Dyson became the latest manufacturer to hop aboard the battery-powered bandwagon this week, revealing a £2.5bn investment plan to produce an electric vehicle by 2020.
In doing so, British inventor Sir James Dyson and his vacuum cleaner-making firm, raised eyebrows across the auto industry. Dyson is attempting to crash the party at a time when traditional carmakers are embroiled in an electric vehicle (EV) arms race.
Some of Britain’s biggest car manufacturers – steeped in the engineering and regulatory challenges that come with every new launch – reckon Dyson will struggle to rush a new EV into showrooms by 2020.
The Wiltshire-based company has a team of 400 engineers on the project, which has been under wraps for two and a half years. But he consumer technology firm is moving into the cut-throat world of car manufacturing with a blank sheet of paper – it has an electric motor, but no chassis and no manufacturing plant.
A source at one carmaker, with knowledge of EV production, said: “It is a challenge because getting a car to market is a long process. We are launching a new electric car next year. That process started five or six years ago – and we have everything in place (manufacturing facilities, established supply chain and manpower).”
Beyond manufacturing challenges, the source reckons Dyson’s ambitious plan would be severely tested by the time it takes for each new vehicle to be passed fit by regulators.
“The complexity of crash regulations alone is huge,” the source said. “Each car must be compliant in each market.”
He said it takes “years rather than months” to get a new vehicle through the EU’s rigorous safety testing process until it is awarded a certificate of conformity.
High end, small volume
Dr Paul Nieuwenhuis, senior lecturer at Cardiff University’s Centre for Automotive Industry Research, believes Dyson is aiming to follow Tesla’s lead – by producing small amounts to sell at a high price.
Tesla, Elon Musk’s California-based EV pioneer, has forced the hand of industry giants, such as Volkswagen, Toyota and General Motors, to respond with their own EV launches.
“The timescale sounds tight if you are developing the car and building it,” Nieuwenhuis said. “Some manufacturers have managed it in three years. However, they do that with a lot of technology carried-over from other models.
“Britain is stuffed with a lot of engineers with experience specifically in low-volume manufacturing. For example, TVR could produce a new car in 18 months. So if that’s the way they are thinking, the timescale is doable but very, very tight. If you are a new entrant, it’s much easier to go in at the top, as Tesla has done, than at the bottom.”
Dyson has experience of entering crowded markets at the premium end and convincing consumers to spend more on its products than cheaper alternatives, as it did with its pricey vacuum cleaners.
Dyson indicated the car might be expensive, saying: “Maybe the better figure is how much of a deposit they would be prepared to put down.”
Tesla’s Model 3, the Palo Alto firm’s first “mass market” vehicle, still comes with a comparatively hefty $35,000 price tag. However, the entry level Model S costs $94,000, while a Model X starts at $96,000.
Solid state future
Dyson is developing two solid-state batteries, which don’t contain liquids like the lithium-ion batteries used in smartphones and electric cars. In theory, these batteries are safer, can be recharged more quickly and can hold a charge for longer.
Japanese auto-firm Toyota announced earlier this year that it hopes to have cars with solid-state batteries on sale by 2020 – the same time frame as Dyson.
While carmakers are battling to develop the best batteries, they are also fighting to secure enough of the key minerals used to manufacture these power packs.
VW is scrambling to secure long-term supplies of cobalt, a vital component of rechargeable batteries. The world’s largest carmaker has asked cobalt producers to submit proposals by the end of September to supply VW with the key mineral for up to 10 years from 2019.
VW has accelerated its EV ambitions following the “dieselgate” scandal and plans to invest more than $24bn in zero-emission vehicles by 2030. It aims to ramp up EV production to 3m a year by 2025.
Others, such as Nissan, are buying up battery capacity to secure supply for future EV demand.
“All of these things create huge question marks for Dyson,” said a source twho works with some of the world’s biggest auto companies.
Dyson has hinted that although Britain remains a “frontrunner” to build the car, it is more likely the vehicle will be manufactured in the Far East. The British firm already has manufacturing operations in Malaysia.
Experts believe Dyson will develop the vehicle and all future Dyson cars in Britain, but build them in China. It is not only cheaper to manufacture a new car in China, it is also where the market is.
“Wherever we make the battery, that’s where we will make the car,” Dyson said. “We see a very large market for this car in the Far East … We want to be near where our markets are and I believe the Far East has reacted [to electric] more quickly than the UK or Europe.”
Nieuwenhuis noted that China is by far the biggest market in the world for EVs; it is also the biggest market for luxury cars. “So that makes sense,” he added.
In 2016, 507,000 EVs and plug-in electric hybrid vehicles (PHEVs) were sold in China, a 53% increase from 2015, according to the China Association of Automobile Manufacturers. Chinese car firms accounted for around 90% of these sales.
Meanwhile, 222,200 EVs and PHEVs were sold in Europe, a 14% increase year-on-year and 157,130 units were sold in the US, up 36% from the prior year, according to EV Volumes according to industry analysts EV Volumes.
The pro-electric Chinese government is pulling out all the stops to improve air quality in the country’s congested cities, with Beijing offering subsidies and other incentives to auto companies.
Strong demand plus government support for EV technology is an attractive combination for the auto industry.
Dyson insisted the venture will make a profit. But, the right technology and compelling offers of state support still don’t guarantee success. Tesla has benefitted from huge US subsidies dished out to EV buyers. Despite this, the poster child of the EV sector remains loss-making.
The source with knowledge of EV production at one carmaker noted: “Tesla hasn’t made a quid yet. Breaking into the auto market is difficult. Tesla has done it, but last year’s figures show it sold 76,000 vehicles with no profit.”