The hidden cost-down every EV OEM ignores

In the heated battleground of the EV market, where titans like Tesla and China are locked in a relentless price war, both legacy and startup automotive OEMs are overlooking a critical factor in their cost reduction strategies. The humble mechanical assemblies - fasteners, clips, glues, and welds - long considered an afterthought, constitute the foundation of every product we use, from tractors to cars. These unsung heroes are often dismissed as mere commodities. However, their role in EVs is magnified, transforming into a rapidly escalating issue with each new program. Addressing this issue isn't just beneficial; it's necessary to drive down costs. A 5 cent bolt can be the deciding factor in saving or costing a program millions each year. Let's explore three compelling examples of this potential game-changer in the EV market.

Consider the average car or SUV you see on the road – it's a marvel of engineering held together by thousands of fasteners, from your everyday bolts to those pesky clips you dread when dismantling a quarter panel. These seemingly inconspicuous fasteners, along with a mix of welds and glues, play a significant role in assembling your vehicle. And yet, they're often overlooked despite their financial impact – costing an Original Equipment Manufacturer (OEM) up to a staggering $5,000 per car.

That's not all - the equipment cost, from torque guns to high-tech robots, can soar into the millions. The complexity of these processes also offers a myriad of opportunities for things to go awry. Despite this high level of risk, these crucial components are frequently underestimated and under-resourced, regarded as mere commodities.

If we look at the fasteners in an average Electric Vehicle (EV) program, there should ideally be only around 250 types. However, most new programs launch with over 600 types, leading to millions in unnecessary expenditure. Even Tesla was not immune to this in their first three programs. However, they transformed the game with their Model Y, which utilized a full-body casting that whittled the fastener count to less than 100. It's important to note that full-body casting isn't the only route to substantial savings - there are other, equally efficient methods. Here are three examples that every CFO should note, demonstrating how focusing on relatively small components opens the door to potentially significant savings.

In the dynamic landscape of Electric Vehicle (EV) manufacturing, there are three crucial areas that deserve our focused attention, whether we're talking about tractors or high-speed cars. 

1. Reworks: The pressure to launch new programs and satisfy shareholders often detracts from the attention to detail required in manufacturing. Reworking seemingly insignificant elements like bolted, clipped, or welded joints can unexpectedly inflate costs. A single misstep with a simple bolt or nut, costing cents, can lead to reworks costing thousands of dollars per vehicle. This holds for all, from industry giants like Caterpillar to popular manufacturers like Ford.
2. Recalls: Recalls are a significant setback for any new venture, tarnishing the brand's reputation. Regrettably, recalls in the EV industry, more often than not, involve fasteners— a seemingly small component causing colossal disturbances.
3. Obsolescence: This is the industry's primary concern, affecting legacy manufacturers and startups. With numerous brands, factories, design, and purchasing teams, efforts often need to be more cohesive. In a rush to meet deadlines, design teams might independently source new parts from a distributor or vendor. The problem arises when an identical part already exists in volume elsewhere within the organization— resulting in duplication, obsolescence, and millions wasted on every new vehicle launch.

In conclusion, our company is dedicated to safeguarding your most precious asset – your product's unique narrative. We understand the value and power of your story and aim to protect it from becoming obsolete. We offer a digital expert for new and existing programs, helping steer clear of costly reworks, recalls, and obsolescence. Partnering with us means investing in the longevity and relevance of your product's story, ensuring that it continues to resonate with your audience and provide value to your business. Trust us to be the guardians of your narrative – because at the heart of every great product lies an even more incredible story.

EV cost breakdown - https://www.bloomberg.com/news/newsletters/2021-05-25/hyperdrive-daily-the-ev-price-gap-narrows