New routes to market are being opened up by a switch from steel to composite panels
Pressing steel is a monumental and costly undertaking
Arrival electric van can be built on small scale yet profitably
‘Go big or sink fast’ has been the mantra of car makers in the last couple of decades.
If your manufacturing operations don’t utilise economies of scale, to use the business-jargon version, then you will never make money in a world in where profit margins are slim and disruptive shocks are becoming the norm, especially in the mass-market end of the car choice.
“Autos is a high fixed-cost/scale business,” wrote anaylst Adam Jones of Morgan Stanley bank in January. “Returns are maximised when you can achieve very high volume per [unit].” His point was that profits can only flow on annual volumes over 100,000.
However, newer car makers and automotive disruptors are challenging the prevailing wisdom to find new ways to bring vehicles to market, especially ones that fulfil a more niche customer need or desire without sending the price spiralling to the point where you’re paying Aston Martin money.
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A key aim is finding an alternative to the stamping press, a vast and vastly expensive machine that uses immense force to stamp out panels and other car parts from steel.
Not only is the press expensive, but so too are the dies – the pattens that create the shape of the parts.
“I’ve seen pressed steel dies at $3-4m each,” said Jean-Philippe Launberg, former technical director of General Motors in Brazil and now strategy and business director of Gordon Murray Design (GMD). “And you don’t just need one for a piece; you need four, five or even six steps.”
The solution preferred by GMD and others, including hydrogen fuel-cell vehicle hopeful Riversimple, London taxi maker LEVC, commercial EV start-up Arrival and others, are panels pressed from composites, rather than steel.
Plastic panels are still pressed but at a much lower pressure, between 100 and 400 tonnes, compared with 3000-5000 tonnes for steel, Launberg said, and it’s done in a single step rather than multiple steps.
“It enables profitable vehicles than a lower volume than steel,” he explained. “The cost of building a factory for the car is cut by 40%.”
Plastic panels can also cut the weight of the vehicle by at least 20%, Launberg said.
GMD offers a production process utilising the technology, called iStream, to interested companies. Launberg said two are in the process of using it to bring vehicles to market, one below 5000 a year the other in the “tens of thousands”.
Neither is TVR, a named iStream customer that’s still in the process of amassing funds to make its Griffith V8 sports car.
The process of sticking non-structural composite panels onto a stiff frame can be done cheaply enough to allow shorter runs of models that are more runabout than rarefied.
“If you make steel cars, the optimal scale is about 300,000 for a model [over the course of its life], because that’s what you spit out from pressed steel tools,” said Riversimple founder Hugo Spowers. “As soon as you go to composite, the maximum throughput of one set of tooling is 5000 vehicles, and so that’s how many you assemble on site.”
The process cuts the need for the megaplant, Spowers argued. “The beauty of this manufacturing model is if I wanted to make 50,000 instead of 5000, we would build more small plants, not a bigger plant,” he said. That plant might make a different variant of Riversimple’s dinky lightweight two-seater, which is still in development.
“I’m only gambling two-to-three years ahead about what the market wants, rather than 10 years ahead for a big plant.”
This ‘microfactory’ idea is one adopted by Arrival, the EV company that’s getting ready to launch a van, due later this year, bus and, in 2023, a car aimed at drivers working for ride-hail companies such as Uber.
“The Henry Ford model has worked well, but we said ‘let’s question that; does it need to be one line?’,” said Arrival president Avinash Rugoobur.
The planned Arrival van factories are designed to make 10,000 a year, while bus factories are pegged at 2000. Its vehicles use plastic composites, pressed on site in the required colour. Rugoobur pointed out this removes the need for a stamping press or a paint shop – two big expenditures.
Car companies with bigger production goals are also questioning the accepted wisdom of car production. Tesla, for example, is employing what it calls the Gigapress, a giant aluminium casting machine that can make front and rear underbodies in one piece each.
“We’re literally trying to make full-size cars in the same way that toy cars are made,” Tesla CEO Elon Musk tweeted last year. Tesla says the process replaces “70-plus” parts each.
Cost-saving is less the point here but rather the reduction in complexity, increased structural rigidity in the final vehicle and better quality control.
Volvo meanwhile has indicated that it too is investing in mega-casting machines as part of an overhaul of its manufacturing.
The whole idea of the conveyor-belt system of assembly is being reinvented too by Swiss company ABB, famous for its manufacturing robots. ABB has developed a system in which the production line is replaced by flexible manufacturing cells between which vehicles and parts bins are hauled on trolleys by automated vehicles. ABB claims the system would speed up the time to make a vehicle and reduce manning, cutting costs in two key areas.
Bentley is one manufacturer that’s keen to do away with the traditional production line. It said in February that its new plant to build its first EV will use automated guided vehicles to move bodies around, rather than a traditional conveyor belt. “It will give us the ultimate flexibility in volume,” said Bentley head of manufacturing Peter Bosch.
“Manufacturing is hard” is a favourite saying of Musk, and that holds true no matter which way it’s approached. But as with anything to do with cars, at some point you have to question the old tried-and-tested methods to see whether it can’t be done better.
Keyword: Volume down, profits up: the radical new ways of mass-building cars