For over a century, the automotive industry has been a dominant influence over all aspects of industrial manufacturing. Today, as the process of moving from internal combustion engines (ICE) to electric vehicles (EV) gathers pace rapidly, we continue to see the wide-ranging impact of technology convergence within this sector.
The recent numbers are staggering – sales of battery electric vehicles (BEVs) rose by 40% and plug-in hybrid vehicles (PHEVs) by 74% worldwide in 2020, with the main growth stemming from Europe. But for OEMs and the supply chain, there are major challenges ahead as revealed in Wards Intelligence’s report, commissioned by Hexagon: ‘The electric vehicle pivot: Why smart manufacturing, not scale, may be the key to success’.
A disrupted sector
The path towards a 100% EV future represents the most significant upheaval in the automotive sector since the Model T Ford in 1908, and with that comes a transformation in the entire manufacturing process and supply chain. 90% of the components supplied to ICE cars are redundant in the new EV supply chain, leaving the door wide open for external competition. Notably, this includes players from the global electronics sector, which is now far more closely aligned to car manufacturing than it was previously.
But is this potential threat being acknowledged by established industry players? The report’s survey data suggests maybe not. Only 8% of respondents viewed pure-play EV manufacturers winning market share as a threat. As the report details, new challengers entering the EV space have a number of logistic and economic advantages which will require existing manufacturers to re-think their strategy to remain competitive.
Economies of scale still the answer?
Traditionally, economies of scale have been a car manufacturer’s friend. Since Ford with the Model T first presented the possibilities of mass production, scaling up has been a primary strategy for keeping costs down. Aligned with this, the ‘just in time’ method pioneered by Toyota in the 1970s delivered significant improvements in both quality and capacity. But recent issues with supply chains brought about by freak weather incidents, the Suez Canal blockage and the COVID-19 pandemic have highlighted the fragility of this methodology.
The development of EVs has provided the automotive industry an opportunity to start afresh with a new way of doing things that doesn’t lean so heavily on economies of scale and is more resistant to supply chain disruption. Smaller, cheaper ‘microfactories’ have been designed and built to deliver EVs at a much lower cost than the usual $1 billion+ plants, with fully automated production processes reducing costs even further.
One of the key benefits of the ‘just in time’ method is avoiding waste, but this is achievable without the inherent risk of supply chain disruption. Smart manufacturing offers OEMs and the supply chain an opportunity to optimise processes at every stage of EV production – from design to assembly line – through an interconnected array of sensor technology, autonomous QC and AI-driven software. By delivering improvements in the productivity, quality and connectivity of design and manufacturing processes, material wastage and time-to-market can be reduced.
The harvesting of data and putting it to work in smarter, more autonomous ways is fundamental to the future of EV and ICE car manufacturing. For example, ŠKODA AUTO’s tailor-made smart measurement cells that have significantly increased measurement capacity and quality as part of an initiative to reconfigure their inspection processes for automated 3D optical systems instead of tactile measurement.
Using smart systems such as these to increase the level of automation in manufacturing processes gives EV industry manufacturers a much-needed opportunity to maximise profitability and quality throughout the product lifecycle and compete with a raft of new players entering the market.
Keith Perrin, Senior Director – Digital Transformation for Hexagon’s Manufacturing Intelligence division, a global leader in sensor, software and autonomous solutions, commented: “The old industry was a finely tuned machine… OEMs assembling parts from suppliers. All of a sudden, the traditional norms are no longer there and people are looking with fresh eyes about car manufacturing, which means re-tooling. However, this isn’t just an engineering problem, the entire business model needs to be re-tooled. The new players entering the market? They don’t have that problem.
“Trying to adapt to the new world might appear chaotic, but it’s just a different way of doing things. The rates of innovation with these new methodologies iterate and deliver much faster than before. The longer companies take to adapt to the new way, the further behind they will become.”
The power of knowledge
The Wards Intelligence report from Hexagon also reveals that while awareness in this sector of smart manufacturing is growing, full engagement is still two or three years away. With the automotive industry on the threshold of immense change, those who get to grips now with all that smart manufacturing technology has to offer are giving themselves a crucial advantage in an increasingly competitive landscape.
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