The global value chain describes the full range of activities that firms engage in to bring a product from its conception to its end use and beyond. This includes design, production, marketing, distribution, and support to the final consumer (Science Direct, 2017). On the other hand, the global value chain for electric vehicles (EV) includes several components and stages, including research and development, raw material extraction, designing, manufacturing, assembling, marketing, distribution, and sales. Thus, a better understanding on the growth of EV revolves around an analysis of characteristics, growth, and sustainability of global value chains.
Recently, open trade and investment agreements have helped to build global value chains, which are a key part of how economies are linked. It alludes to a global nature of value flows in which numerous countries transport their products through the various manufacturing stages, deliver them to the end customers, and dispose of them after usage (Lamberti and Pero, 2019). It is described as a network of homes, businesses, and states that work together to share a single good. The network is a part of the global economy. GVCs now play a crucial part in the current global economy as a result of the 21st century’s innovative commercial, transportation, and information technologies. The core characteristics of GVCs’ global interconnectedness naturally expose them to factors that can impact their growth.
When it comes to globalization and international relations, the political factor is one that has a big effect. Regional trading agreements, reduced trade barriers, policies, and increased trade liberalization are examples of political dynamics. For example, government policies that favor greener options can have a big effect on the number of people who buy EVs instead of cars that run on fossil fuels (Nandan and Pandey, 2022). On the other hand, there is globalization which has been at the core of GVCs’ growth. Globalization encouraged many industries to break down their goods and services into components and stages of production to involve local markets and outsource foreign suppliers to achieve more profit and a more sustainable supply chain to avoid interruption in one of the chains (Barber, 2005). In the context of EVs, for instance, globalization has facilitated the campaign for a greener environment often has an impact on consumer purchasing behaviors (Nandan and Pandey, 2022).
Concerns about fair economic growth and material well-being are inextricably linked to the environmental and social effects of international trade, production, and consumption. These effects are talked about in the context of global value chains. Regarding the equity of unfavorable results in climate change and environmental degradation, in particular, globalization raises important issues (Tannous and Yoon, 2018). As people become more aware of climate change, the transportation industry has been seen as one of the most important areas for carbon reduction plans and mitigation goals. A revolution is taking place in the industry as a result of the benefits of using lion batteries as the power source for electric vehicles and the efficiency of EVs as contrasted to petrol cars (Nandan and Pandey, 2022). In the meantime, the tesla manufacturer is expanding its global operations and adding new suppliers. Also, it is mapping the battery supply chain to improve the direct relationship with those suppliers to secure materials like Lithium from China, Argentina, and the USA, Cobalt from China and Congo, Nickel from Australia, China, and Canada (Tesla, 2022).
The value chain is a term used to describe the whole gamut of operations that businesses carry out to bring a commodity from its inception to its ultimate usage and beyond. This covers conception, creation, marketing, distribution, and customer service. Given the interconnected nature of GVCs, it means that it is subject to factors that influence their growth. Nevertheless, sustainability seems to take foot in recent times with pressures emphasizing greener environments making EVs among the viable options.
Reference List
Barber, E. (2005) ‘International logistics: Global supply chain management’, Interfaces, (32(2), PP.183-184.
Lamberti, L. and Pero, M. (2019). Special issue editorial: Managing the supply chain management–marketing interface. Business Process Management Journal, 25(2), pp.246–249.
Nandan, T. and Pandey, A. (2022). Supply chain barriers for electric vehicles and their mitigation strategies: systematic literature review. International Journal of Electric and Hybrid Vehicles, 14(4), p.269.
Science Direct Global Value Chains (2017) Web.
Tannous, K. and Yoon, S. (2018). Summarizing Risk, Sustainability and Collaboration in Global Supply Chain Management. International Journal of Supply and Operations Management, 5(2), pp.192–196. Web.
TESLA Supply Chain (2022) Web.