Electric Vehicle Startups versus Established Auto Makers
Published May 20, 2021
The race to build the car of tomorrow pits established automakers against electric vehicle startups.
Part 4 of our ‘CHARGED UP’ Series on E-Mobility
The race to build the car of tomorrow pits traditional auto makers against young manufacturers and electric vehicle startups. It’s a tech race about whose wagons will one day dominate the prairie…and control the purses of their drivers.
Established car companies have valuable assets in their armories: they perfected high-quality mass production, they built strong brands with loyal followers, and they retain manufacturing footprints around the globe. They have robust retail networks and supply chains. But to succeed in the new electric vehicle era, they must integrate cutting-edge software with hardware. They must provide exciting products at competitive prices. And eliminate organizational silos so their corporate culture doesn’t sabotage their ambitious electrification strategies.
Young electric car companies and EV startups, in contrast, have no legacy regarding product, operations footprint, or mindset. This gives Tesla, Rivian and Lucid wide latitude to do things differently than the traditional manufacturers. What separates these young powerhouses from the rest is their vertical integration. From the outset, that’s how they were set up. Key technologies and software are developed, tested and perfected in-house, instead of sourcing them from suppliers. The energy consumption of the car’s powertrain, climate control and other systems is optimized in the process, aided by sophisticated power management and ‘smart’ distribution. Component ‘light weighting’, down to car seats, gets rid of extra pounds and reduces the amount of auto mass that needs to be moved.
Tesla makes its own power electronics and motors. Its proprietary SuperCharger network is the world’s best and largest. The company’s over-the-air updates, which ‘rejuvenate’ everything from suspension to range and navigation, are the envy of the industry. The world’s most valuable auto maker is widely seen as setting the standard for EV powertrains and most importantly for its software and centralized control unit. This is the digital brain for the car’s ‘autopilot’ and infotainment. Market and tech analysts predict Tesla will likely remain the cost and technology benchmark for some time.
Rivian built a unique connected ‘skateboard’ platform – a slim chassis holding battery pack, powertrain and suspension – that is used for the company’s soon-to-debut R1T pickup truck, the R1S SUV, and a delivery van, of which 100,000 units are on order to boost Amazon’s ‘last-mile’ delivery capabilities. Powertrains, battery packs and other core components for these vehicles are designed and built in-house.
Lucid, too, swears by vertical integration for the design and development of its electric powertrain technology – motors, battery packs and all.
The focus on vertical integration gives manufacturers significant advances in the overall energy efficiency of their vehicles and it explains why a Tesla Model 3 scores up to 141 MPGe (an acronym for miles-per-gallon equivalent, the EPA’s way of quantifying the efficiency of electric vehicles). This compares to the electric flagship of the Volkswagen group – the Porsche Taycan Turbo S – which gets an EPA-rated 68 MPGe. Audi’s e-tron drives off the lot with a 78 MPGe rating while VW’s latest U.S. market entrant – the ID.4 – claims 97 MPGe.
This is one more reason why traditional auto makers are watching the competition with eagle eyes and are not shy to take more than just a page or two from the playbooks of these young market intruders.
Of course, Tesla, Rivian and Lucid have their own unique challenges to deal with. There is the difficult transition from startup to manufacturer (Tesla has already gone through self-proclaimed ‘production hell’). They need to build brand appeal, retail channels and a global footprint. Capital markets and investors require constant TLC; so does company culture. Daunting tasks, no doubt.
The stakes are high for both camps. Time will tell if the prairie is big enough for all these wagons. Then again, to quote a distinguished colleague from Apple, the more the merrier…
Let’s keep charging!
– Christian Koenig