EV Startups Seeking Mass Production At Low Costs

All of the electric vehicle and van startups vying to be the next Tesla Inc want to avoid Elon Musk’s “manufacturing hell.”

However, electric vehicle companies such as Arrival SA (47K.F) in the United Kingdom and Fisker Inc in the United States are taking completely different approaches to overcoming the hurdles of successful mass production that nearly bankrupted Tesla.

Few have been able to find investors prepared to put up billions of dollars to help them pay their voyage. Rivian has raised $10.5 billion in funding from Amazon.com Inc, Ford Motor Co, and other investors as it ramps up production of electric vans, pickup trucks, and SUVs.

Startups without Rivian’s piles of capital must find less expensive routes to mass manufacturing or risk failing in the EV arms race, a problem Musk frequently underscored on Tesla’s July 26 earnings call.

“The thing that’s remarkable is that Tesla didn’t go bankrupt in reaching volume production,” Musk said.

Tesla struggled to build up commercial production of the Model 3 car in 2017 and 2018, with the then-losing automaker burning through cash as it battled over-reliance on automation, battery difficulties, and other obstacles. To reach its production targets, it even built a new line in a big tent outside its Fremont, California, factory in just two weeks.

Many automakers have traditionally spent more than $2 billion on a factory capable of producing 240,000 or more vehicles per year.

Arrival has chosen to develop “microfactories” for electric vans and buses, which are small operations with low-cost equipment that cost $50 million. Arrival’s vans are composed of lightweight coloured plastic composite and do not require paint shops, which can cost hundreds of millions of dollars.

Arrival intends to build microfactories near major clients throughout the world, reducing transportation costs and employing locals.

“You have to raise so much money to do this the traditional way that it keeps startups from coming forward with new ideas,” said North American head Mike Abelson – a former General Motors Co executive.

Arrival raised $660 million in its March initial public offering and is currently constructing two plants in the United States: one in North Carolina that will produce vans for United Parcel Service Inc (UPS.N), the company’s largest customer to date, and another in South Carolina that will produce buses. It is also constructing a factory in Spain. Arrival will announce more plants later this year, according to Abelson. The first Arrival microfactory, in Bicester, England, will serve as a model for future factories. One of the ways the company will avoid big-ticket items that have historically defined automotive manufacture is by not having a paint shop.

Engineers at the firm have created moulds for plastic body panels that cost thousands of dollars instead than the millions required for a standard metal die. Engineers at Arrival have also created their own moulding equipment.

Arrival need about 70 robots per microfactory, according to Abelson, and the company is using common-use, generic robots from long-time auto industry suppliers Kuka AG and Italy’s Comau, rather than pricey made-to-order robots. Stellantis NV, a carmaker, owns Comau.

Robots are programmed to perform multiple tasks. If you need to apply glue at multiple spots during assembly in a large traditional auto plant, you install more adhesive stations along the line to churn produce a vehicle every minute.

However, there will only one adhesive station in Arrival’s microfactory, and autonomous wheeled robots created in-house will transport a chassis back and forth throughout the assembly process.

According to Abelson, going small allows Arrival to commit to 10,000 vans per factory every year rather than 100,000. Each microfactory will provide roughly 250 jobs, far less than the tens of thousands that a big auto plant has historically generated.

“That means if a plant doesn’t work out, it’s not a disaster for a local economy,” Abelson said. “A major car plant closing is a big hole to fill.”

(Adapted from TechLive.com) 

Categories: Economy & Finance, Entrepreneurship, Regulations & Legal, Strategy, Sustainability

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