The future is fast. Berlin’s BER airport, a few kilometres from Tesla’s Gigafactory, took fourteen years to complete and was delivered at three times over the budget. Tesla outperformed BER in speed and cost-effectiveness. Stalling only pushes digital transformation further back into the future without tangible results. The future is not fearful of failure. Supply chain security, trade barriers, the SARS-CoV-2 pandemic, geopolitical instability, and logistics disruptions have pressed companies to find alternatives to globalized supply chains, and this has made the future local. Building a factory in Berlin is a return to the roots of things. The trend is not toward low wages and production costs, but toward defining the productivity imperative.
The future is calling for a factory archetype that can define its productivity imperative. And this imperative in turn regulates the critical drivers that capture impact at scale. Battery packs make up 25% to 40% of the total cost of Battery Electric Vehicles (BEVs). This means that a manufacturer must make the rest of the car cost less. By using gigantic aluminium die-casting machines made by IDRA Group, Tesla cut production costs by 40%. To evade the “purgatory of pilots”, Musk approached the opportunity from a “bottom-line value backward” perspective, rather than from a pure technology forward viewpoint. This enabled Tesla to focus on the right productivity imperative first.
The future is intelligent, data-driven, and digital. C-suite executives know that technology will drive resilience and future competitive advantage, and is essential for better understanding and serving clients. Leading Chief Experience Officers (CxOs) at firms like Tesla have the foresight to understand that BEVs will need to store driver profiles in the Tesla Cloud. This enables Tesla to manage privacy concerns and cybersecurity in the sharing economy. Data will allow seat positions, cabin temperatures, and communication and entertainment platforms, cameras and mirrors to be automatically adjusted to changes in user profiles. Once adjustments to profiles are uploaded to the Tesla Cloud, the BEV adapts and alters its approachability.
In an audacious move to change mechanical engineering, Elon Musk ventured into the country of carmakers. He built his Gigafactory in Grünheide, Germany. The cutting-edge factory was an innovative showcase project. Musk established new standards. Cloud, Vertical Integration, Speed at any price, AI, Glocal- global but local, and aluminium die casting became critical drivers. Going even further, Tesla uses its own parts in order to guarantee supply chain security. Everything from the programming and production of photovoltaic systems to car bodies is vertically integrated. Tesla takes care of all of it in-house. As much as Tesla has radically departed from age-old traditions in design and development, it has appropriated the best learnings of the past by manufacturing the vast majority of its own parts.
Die casting of BEV components reduces the capital needed to build the chassis of a car, which is a vehicle’s second most expensive component, after the engine by 40% and the average costs of other parts by 30%. Musk pioneered the use of massive casting machines to make huge single pieces of vehicles’ undercarriages. These casts replaced the need for 60 welded components, as well as the need for robots on factory floors.
Gigapresses have helped carmakers to simplify manufacturing. Front and rear underbodies cast by Gigapresses are now combined with battery packs to form the chassis of BEVs. Fixing design flaws of vehicles made up of countless small parts is easier rather than a single module made using die casting. Product design for die casting must therefore be near perfect. Here the obvious impact will be on those companies that supply countless small components that are now replaced by modules made using die-casting techniques.
Die casting in manufacturing is not new, but its application to large aluminium underbodies for cars is a fresh idea. In 2022, the aluminium die-casting market was worth almost US$73 billion. It is projected to reach US$126 billion by 2032 according to AlixPartners using analysis based on Apollo Reports data. The average content of metal in European-produced cars is expected to increase to almost 200 kilograms by 2025.
With prices of raw materials surging, and manufacturers of BEVs struggling to preserve margins, Toyota, General Motors, Volvo and Hyundai, and the Chinese EV startup Nio are looking at IDRA Group for technology that can simplify the car production process. IDRA, was acquired by the Chinese group LK Industries, and has been outputting Gigapresses since 2016. Other makers of Gigapresses include, Yizumi Holdings in China, Buhler Group in Europe, Shibaura Machine and Ube Corp., in Japan, and Haitan in China. The future is also efficient. At the Gigafactory in Grünheide, Musk fused artificial intelligence and automation to create new efficiencies in manufacturing.
By 2024, Tesla would open a network of 3,500 Superchargers along highway corridors to non-Tesla customers. It would also offer 4,000 slower chargers at places like motels, supermarkets, and diners. BEV manufacturers wanting to tap the $7.5 billion federal program to expand the use of EVs and cut carbon emissions, will have to use standardized payment options that involve a single form of identification across all chargers. The future is fast, local, and unafraid of failure.
