Do Ford, GM and Stellantis have a long-term plan?
I have worked for several years in Tier 1 companies and now in work for EV OEM. The new OEM startups have a the roadmap to stop depending on Tier 1 and do all the design in-house. Following in the footsteps of Silicon Valley “culture”. But the classic OEMs have a high dependency from their suppliers. Are this kind of de decision ok? What are the pros and cons?#auto #tiers
It all starts as in house. Then slowly slowly, it gets scattered. Because, it is cost effective. It happens over a period of time.
As everyone else has said, the legacy OEMs did try doing all this stuff in-house once upon a time and realized it was more cost-effective to outsource the work. These startups will eventually realize that too and do the same.
It also pushes the liability to the suppliers, should something go wrong with the technology (L3/4/5 automation)
Why would outsourcing be cheaper? Supplier companies also hire engineers, keep labs, and manufacture that OEMs can as well, considering they have volumes of millions of cars. If OEM doesn't have the proven technology and product ready, then they have to outsource in order to get to market ASAP. And they can develop in parallel without too much time pressure. But if OEM has actually matured technology and related product, it only makes sense to outsource low volume or low priority things.
Nobody is going to make money by making a better wheel bearing than the other guy. Smart manufacturers will go In house on clear differentiators, but the other 80-90% of parts should come from suppliers.
Uh... yeah? Also GM and Ford are bringing some of those components in house now. Honestly automotive is all about supply management. That's why this thing eats so much capital until you make profit.
Legacy OEMs are burdened by the high cost of labor forced on them by the unions. They’re paying billions to people that retired decades ago - ridiculous if you ask me. unions will be one of the top reasons why a legacy OEM will be usurped by a new competitor.
Speak for yourself. I worked for a Japanese OEM, and upper management would laugh at how tightly the UAW had the big 3's nuts locked in a vise. In fact, the mere existence of the UAW was what kept the benefits and pay of the manufacturing line down South in "right to work" states to a livable degree. Without the scarecrow threat of the UAW coming in and "forcing" the OEM to shut down the plant because of higher costs; They'd probably pay people considerably less.
These new startups are run by morons. Think the old school didn’t try to in house more stuff? They did and it was awful.
+1. How about Tesla? Any idea
Tesla does in-house designs as many as possible, in my opinion