Automakers will expand their offerings in 2024 to include (more) electric vehicles in their product lines, offering a mix of battery-electric vehicles, hybrids, and plug-in hybrids. And new, pure-play EV startups will enter the field. Both face a number of challenges that will require the ability to quickly change designs and production processes to match changing market demands for the different types of electric vehicles.
Traditional automakers expanding their offerings to include (more) electric vehicles must revamp their work cells, production lines, and entire operations. Many seek to produce a mix of battery-electric vehicles, hybrids, and plug-in hybrids. Some are changing production operations on the fly, fine-tuning the exact volumes of each type of car in a given year. Others find they must switch from one type of electric vehicle to another based on evolving customer demands.
In addition, there are dozens of new entrants into the auto manufacturing market that are pure-play electric vehicle companies. Several (Rivian, Fisker, and Xpeng Motors) already have over $1 billion in funding, and another half dozen or so have more than $500 million in funding. Modern manufacturing principles and approaches that have been proven by traditional automakers would be of great interest and could play a large role in these companies for two main reasons.
These companies differ from legacy automakers in two ways. First, these companies are digital-first companies from the start and would likely embrace digital technologies (e.g., IoT, digital twin, wide-scale use of analytics, etc.). Second, their operations are greenfield environments, so adopting new technology is a given and easier to use.
General Issues Impacting Any Manufacturer of EVs
The shift to EV production is a complex and resource-intensive process that requires automakers to rethink and often reinvent their approaches to vehicle design, development, and manufacturing. It also involves a strategic focus on sustainability, collaboration with new partners, and a commitment to innovation to stay competitive in the rapidly evolving automotive landscape.
Electric vehicles are comprised of many elements that are not used in traditional cars. Batteries and electrical systems are completely different. Many electric vehicles make use of or are exploring novel body elements made from new composites to lower the weight of the vehicles (and thus, extend their range on a single charge or given battery size). That means automakers must deal with new suppliers and work with greatly expanded upply chains.
Issues Impacting Traditional Automakers
The transition from internal combustion engine (ICE) vehicles to electric vehicles (EVs) requires automakers to undergo significant end-to-end changes across their design, development, and manufacturing processes. This transition not only involves the adoption of new technologies but also necessitates a shift in organizational mindset, supply chain restructuring, and market strategy adaptation. Some of the critical changes that are required include:
Design and Engineering Issues
- Platform design: EVs often use a dedicated platform that can accommodate large batteries and electric drivetrains efficiently. This may involve developing new vehicle architectures that prioritize space for battery packs, optimize weight distribution, and enhance structural integrity for safety.
- Battery technology and management: Designing efficient and safe battery systems is crucial. This includes selecting the right type of battery (e.g., lithium-ion), designing battery management systems (BMS) for longevity and safety, and integrating thermal management systems to maintain optimal operating temperatures.
- Electric drivetrain and power electronics: Developing electric motors, inverters, and other power electronics that are efficient, compact, and reliable. This involves significant research and development (R&D) efforts to innovate in electric propulsion technology.
- Regenerative braking systems: Implementing regenerative braking systems that recover energy during braking and improve overall efficiency.
- Aerodynamics and lightweight materials: Emphasizing aerodynamic designs and the use of lightweight materials such as aluminum and carbon fiber to reduce energy consumption and increase range.
Supply Chain and Production Issues
- Battery supply chain: Establishing a secure and sustainable supply chain for battery materials, which may involve partnerships with mining companies, battery cell manufacturers, and recycling companies to ensure a steady supply of critical materials like lithium, cobalt, and nickel.
- Component sourcing: Shifting from sourcing ICE-specific components to electric powertrain components, which may require developing new supplier relationships and evaluating the sustainability and ethical sourcing of materials.
- Manufacturing facilities: Retrofitting or building new manufacturing facilities that are equipped to assemble EVs, which includes installing battery assembly lines, electric motor production facilities, and the necessary infrastructure for handling high-voltage components.
- Quality and testing: Implementing new quality control and testing procedures specific to EVs, including battery safety tests, electric drivetrain reliability testing, and software validation for vehicle control systems.
Issues Involving Support Infrastructure and Ancilary Operations Areas
- Regulatory compliance: Navigating a changing regulatory landscape focused on emissions standards, safety regulations for battery systems, and incentives for EV production and ownership.
- Investment in research and development: Continuously investing in R&D to improve battery technology, reduce costs, and increase the efficiency and range of EVs.
- Service and maintenance: Developing a service network trained to handle high-voltage systems and specific maintenance requirements of EVs, as well as offering remote diagnostics and software updates.
Issues Impacting Both Traditional Automakers and Startups
Manufacturing electric vehicles presents several challenges that are distinct from those faced by those manufacturing traditional internal combustion engine vehicles. Manufacturers must use new technologies, work with different and new supply chain partners, and try to match design and production to a widely changing market.
Demand for EVs can significantly change with a small change in government-backed cost offsets. Vehicle costs can substantially rise or fall based on the availability of raw (and rare) materials for batteries and other electronic components. Similarly, demand for EVs can drastically shift up or down based on the cost of electricity.
As such, any maker of an EV (new or established) must focus on elements that are new compared to what is involved in designing and producing gas-powered vehicles. Some of the issues that are unique to EV manufacturing include:
- Battery technology and cost: EV batteries are central to the technology but present challenges in terms of cost, range, charging time, and lifespan. Batteries are also heavy, which can impact vehicle design. Reducing battery costs while increasing their efficiency and lifespan remains a key challenge.
- Supply chain for raw materials: EVs require specific raw materials like lithium, cobalt, nickel, and rare earth elements for batteries and motors. Securing a steady supply of these materials can be difficult due to geopolitical issues, limited sources, and environmental concerns associated with mining.
- Manufacturing complexity and cost: EV manufacturing can be more complex and costly compared to traditional vehicles. This is partly due to newer technologies used in EVs and the need for specialized manufacturing processes, especially for battery production.
- Recycling and end-of-life management: As EVs become more common, the need to efficiently recycle batteries and manage end-of-life vehicles becomes more critical. Developing efficient recycling processes for EV batteries is a significant challenge.
- Technological development and integration: Continuous innovation in EV technology, such as advancements in battery technology, electric motors, and power electronics, requires ongoing investment and integration into manufacturing processes.
- Regulatory and safety standards: EVs must comply with various regulatory and safety standards, which can vary by region. Adapting to these standards can be challenging, especially for new entrants in the market.
- Consumer acceptance and market adaptation: Convincing consumers to switch to EVs involves overcoming concerns about range, charging infrastructure, and cost. Additionally, adapting the market to accommodate a growing number of EVs is a complex challenge involving multiple stakeholders.
- Energy demand and grid impact: The increase in EVs will significantly raise electricity demand. Ensuring that power grids can handle this increased load without compromising reliability is a challenge.
These challenges are being addressed through technological advancements, increased investment, government incentives, and collaboration between companies and governments. The EV sector is rapidly evolving, and many of these challenges present opportunities for innovation and growth in the industry.
Meeting the Need for Flexibility with Smart Manufacturing
Smart manufacturing is critical for automakers to be successful in the EV market. The reason: Change is the norm with EVs.
Shifting tastes
Depending on fluctuating gas prices, changing tax incentives, new emission regulations, and more, consumer interest in EVs can grow or wane. Manufacturers must be in a position to deal with such market variations.
Smart manufacturing can help. Automakers that speed development and production cycles by optimizing workflows using modern computer-aided design, assembly line virtualization, and digital twins can compress the time and close the gap between committing to building a particular EV and the time when consumers can buy one. By closing that gap, there is a better chance that the conditions that were in place to make the decision to bring a model to market are similar to the conditions when it is finally available.
Shifting government incentives
The EV market is heavily dependent on government aid and incentives. Many consumers opt to buy an EV based on tax credits and other financial incentives. As such, the market is often tied to changes in these things.
However, there are also incentives for the manufacturers themselves. In North America, this has led to an interesting change. Half of the $7,500 EV tax credit is dependent on a vehicle’s battery component manufacturing location. Sixty percent of which must be in North America for 2024. The other half of the credit requires changes to supply chains and sourcing, which automakers can solve by localizing production in North America.
The result of this 2024 condition: Several automakers are building new manufacturing capabilities and retrofitting existing facilities in North America.
That ties into yet another benefit of smart manufacturing. Take virtualization. Before committing to the physical layout of an assembly line, an auto manufacturer can create a digital twin of the line, allowing it to simulate, model, and test various configurations to identify the most efficient setup. Through this modeling, manufacturers can identify potential bottlenecks, inefficiencies, or ergonomic issues for workers.
By employing assembly line virtualization and digital twins, an EV manufacturer can replicate a work cell, production line, or entire plant in a second location. In other words, they do not have to start from scratch. All of the best practices and lessons learned on an existing line can be cloned to bring new production capabilities online quickly in a different geographical location.
A Final Word About EV Manufacturing
Electric vehicles bring many manufacturing challenges to the table. Manufacturers must move fast to keep pace with changing preferences and support for new technology within the vehicle.
Fortunately, every step, from design to materials and parts sourcing to production, can be sped up and made more efficient using a smart manufacturing approach.
