The new challenge
China is leading the challenge to incumbent carmakers
The legacy industry’s greatest assets are not worth as much as in the past
AT THE START of the 20th century at least 100 American firms were handmaking expensive cars. The economics of mass production led to the concentration of the industry in a few vast firms. Now the process has gone into reverse. In China alone some say there are 300 EV-makers. Batteries and electric motors, which can be bought off the shelf, obviate the need to spend billions developing several ICEs to serve a range of cars with different requirements. One sort of battery can come in a variety of sizes; one sort of motor will suit a variety of vehicles with performance characteristics tweaked by software. So profitability can be reached from smaller volumes.
Creating an artist’s impression of a car and a slick presentation is simple. Even making a handful of cars by hand is not hard. But Factory 56, located at Mercedes-Benz’s mammoth plant in Sindelfingen near the company’s base in Stuttgart, shows that manufacturing at scale is hugely complex. Each high end S-Class is available in several levels of trim and with a variety of options, from exclusive woods and leathers to composite brakes, requiring thousands of parts to be brought to the correct place in the assembly line at just the right moment on robot shuttles. Power tools are controlled wirelessly to tighten the right bolts for torque settings.
The challenge for a newcomer is to replicate this process. It helps that EVs have fewer parts and are easier to assemble than ICE cars. New entrants often make only one or a…