The competition to dominate the evolving electric vehicle market is that companies are pinning their hopes on diametrically opposed approaches to manufacturing.
The traditional assembly line has dominated manufacturing for decades. Likewise, the idea is that bigger is better and that economies of scale can be achieved by increasingly larger production facilities.
That mindset is behind the emergence of “Gigafactories” – massive manufacturing facilities capable of producing the batteries and vehicles that will move humanity toward greener transportation.
The term was first used by Tesla CEO Elon Musk in 2013. Tesla, located in the Nevada desert, expects its original gigafactory to be the largest building in the world upon completion.
Six years after construction began, however, the plant is only 30 percent complete. Is there an alternative to the traditional assembly method of production and economies of scale due to ever-increasing production footprints? For proponents of the microfactory concept, the answer is a resounding yes.
The term micro-factory was coined in 1990 by the Mechanical Engineering Laboratory of Japan. It reflects the idea of a smaller manufacturing footprint, leveraging cell-based manufacturing and higher levels of automation to deliver more innovative and adaptable designs.
A major advocate of this approach is Phoenix-based Local Motors, which produced the world’s first 3D-printed car in 2014. More recently, it is the British start-up Arrival that is leading the concept.
The company recently emerged from stealth mode and was listed for a whopping $ 5.4 billion on the New York Stock Exchange. Arrival focuses on buses and commercial vehicles.
It has secured investments from Honda, Kia and UPS. The latter has a standing order for 10,000 electric vans, which will be produced at Arrival’s first micro-factory in Banbury, Oxfordshire. A second micro-factory in South Carolina will focus on buses.
These production facilities are in stark contrast to the colossal structures in which many of the world’s leading car manufacturers invest.
While Tesla’s giga factory in Nevada already has a 1.9 million square foot footprint with more than 5.3 million square feet of operational space across multiple floors, an Arrival micro plant can be deployed in a standard 200,000 square foot warehouse.
The bold statement behind this approach is that the micro-factory will enable Arrival to produce electric utility vehicles at a price that is competitive with internal combustion engines.
The starting point for this argument is the lower capital costs required for the micro-factory. Because a gigafactory is both massive and purpose-built, it takes many years and significant capital expenditure.
The micro-factory only takes six months to be operational and can be set up in a generic warehouse. By using its own proprietary composite material, Arrival has also eliminated the need for painting and stamping – both activities that traditionally occupy significant factory space.
Finally, microfactory advocates promise to make significant savings on outbound logistics. Rather than having one central factory, setting up hundreds of smaller factories operating close to their local markets means bringing the product closer to the customer.
While this all sounds good in theory, it has yet to be demonstrated in practice. The proof is in the pudding, as the saying goes. A major challenge is incoming logistics. Having more factories means shipping components and materials to more locations.
That’s one reason Arrival has a strong focus on vertical integration – the company has its own chassis, drivetrain, body and electronic controls. In his commercial vehicle, 60 percent of the components are vertically integrated.
While that number may be high, 40 percent of auto parts still need to be supplied by suppliers. If those parts need to reach factories in dozens or perhaps hundreds of locations, you run the risk of wiping out savings in outbound logistics.
In any case, even if 100 percent vertical integration could be achieved, you still need to move components and materials to multiple locations for mounting. The micro-factory’s cell-based fabrication focuses on flexibility and innovation.
Each cell is a cluster of robotic arms, with the manufactured product making its way from one cell to another via an automated robotic vehicle. Arrival uses standard robots, but builds its own advanced software to improve this process.
In a traditional assembly line, the production process is linear. In the micro-factory, the product can visit the different cells in any order, perhaps even return to the same cell.
If a new cell needs to be added for more customization, this is possible without stopping or disrupting production. It is no coincidence that Arrival has chosen to focus on commercial vehicles and buses, where the need for design flexibility is greater given the different demands placed on these vehicles.
The company has recognized that a one-size-fits-all approach is less effective for these sectors and is positioning itself accordingly. We are reaching a critical point on the road to vehicle electrification.
What makes this story so fascinating is that in this unfolding story, the major original equipment manufacturers are placing their bets on diametrically opposed approaches to manufacturing.
Some bold bets are being placed and it is probably too early to call the likely winners in this race. From the point of view of mankind, it can only be good that we didn’t put all our eggs in one basket.
Roger Brereton is head of sales at steering system specialist Pailton Engineering