The End of the Beginning for EVs

EVs are where the ICE auto industry was in the 1950s.

In the 1950s, brands like Nash, Packard, Studebaker, Hudson and Kaiser were significant players in the automotive industry. All eventually disappeared, as scale economies forced automakers to get bigger to stay price competitive. In those days, automakers used proprietary bodies, engines and transmissions to differentiate the product, but the modern electric vehicle market is going in a different direction. Entire EV drive lines as well as batteries are now outsourced, and few EV buyers make a purchase based on the technical excellence of a motor or battery. With outside suppliers doing the heavy engineering lifting, multiple EV manufacturers have surfaced. It’s unlikely that all will survive going forward.

And, access all episodes of End of the Line on Engineering TV along with all of our other series.

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Episode Transcript:

Most people who are not engineers are frequently surprised by how much of the cars that they buy are not actually made by the automakers themselves.

I worked for a couple of Tier 1 suppliers to the Big Three, and collectively we built perhaps half of the value of assembly-line cars and light trucks, with a couple of important exceptions: drivetrains and bodies.  

It almost goes without saying that a unique body is a key selling feature for any automaker, and historically, the same has been true for engines and transmissions. If you wanted a Hemi or a Wedge, you went to Chrysler. If you’re a transmission aficionado, there were people who swore by GM’s Turbo-Hydramatic. There are many examples.

For smaller automakers, especially in the 1950s, companies like Studebaker, Nash, Hudson, Kaiser, Packard and others relied on outsourced content for significant parts in the vehicle—and frequently on parts supplied by their competitors.

As late as the 1970s, few buyers of an American Motors Hornet or Gremlin knew that the automatic transmission under them was built by Chrysler, or that the ignition system came from a General Motors subsidiary. And few buyers cared.

But engines were a different thing. They were proprietary, and each manufacturer boasted about the superiority of their design. Engines mattered.

In today’s EV industry, however, few buyers purchase a car based on the superiority of electric motor technology. Why? Electric motors are intrinsically more efficient than internal combustion engines, and there is little benefit to one maker’s electric motor over another.

It’s the same with batteries. With lithium-ion technology standard now, vehicle ranges are also fairly consistent across brands. And critically, the Tier 1 community I spoke about now sells entire electric vehicle drive lines as well as battery packs.  

Almost anyone can start an EV company now, by shopping the expensive-to-develop chassis components and installing them in their own bodies. That means more players, just as there were in the internal combustion engine world of the 1950s. This lasts until someone makes a technological breakthrough, significant change in the form or value proposition of the automobile as a whole, or finds significant cost reductions.

In the 1950’s, the importance of economies of scale meant the death of those smaller brands that I mentioned, and even Chrysler spent several decades effectively on life support. And we all know about the GM bailout. As industries mature, the number of players tends to diminish, something which has not yet happened in the electric vehicle industry. Everyone is piling in, from Rivian to Vinfast, and I seriously doubt that the global automotive market will support this number of players.

Who will survive? The major automakers like Toyota will, as will Tesla, although for the latter I suspect that much of the brand equity of that product resides with the profile of the corporate CEO. I predict that five years from now, there will be fewer EV manufacturers than there are now. And 10 years out, fewer still. And that’s fine.

Few mourned the passing of Studebaker, or American Motors. And the cars get little bit better every year regardless.

Written by

James Anderton

Jim Anderton is the Director of Content for Mr. Anderton was formerly editor of Canadian Metalworking Magazine and has contributed to a wide range of print and on-line publications, including Design Engineering, Canadian Plastics, Service Station and Garage Management, Autovision, and the National Post. He also brings prior industry experience in quality and part design for a Tier One automotive supplier.