Lead
Introduction
Build or buy, buy, buy?
Author 丨 Ma Xifeng
Responsible editor 丨 Xu Jinkai
Editor 丨Zhu Jinbin
In order to compete with Tesla's automakers to develop battery-powered, software-driven cars, they are now rethinking a new question: which technologies need to be built and built by themselves in the electric age, and which should continue to buy and buy from suppliers.
With the rise of electric vehicles, the automotive supply chain is changing, and these changes are reshaping the entire industry.
For most global automakers, vertical integration is the most obvious shift by manufacturing more parts within the company. These manufacturers have relied for decades on suppliers to produce critical components and software, and rely on countries with low labor costs to create vast manufacturing networks.
But some established automakers are considering a thorough decision on whether the long-standing problem is "full-stack self-development or partial OEM." A big factor is the success of Tesla's electric car, as Tesla relies heavily on proprietary technology that the company develops and manufactures in-house.
Another driver is the financial losses caused by supply chain disruptions during the long-term pandemic. Growing demand for electric vehicles is disrupting the automotive supply chain, which is under constant pressure from COVID-19, rising raw material prices and chip shortages.
"The most important thing is that we need vertical integration, and Henry Ford is right," Ford Motor Company CEO Jim Farley said at a conference earlier this month.
A vehicle goes through many stages from raw material to finished product and finally delivered to the consumer. If the company was originally responsible for only one stage, it was vertically integrated when it started producing raw materials that had previously been supplied by its suppliers, or when it started producing products that had previously been made from the raw materials it produced.
For example, Farley mentions the company's founder Henry Ford's Rouge manufacturing plant in Dearborn, Michigan, which absorbed iron ore and other raw materials in the early 20th century and could produce Model T cars on assembly lines.
Farley also said Ford had to abandon its early ev strategy of buying off-the-shelf parts for electric vehicles. Now, he said, Ford's goal is to be able to control the supply chain "all the way to the mines that produce battery materials."
Competitors, including Volkswagen, General Motors and Mercedes-Benz, are pursuing similar tactics.
Mercedes last year acquired British manufacturer of high-performance electric motors, YASA, and restructured a factory near Berlin to produce electric motors based on YASA technology. In March, it also opened a new plant in Alabama to produce battery packs for U.S.-made electric vehicles and will work with Japanese battery maker Envision AESC to manufacture batteries in the United States.
"We are procuring deeply," Mercedes-Benz CEO Ola Kaellenius said at a briefing in Alabama.
A winning strategy
For decades, automakers have handed over development and production control to suppliers, who produce steering controls, semiconductors and electronic components for multiple automakers at the largest scale and at the lowest cost. Now automakers are now investing in mines, motors and batteries on their own.
In the new world of electric vehicles, investors see Tesla's approach of buying raw materials directly, making its own batteries and designing its own software as a winning strategy. The approach of the successful will always be used as a winning strategy.
It's not hard to see why they think so, and in recent weeks, Tesla's market capitalization has even soared to more than $1 trillion, more than Toyota, Volkswagen, GM and Ford combined.
"Major players have realized that electric vehicles are the future, but they have yet to widely recognize that they must improve themselves in terms of motors, transmissions, battery technology, inverters and electric powertrains," said Peter Rawlinson, CEO of electric vehicle startup Lucid, who was previously Tesla's vice president of automotive engineering.
According to Guidehouse Insights analyst Sam Abuelsamid, between the 1970s and the 2010s, the share of automaker-owned automotive intellectual property was declining, from 90 percent to 50 percent.
This means that while electric vehicle pioneer Tesla demonstrates that its vertically integrated vehicles are popular with consumers, many automakers still lack in-house engineering expertise to develop their own EV platforms, powertrains, and battery packs.
Tesla CEO Elon Musk said on the 2020 earnings call: "We design and build a lot more cars than other foundries, and other foundry production will mainly go into the traditional supply base and perform catalog engineering as I said." ”
Tesla's approach is very costly, so it has raised the price of vehicles several times in the past few years. Despite promises to launch an affordable model that starts at about $25,000 (about 160,000 yuan).
But Musk said earlier this year: "We haven't developed this $25,000 car at this moment." At some point in the future, we will. But our plates are now enough. ”
In other words, Tesla still makes a lot of money even if the price is high, when will the affordable car come? Ask is what will come.
A contest of technology
Supplier industry executives say there is also a gap between automakers' claims about their vertical integration strategies and engineers trying to deliver new cars by deadlines.
"There's a lot to say about insourcing and vertical integration, especially in areas like software," Kevin Clark, chief executive of automotive supplier Aptiv Plc, said in February. "Almost every foundry with which we do business is struggling with software development."
Xavier Mosquet, senior consultant at the Boston Consulting Group, also said many manufacturers are still more willing to buy electric vehicle technology to avoid the cost and complexity of in-house manufacturing.
"There are a lot of automakers that want to go some way to keep buying and take responsibility for the eventual integration," Mosquet said, although it certainly takes years to determine which approach is more successful.
With EV purchases still accounting for only a small fraction of total demand for cars, many automakers are reluctant to buy EV manufacturing entirely in-house. Obviously, the benefits and temptations are still not big enough, but they seem to have predicted that electric vehicles will develop wildly next.
According to IHS Markit (Asian Financial Cooperation Association), only Tesla, electric car startup Lucid and BYD currently manufacture electric motors entirely in-house, followed by Hyundai and the Renault-Nissan-Mitsubishi Alliance.
Other automakers, including Mercedes-Benz, Ford and Porsche, are using supplier-supplied electric motors for their current EV models.
"Electric powertrains can't be bought off-the-shelf to world-class standards, it's not a commodity," said Peter Rawlinson, CEO of Lucid. "It's a technology race that the market hasn't seen or realized yet."
| Ma Xifeng |
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