{"id":7360,"date":"2020-09-04T19:13:12","date_gmt":"2020-09-04T17:13:12","guid":{"rendered":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/?p=7360"},"modified":"2020-09-04T19:13:12","modified_gmt":"2020-09-04T17:13:12","slug":"industrys-radical-future-structure","status":"publish","type":"post","link":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/2020\/09\/04\/industrys-radical-future-structure\/","title":{"rendered":"Three layers: the auto industry\u2019s radical future structure"},"content":{"rendered":"

Rapid growth in electrification is driving a seismic shift in how the automotive industry builds cars. But an even more fundamental change is taking place thanks to e-mobility, says <\/strong>Daniel Barel,<\/strong> Co-Founder and CEO of electric vehicle platform maker REE<\/strong><\/span><\/p>\n

When Henry Ford started building cars, his factory made all components. From the four-cylinder engine to its vanadium alloy steel, production took place under one roof because there was no alternative. Demand was so high that Ford concentrated solely on the Model T, famously stating \u201cany customer can have a car painted any colour they want so long as it is black.\u201d<\/span><\/p>\n

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By 1916, 55 per cent of all the cars on the road were Model T Fords<\/span><\/figcaption><\/figure>\n

To grow, Ford realised the business would have to outsource \u2013 and the automotive supply chain was born. Some years later, Toyota pioneered Just-In-Time (JIT), a process that synchronised production and logistics to maximise manufacturing efficiency, moving automotive supply chain forward again.<\/span><\/p>\n

Over a decade later, the industry is facing a seismic change in the way it makes cars. An EV is very different to an ICE car, for instance \u2013 and the traditional outsourcing process has meant that many OEMs are without critical internally-developed pieces of technology, since EV components are often manufactured by Tier1 and Tier2s and seen as commodity items. Many OEMs choose to concentrate on battery and autonomous technology instead.<\/span><\/p>\n

There is also a global shift in mobility. Brands that once resided with the OEM on a physical vehicle are moving to the service provider. Order an Uber or Lyft and one might not actually care which make or model arrives. The same can be said of the FedEx or Amazon van that delivers your parcel as the van has their logo on its side \u2013 so the service provider\u2019s brand is now the leading one.<\/span><\/p>\n

Last but not least, OEMs are struggling to forecast and design future vehicles, because the shift is happening so quickly. This is mainly due to the legacy process of developing a car\u2019s platform, which is lengthy and expensive. OEMs used to be able to forecast 10-15 years, giving them enough time to design and develop next generation platforms. But now they risk being left behind, with New Mobility players emerging faster, launching next generation vehicles.<\/span><\/p>\n

With the traditional model of OEM, Tier1, Tier2 outdated, a new structure is required. At REE, we\u2019ve spent many years thinking about this and building it quietly but fiercely behind the scenes.<\/span><\/p>\n

We call it \u2018The Three Layers\u2019 and believe it is how the industry will evolve. The concept is that all layers work together as one, creating services and capabilities according to customer needs with specific, tailormade vehicles.<\/span><\/p>\n