Comment by burgreblast | Hacker News Reader

Comment by burgreblast | Hacker News Reader

This is a great post from someone not in the industry.

Car companies can't outsource production to Foxconn.

Source: gesamtprojectintegrationleiter (complete project integration director) for a german car brand. After the car is "finished" setting up the production line and making the tools is a 24-36 month process. You _need_ suppliers both for sheer capacity and expertise. On my project, 17,000 parts (most with subcomponents) coming together. THEN crash, emissions, certification, etc.

Easier of course to do at small scale like Tesla, but growth and capacity planning are huge topics. Tesla's run rate is what 30K cars per year? (not sure, just a guess). BMW sold 2M cars last year. Factories, suppliers, labor, paint, tooling (not the fun stuff) consumes an unbelievable number of cycles.

Obviously that revolution will come from software, but there's no getting around the hardware. One of the software co's will have to buy a car company to achieve revolution and scale.

So build a Foxconn.

Someone is moving to create a billion dollar scale auto manufacturing facility in Atlanta. Seems nobody knows who, but guesses abound.

Both Apple and Tesla realize this is a solvable problem and have the money to make it happen. Blog Wait But Why brilliantly detailed the the return to first principles for enormous cost savings. We've seen it before, we'll see it again.

Someone did create Foxconn, after all.

To become a 'Foxconn' of automotive is really an interesting idea. The model of designing a vehicle might have to become more constrained which cuts right into the core of the automotive industry's design processes and car model portfolios. They're trying as hard as possible to horizontally differentiate from the competition and vertically differentiaite to access more segments.

A billion dollar plant isn't really novel for the car industry - that's what it costs to bring a new facility for a model or family of models online.

I think the missing link to do what you're describing (a 'flow shop' that can be very rapidly reconfigured to act like a 'job shop') would take an order of magnitude or two more investment which, given the automotive industry's single-digit profit margins, may be too risky for the incumbents. I've heard of Tesla trying to do this, but not without major difficulty (no one has ever scaled this while simultaneously building a brand new company and car and distribution network and being at the forefront of aluminum body components, etc.)

Thing is, there really isn't that much differentiation between automobile models. Everything out there is basically a sedan, SUV, or pickup truck (even the Jeep Wrangler is being forced, kicking & screaming, into the SUV form) with little meaningful difference between variants. In "trying as hard as possible to horizontally differentiate from the competition and vertically differentiate to access more segments", manufacturers are trying really hard to make car-making as hard & difficult & expensive as possible. So back to basics: it's not that hard, it's a well-understood process with a robust supply chain ... an industry ripe for one company to arise focusing on turning designs into vehicles, without the additional overhead of design & marketing.

Insofar as the "flow shop" for car manufacturing "would take an order of magnitude or more investment", well, we all know one company that does have that kind of cash (!) lying around, and the interest in re-inventing the automotive industry.

> manufacturers are trying really hard to make car-making as > hard & difficult & expensive as possible.

I think you may be under-estimating the complexities market. In fact, the cheapest models in a give product are often the highest volume. So you have to deliver maximum value in each price segment.

It's not solely about price: The last brand to compete primarily on low-price was Yugo. How'd that turn out?

Also, if marketing is so non-essential, why does Google make any money? For that matter, how many non-free [choose your industry, including software] companies don't use paid-for marketing?

> So build a Foxconn.

I am waiting for the day factoryless car companies are the norm, just the same way we have fabless semiconductor companies.

Imagine this, a car can be designed and validated, and then the designed is sent off to a contract manufacture like Foxconn. A few months time, cars will start rolling off the production line. Conceptually, it is the same as building an iPhone, just physically bigger and has a much higher functional safety requirements.

However, I don't think I will see this in my life time or my kids' lifetime.

This happens now to a large degree. It's just not visible to people not involved in the industry. Many companies utilize excess capacity in their factories to build vehicles for other manufactures. Toyota's roll off of Subaru lines and Mazda used to produce Fords, etc. Most cars on the road share components made by the same supplier.

The problem is that people grossly underestimate the complexity involved in manufacturing a car. The reason why these CEOs can get away with making such seemingly crass statements is that a lot of the things people are saying they should do, they either already do, or have been tried and didn't work.

No this doesn't happen to a large degree.

The examples you cite are where existing tooling is used to manufacture a complete product. The Mazda/Ford owned assembly line can be set up for either product.

There are crazy hard barriers standing in front of fabless car companies, with little benefit.

Who wants to buy a car from a manufacturer with no support? Will the suppliers guarantee parts for 20 years? Or do you want to contribute to landfill problems and tell me to just get a new one?

This is been tried to varying degrees and failed. It's really difficult to get the major players to work together.

However, I'd say that VW is probably the closest analog. Their car platforms are largely LEGO-like components that can be put together in varying configurations as needed by their different product lines. They have a handful of major platforms that underpin the majority of VW, Audi, Porsche, Seat, Skoda, and Bentley, and they are working on unifying Lamborghini with Porsche and Audi.

I know it's not what you're envisioning, but the reality of manufacturing places limit what can be done. Tesla is such an insignificant player right now that what they are doing manufacturing-wise is not yet relevant to the industry at large. They sell thousands of cars a year while the major industry players all sell millions. Tesla can survive with inefficiencies that would destroy Toyota.

Don't forget that Teslas have significantly fewer parts than a conventional car does.

Fewer *moving parts.

Tesla was bragging that it had less moving parts thus less parts which will wear out and fail eventually. They didn't claim they had less parts overall or less complexity.

And even if Tesla could theoretically build a minimalist car, their current vehicles are anything but, they've invested a lot of technology into safety systems and electronics.

> Car companies can't outsource production to Foxconn.

What about Magna Steyr, Karmann, or Valmet?

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