automakers will invest over $37 billion in North American plants from 2019 to 2025, with 15 of 17 new plants in the United States, according to LMC Automotive. Over 77 per cent of that spending will be directed at SUV or EV projects.

Equipment providers are in no rush to add to their nearly full capacity.

“There’s still a pipeline with projects from new EV manufacturers,” said Mathias Christen, a spokesman for Durr AG DUEG.DE, which specializes in paint shop equipment and saw its EV business surge about 65 per cent last year. “This is why we don’t see the peak yet.”

Orders received by Kuka AG, a manufacturing automation company owned by China’s Midea Group, rose 52 per cent in the first half of 2021 to just under 1.9 billion euros ($2.23 billion) - the second-highest level for a 6-month period in the company’s history, due to strong demand in North America and Asia.

“We ran out of capacity for any additional work about a year and a half ago,” said Mike LaRose, CEO of Kuka’s auto group in the Americas. “Everyone’s so busy, there’s no floor space.”

“We built a facility and have like 5,000 robots on shelves stacked 200 feet high, almost as far as the eye can see,” said Dueweke, who noted Fanuc America set sales and market share records last year.