Electric vehicle makers are racing to become the next Tesla, but want to avoid Elon Musk’s early problems with production.
So companies like Arrival and Fisker are taking very different paths to overcome these problems.
A few have found investors willing to spend billions to fund their startups. Rivian has raised about $ 10.5 billion from Amazon.com and Ford Motor Company. It is expected to begin production of electric vans, trucks and SUVs.
Start-ups that don’t have enough money to invest need cheaper ways to produce lots of vehicles in a short period of time. If they can’t, they risk having the problems Tesla had in his early years.
The remarkable thing is that Tesla was not financially ruined to achieve mass production, Musk told Reuters news agency.
The traditional method of many automakers was to spend over $ 2 billion at a large factory to build 240,000 or more vehicles each year.
Arrival instead chose to build “micro-factories” of electric vans and buses. These are small factories that cost $ 50 million and have less expensive pieces of equipment. Arrival does not need any special equipment to paint its vehicles as they are made of light and colorful plastic. Painting equipment can cost hundreds of millions of dollars.
The arrival foresees micro-factories near the main markets of the world. This will allow them to hire local workers and reduce shipping costs.
The money a business has to raise “to do it in the traditional way … prevents startups from coming up with new ideas,” said Mike Abelson. He is the North American Arrival chief.
The company raised around $ 660 million by selling shares in its company during its March public offering. Today, it is building two factories in the United States. One is in North Carolina and will be doing pickup trucks. The other is in South Carolina and will be making buses. In addition, it is building a factory in Spain. Abelson said Arrival will announce more factories later this year.
Production in micro-factories
Arriving’s first micro-factory in Bicester, England, will serve as a model for other factories. Lack of painting equipment is just one way the company can avoid the cost of manufacturing traditional vehicles.
The engineers of the startup have built mussels for plastic vehicle parts costing thousands of dollars. This is far less than the millions of dollars needed for traditional metal equipment. Arrival engineers also designed their own molding machines.
Abelson said Arriving needed around 70 robots for each micro-factory. And it only buys basic robots that are commonly used from long-standing suppliers in the automotive industry.
Getting small means Arrival can produce 10,000 vans each year in each micro-factory instead of 100,000, says Abelson. In addition, each micro-factory will create around 250 jobs. It’s not nearly the thousands of jobs created by large factories in the past.
“This means that if a factory is not functioning, it is not a disaster for the local economy,” said Abelson. “The closure of a large auto plant is a big hole to fill.”
Electric vehicle maker Canoo has taken a similar path. But leader Tony Aquila has said Canoo will build a larger micro-factory to serve as a hub for future smaller factories.
Electric Last Mile Solutions plans to launch a small electric van in the United States later this year. At first, it will be go back up prefinished vehicles made in China at a former General Motors plant in Indiana. There, it will add new security features to meet US regulations.
Company chief James Taylor said it would initially save hundreds of millions of dollars on equipment. As the profits increase, it will add more American coins over time. “We’re going to be working backwards,” Taylor said.
Other startups are producing abroad to cut costs.
Israel-based REE is considering deals with American Axle and Mitsubishi to help it build its platforms.
REE and Fisker have also partnered with Canadian automotive supplier Magna International to build their electric vehicles. Fisker has a similar agreement with Foxconn Technology of Taiwan.
I am Alice Bryant.
Reuters news agency reported this story. Alice Bryant adapted it for Learn English. Susan Shand was the editor.
Words in this story
Start – not. a new business
Van – not. a vehicle used for the transport of goods and closed on all sides
SUV – not. a large vehicle designed for use on rough surfaces but which is often used on city roads or highways
Mold – not. a container that is used to give shape to something poured into or squeezed into it
Go back up – v. reassemble parts of something
Platform – not. a generally elevated structure that has a flat surface where people or machines work