Electric shift prompts radical rethink on car manufacturing

Car makers are reviewing every aspect of production to counter the productivity of the Chinese and the cost-effectiveness of Tesla

Car makers look to factories to bring down the high price of EVs; new innovations include 'gigacasting'

The industry shift from combustion to electric power has prompted a radical rethink about how the cars themselves are actually built at volume, with a focus on efficiency and cost-saving. 

“EVs changed everything,” said Joerg Reger, managing director of Swiss giant ABB’s automotive robotics division, which supplies manufacturing robots globally.

“Two years ago, all the focus was all about optimising the final assembly. But then EVs came and now everybody is looking here to fix the big problems instead of looking at fine-tuning.”

The factory has become a key focal point for cost saving among car companies to bring down the high price of EVs. It’s also one the car makers can directly control, as opposed to batteries, for which the cost is largely set by a combination of raw material prices and suppliers.

Car makers are reviewing every aspect of their production to counter the productivity of the Chinese and the cost-effectiveness of Tesla.

“The key to growing EV sales is to make EVs more affordable in the west,” Neil Beveridge, analyst at the bank Bernstein, wrote in a report on Chinese EV manufacturing. “One way would be to import more low-cost electric vehicles from China, but this is political suicide for countries with a substantial legacy auto industry. The other way is to lower manufacturing costs.”

Car makers globally are grasping the scale of the problem.

“The automotive industry is now entering an era of transformation, a change in the game where survival is at stake,” said Kazuaki Shingo, head of production at Toyota.

Shingo was speaking at a recent demonstration of production innovation at the company, many of which follow Tesla’s lead.

Tesla’s relentless focus on bringing down the cost of building its cars has allowed it to reduce the sticker price of the Model 3 and Model Y, driving sales and forcing traditional car makers to follow suit, whether or not they have the same margin head room to match the pricing.

Tesla outlined its expertise earlier this year in a deep-dive investor day, in which it bragged of the cost saving it has achieved.

Chief financial officer Zach Kirkhorn told the audience in Texas that the company had taken 30% of the cost out of building the Model 3 since 2018. “Cost reduction is deeply ingrained in our culture,” he said.

Innovations include using ‘gigacasting’ to mould large portions of the underbody to replace dozens of metal pieces.

Tesla has also rigorously simplified the specification of its cars, removing anything it thinks the customer can do without, including in the most recent-generation cars steering-wheel stalks and parking sensors.

Tesla’s next-generation cars, which are due to enter production in 2025, will be 50% cheaper to build than current Model 3 and Model Y, Kirkhorn claimed.

One way it will do that is via a new method of manufacturing that Tesla calls ‘unboxing’.

“Ford first invented this assembly line in 1922, and it's really hard to make a change after a hundred years,” head of vehicle engineering Lars Moravy said.

Tesla wants in future to assemble the car in modules, rather than welding body parts together and then assembling the car by inserting the rest of it into its metal skeleton, which Moravy argues is tricky and time-consuming.

So, for example, the interior will be assembled and then inserted between the sides of the car. Tesla claims this will give it 40% more ‘operator density’.

"That means we can get more people or robots working on the car at the same time,” Moravy said.

The long, often snaking assembly line of traditional factories can be considerably shortened, shrinking the size of new factories and cutting investment, Tesla claims.

Tesla’s innovations have struck a chord at Toyota, the granddaddy of the modern automotive production system. But progress stops for no one.

The Japanese company showcased a range of innovations to speed up EV manufacturing at a recent event held in Japan, with Shingo saying: “I'm willing to break the production-department status quo." 

One innovation is a similar concept to Tesla’s unboxing in that the car is split into three modules – front, middle and rear - that are easier for factory operatives to work on.

Echoing Tesla, Toyota said the shift “improves work efficiency and productivity and reduces processes compared to work conventionally performed with people inside the frame”.

Toyota also said it was ready to embrace gigacasting and spoke of speeding up the process to swap out moulds from 24 hours to around 20 minutes.

Other innovations include increasing the automation within logistics by moving cars within the factory site using something it called vehicle logistics robots.

Toyota said it would partly solve what it said was a “chronic shortage of labour” within logistics due to stricter regulations on driver working hours. 

Meanwhile, Toyota also plans to do away with the traditional conveyor by having EVs drive themselves to the next station – once they’ve reached the required state of completeness, of course. 

Breaking the inflexibility of the traditional conveyor-belt system is going to be key in future, particularly when car makers are looking to save costs by running multiple models with different drivetrains down the same line.

“The biggest challenge our customers face is managing a broad range of variants,” said Reger. “Everybody has to be very, very flexible. This includes the production lines.”

ABB’s solution for the body shop – where the shell is put together and traditionally the most automated part of vehicle production – is to build standardised but flexible robot ‘cells’ that can quickly change from glueing to sealing and to spot-welding. Mobile robots bring parts and take away completed sections. 

This kind of flexibility is key when alternating between combustion engines or electric drivetrains in mixed plants. “It’s super difficult for the car manufacturer to estimate numbers for particularly electric cars. Some months they have good sales. The next month is down,” said Reger.

But more robots isn’t always the answer. It doesn’t necessarily hold that increasing automation decreases costs. In a country with lower labour costs, it takes longer to realise the savings of the investment.

For Volkswagen, Tesla’s unboxed process appears to run counter to the American company’s stated aim of simplification.

“I’m not a fan of Unboxed,” said Christian Wollmer, head of production at Volkswagen. “For me, it’s a signal they want to increase the number of variants. We want to go the other way.”

Volkswagen is looking at cutting range complexity across all models but particularly for the new range of small EVs headed by the ID 2 as it tries to hit its €25,000 price target.

“[The] Polo today has 110 million different combinations. That’s crazy,” Wollmer said.

Multiple combinations lead to assembly operators taking longer to pick out individual parts for different variants, increasing the so-called ‘takt time’ (the time spent at each assembly line station).  

Production speed is everything when it comes to reducing manufacturing costs – assuming, of course, there’s a ready market for all the cars spilling efficiently out of your factory gate.