Towards the end of this century’s first decade, improvements in manufacturing technologies and efficiency put a significant hole in a previously healthy contract manufacturing industry. In one way or another, household names like Bertone, Heuliez and Karmann shrank from prominence, as OEMs improved their production line techniques and management, enabling them to build ever more complex model mixes along the same assembly line.
Fast forward a few years, and developments in manufacturing appear to once again indicate an opportunity for some form of viable contract manufacturing industry. Efforts to develop a more localised approach to manufacturing, coupled with a gradual adoption of additive manufacturing and, further down the line, the possibility that non-traditional automotive companies might seek low-volume production runs, all suggest an opportunity for a resurgence of contract manufacturing. Consider, for example, Local Motors 3D printing driveable cars live at motor shows, and Google selecting Roush to build a 100-unit run of its driverless pod-cars.
The highly cost-conscious nature of the modern automotive industry means, however, that any return to contract manufacturing would most likely be with the truest interpretation of the word ‘contract’, and very different from the coachbuilding of the past.
In addition to potential disruption at the manufacturing end of the business, the industry’s seemingly unstoppable shift to autonomous drive technology brings with it ever greater opportunities for disruption to the automotive industry’s long-established business models. And were the current use case for cars to change, so too would the type of car required and the way in which it is built.
‘Cross-sector collaboration is essential for our future’
Megatrends brought together Paul Mascarenas, Nick Fell and Karl Siebertz to discuss see the future of vehicle manufacturing and the way changing use cases and business models might impact vehicle design and production. Mascarenas is President of FISITA, the umbrella organisation for the world’s national automotive societies; Fell is Director and Head of Tata Motors Europe Technical Centre; and Siebertz is Head of External Alliances, Europe at Ford Research & Advanced Engineering and Vice President, Technical at FISITA.
“Cross-sector collaboration is essential for our future,” said Fell, when Megatrends asked whether a new company could enter the automotive sphere and build its own cars. “Any disruptors coming in are not only a tremendous prompt for the established players but they also offer opportunities for collaboration. In product engineering and in manufacturing engineering, tailored solutions and small volume solutions will be required. Monolithic production processes will have to remain a part of it, but the secret lies in how you configure those production processes to customer requirements.”
Economics will prevail, said Mascarenas. “Sure, there are many start-ups and non-traditionals coming in. But I don’t see anything that fundamentally changes the economies of scale. And if you’re really going to get into producing hundreds of thousands or millions of vehicles a year, there will need to be consolidation of partnerships to deliver that scope. You may come up with an extremely well-engineered vehicle but it’s no good if you can’t deliver it in a way that the customer can afford to pay for it. You might do 10,000 or 20,000 a year, but to penetrate a market which is 80 million to 100 million strong, you have to be doing that at scale.”
Could, then, a resurgence of contract manufacturing in some form be envisaged as a way in for those non-traditional tech companies, for example?
“It comes back to affordability, and how many stages there are in the supply chain,” said Fell. “As a transitionary move towards high volume manufacture, it’s plausible. But in the end, if you are operating at the high volume base, you have to be able to configure within a very high volume environment, something which the industry has succeeded in doing in the last 20 years. That would enable you to offer very high customer variety, but still enjoy the economies of scale.
“Contract manufacturing could conceivably be a transitionary phase,” he continued, “but the demise of some of those big name contract manufacturers is in fact a mark of the success of the OEMs integrating high variety into their volume production process, through flexibility and IT management of the manufacturing and logistics process.”
Print at home: a role for additive manufacturing?
A suggestion that people might one day be able to use additive manufacturing to 3D print their cars themselves was quickly dispatched by Fell. “That’s a leap of imagination for me,” he grinned. “But I can certainly see how additive processes could help our product development process. I can see how it could serve bespoke or low-volume needs, such as for customisation and personalisation, and for keeping classic cars on the road.”
Mascarenas suggested that contract manufacturing works well in certain other sectors; the manufacturing of consumer electronics devices like smartphones, he said, is contract manufacturing on a grand scale. “The big difference is that most of those devices are made of standard components. They’re just put into different cases and personalised through the operating system and the software. A vehicle is completely different because there’s very little commonality between the OEMs, particularly in terms of the components that require heavy investment.”
The difference, though, is that a car in the street will still be around in five years’ time; a handset probably will not. Perhaps the answer lies in software?
“One of the trends in the industry is the use of software upgrades in vehicles for both functional improvements and for bringing in added features and content,” agreed Mascarenas. “Maybe down the road you’ll see hardware upgrades in terms of some of the physical components. But it’s absolutely right that vehicles today probably have a 12- to 15-year lifespan, providing they do not suffer crash damage, for example. People expect to be able to upgrade, update, and keep things current with the latest features. And that’s a change that the industry is already embracing.”
Meet your autopilot
Embracing change invariably means embracing autonomous drive technology, and the impact it will have not just on whether someone holds the steering wheel or not, but also the business models surrounding those vehicles, and even the design – exterior and interior – of those vehicles. The trend from ownership to usership changes fundamentally everything about the car in terms of what OEMs will offer customers, how the car is developed and even how it is built. What impact would any form of autonomous drive technology have on product development and the way that feeds into manufacturing and sales?
“Automated driving breaks down into several aspects, one of them being the business case,” said Siebertz. “For which kind of customer does automated driving make sense? It really depends on the cost at which the automated car be produced. If it’s significantly more expensive than a regular car, then for many people it might not be very attractive. On the other hand, it could be attractive if it’s used for a high use activity like car sharing.
“Another aspect is user-friendliness,” he continued. “Can people get along with it? And do people really accept it? In the early days of automated aviation, there was a serious issue of acceptance from the pilots, because they still were held responsible for the aeroplane, even when the autopilot did something which they did not like or accept. That had the potential for dangerous situations if the human pilot started overriding the autopilot.”
The comparison of automated driving with automated flying is possibly an unfair one, because once the plane is airborne, it doesn’t have to worry about children running into the road or
non-automated vehicles cutting in front.
Nonetheless, said Siebert, the human factor is similar. The pilot is responsible for the safety of the plane, and the driver is (currently) responsible for the car. “And as soon as things happen which the driver or the pilot wouldn’t do themselves, they feel uncomfortable. Public acceptance is a huge factor. How far would people go to accept the autopilot – in this case the autonomous car – doing something with which they disagree?”
Real life – a test case
To a lay person, it would appear that everything is in place for autonomous driving, apart from consumer acceptance and regulation. Cars have been able to drive themselves for years, and OEMs have demonstrated to media – admittedly on test tracks – how a self-driving car can use lane departure warning, adaptive cruise control and other technologies to avoid obstacles and other cars deliberately sent in to create a nuisance during the test.
Test conditions are very different from real life, countered Mascarenas, noting the presence of a test driver in position waiting to take over if required. “One of the challenges in a fully autonomous car is that everybody in the vehicle is a passenger. There’s no steering wheel or other controls. Technically, you could prove that a vehicle performs better than the average human driver. The question is, what happens when something happens, so to speak? We have not yet sorted issues like policies, liabilities and the ethical decision making for machines. I think it’s going to take a while for those things to shake out. But yes, the level of technology is, if not ready, then at least quite remarkable. It does show the potential of the autonomous vehicle. I think the real potential lies not in an open environment, but in a closed environment.”
Due to the complexity of the software and operating system surrounding autonomy, one of the enablers of automated drive technology will be the sophistication of the development tools, noted Fell. “You cannot depend on physical validation for every scenario, so your ability to model scenarios, predict them and introduce faults and disruptions into that process is a key enabler. In the transition from feet-off, hands-off, brain-off, the step from hands-off to brain-off is huge.” Any driver already enjoying adaptive cruise control will attest to the fact that it enables driving with less concentration than usual, something that is further underlined when lane keep assist is added. If attention does wander, it can come almost as a surprise when the driver is required to intervene.
Autonomous cars on the roads by 2020?
As a result, said Fell, there is a danger of driver abdication, and a blurring of the boundaries of liability. “There are some very important legislative and behavioural issues to address that are at least as significant as the technological issues.”
Several vehicle manufacturers have said that by or in 2020, they will have cars ready with autonomous drive technology. A recent Automotive World report attempted to answer the question of whether we really will see autonomous cars on our roads by 2020. The conclusion: it depends. That is, it depends on what is meant by ‘autonomous’. There is no industry standard definition; the closest the industry currently gets to a definition is to opt for either the NHTSA or the SAE definitions, which have four and five levels of automation, respectively.
Concluding, Mascarenas offered this thought on the shift to autonomous drive technology: “I think we’re going to see highly automated driving as a feature, but my bold prediction is that you’re not going to see any of the major OEMs offering steering wheel-less vehicles by 2020.”
This article appeared in the Q1 2016 issue of Automotive Megatrends Magazine. Follow this link to download the full issue.
