Automakers rushing to develop battery-powered, software-powered vehicles to compete with Tesla Inc. are facing a new challenge: what technology to build themselves, and what to buy from suppliers. Is. Becoming more vertically integrated by manufacturing more in-house represents a major shift for most global automakers, who have relied on suppliers to produce critical parts and software for decades, and manufacturing vast in low-wage countries. network is managed. But some established automakers have been making drastic changes in their long build or purchase calculations. One factor is the success of Tesla’s electric vehicles, which rely on proprietary technology that the company develops and manufactures itself. Another is the financial damage caused by a supply-chain breakdown during a pandemic.
“The most important thing is that we integrate vertically. Henry Ford … was right,” Ford Motor Company CEO Jim Farley told a conference call earlier this month. Farley’s reference was to the company’s founder Henry Ford’s rouge manufacturing complex in Dearborn, Michigan, which carried iron ore and other raw materials at one end in the early 20th century, and churned the Model T off the assembly line at the other. did.
Farley said the company had to move away from its initial EV strategy of buying components off the shelf. Now, he said, Ford aims to control the supply chain “back to the mines” that produces battery materials.
Rivals including Volkswagen AG, General Motors Company and Mercedes-Benz AG are adopting a similar strategy. Mercedes acquired British high-performance electric motor maker YASA last year, and remodeled a factory near Berlin to produce motors based on YASA technology. The German luxury carmaker opened a new factory in Alabama in March to make battery packs for US-made electric vehicles, and said it would partner with Japanese battery maker Envision AESC to manufacture battery cells in the United States.
“We’re going deeper into sourcing,” Mercedes-Benz chief executive Ola Kalenius told reporters during a briefing in Alabama.
Rivals including Volkswagen AG, General Motors Co. and Mercedes-Benz AG are adopting a similar strategy of controlling supply chains
winning strategy
The investment by automakers in mines, motors and batteries is a departure from decades of delegating control of development and production to suppliers, which allows many automakers to produce steering control, semiconductor and electronic components on a greater scale and at a lower cost. can do.
In the new world of electric vehicles, however, investors have decided that Tesla’s approach to buying raw materials directly, building its batteries and engineering its software is a winning strategy. Tesla’s market capitalization has exceeded $1 trillion in recent weeks, more than Toyota Motor Corp., Volkswagen, GM and Ford combined.
Peter Rawlinson, CEO of EV startup Lucid Group, said, “The key players have realized that electric vehicles are the future, but they haven’t yet widely recognized what they need in terms of motors, transmissions, battery technology, inverters and electric powertrains. I want to raise my game.” Inc., said in an interview with Reuters. Rollinson was previously the vice president of vehicle engineering at Tesla.
Between 1970 and 2010, the share of automakers-owned intellectual property in their vehicles declined from 90% to 50%, according to Guidehouse Insights analyst Sam Abuelsamid.
That meant many automakers lacked the in-house engineering expertise to develop their own electric vehicle platforms, powertrains and battery packs when EV pioneer Tesla showed that its vertically integrated cars were a hit with consumers.
“We are designing and manufacturing a lot more of the car than other OEMs who will largely go on a traditional supply base and [execute] Like I call it catalog engineering,” Tesla CEO Elon Musk said during the 2020 earnings call.
Tesla’s approach is costly and the company has repeatedly increased the prices of vehicles over the years. Despite promising to deliver a model that could start at around $25,000, Musk said earlier this year “We’re not currently working on a $25,000 car. At some point, we will. But our We have enough on our plate right now.”
technology race
Supplier industry executives said there is a gap between what automakers say about their vertical integration strategies, and what happens when engineers try to meet deadlines to deliver new vehicles.
“There’s a lot of stories about in-sourcing and vertical integration, especially in areas like software,” Kevin Clark, chief executive officer of auto supplier Aptiv Plc, told analysts in February. “Virtually all OEMs we do business with are struggling with software development.”
Javier Mosquet, a senior consultant at Boston Consulting Group, said many manufacturers still choose to purchase EV technology to avoid the cost and complexity of building in-house.
“There are many automakers that want to continue to buy and manage one way final integration,” Mosquet said, adding that it will take years to determine which approach is successful.
Many automakers are hesitant to completely in-source EV manufacturing at a time when EV procurement is still only a fraction of the total vehicle demand.
According to IHS Markit, today only Tesla, EV startup Lucid Group Inc and Chinese BYD Co Ltd are fully building their electric motors in-house, followed by Hyundai Motor Co and the Renault-Nissan-Mitsubishi alliance.
Other carmakers, including Mercedes-Benz Group, Ford and Porsche, are using electric motors by suppliers for their current EV models.
“Electric powertrains can’t be bought off the shelf at a world-class standard, it’s not a commodity,” Rawlinson said. “It’s a technical race and the market doesn’t see it yet.”
Mercedes said it plans to manufacture electric motors, battery packs and electronics in-house in 2024. The company is also working to reduce costs by securing raw materials directly from miners, Chief Technology Officer Marcus Schaefer told Reuters.
0 notes
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
for the latest auto news And WaitFollow carandbike.com Twitter, Facebookand subscribe us youtube Channel.