3D printing in Automobile: End of Invention from 100 Years Ago?
Challenge of VW: 3D printing will replace the conventional mass production process of cars?
INTRODUCTION
Despite an increasing number of 3D printing application to manufacturing sector such as aerospace and healthcare, many researchers and studies advocate that 3D printing is not effective for mass production mainly due to its elevated cost, speed, and scalability (1). This argument has also been applied to automobile manufacturing. 3D printing has been utilized only in low-volume and niche applications such as prototypes and spare parts, where the technology could contribute to cost efficiency by eliminating high inventory cost and mold fabrication (2). With recent development of the technology, however, VW started thinking whether it should take transformational step in 3D printing to start mass production of metal parts with it. 3D printing will replace the conventional supply chain and mass production process, an invention from over 100 years ago?
DAWN FOR 3D PRINTING
3D printing technology was invented in 1984, however it had never unleashed its potential until recent years (3). An increasing number of patent expiration in recent years changed this scenario. As patents expired, many companies entered the market and accelerated the development, making this technology faster and more cost-friendly (4). In 2018, HP, one of the leading 3D printing manufacturer, launched an advanced 3D printing technology for the high volume metal parts manufacturing which prints parts 50 times faster than ever (5) and gave automotive OEMs an opportunity to use the technology for the production of a large number of parts, simplify its supply chain where 6,000 to 8,000 different parts are produced by many suppliers, and reduce lead time of production.
VW’s CHALLENGE
Although most automotive OEMs are conservative, if not skeptical, to use 3D printer for their production, VW started using the technology in its Portugal plant in 2014 (6) and became a pioneer in 3D printing in automotive sector. In 2018, in collaboration with HP and GKN Powder Metallurgy, an automotive component manufacturer, VW started the production with HP’s advanced 3D printing, aiming to be able to produce individualized design parts such as tailgate lettering and special gear knobs in the short term. In the medium term, by building on these productions, the company plans to further develop the technology and to print the first structural components for mass production vehicles within two to three years (7). According to Dr Martin Goede, Head of Technology Planning and Development, Volkswagen, “A complete vehicle will probably not be manufactured by a 3D printer any time soon, but the number and size of parts from the 3D printer will increase significantly.”(8)
DRIVING FORWARD
VW’s strong commitment to 3D printing shows that its strategy is to create competitive advantage by being the first mover in the technology and its actions such as investment on R&D are aligned with its strategy. With clear goal and alignment, the company positions well to secure the potential benefit from the technology, but if the company seeks to strengthen its position to further secure its potential merit, here are some recommendations.
Short term: First, VW should set higher barriers for its competitors to use 3D printing by strengthening the relationship with HP and GKN Powder Metallurgy, so that it can enjoy the merit longer period. Second, when the company develops enough capability to broaden the lineup produced in 3D printing, it should focus on the parts that consume low volume of raw materials in conventional production process. Typically, these parts require high inventory costs of raw materials because the difference between minimum sales lot of supplier and customer demand causes longer inventory period. Also, these parts usually suffer low yield of raw materials, generating high volume of scrap. 3D printing has strengths in solving these problems, so that the company can improve its cost structure while further developing the technology (9). Third, it is important to create trust between people and cars with parts produced in 3D printing, especially on safety perspective.
Medium term: The company should set tailored exterior body parts as one of the most important goal in the medium term. As one of the biggest differentiation of 3D printing from conventional production is in flexibility to customization, the tailored exterior body parts should give the company competitive advantage. Interactive customization would be the strength of the car made in 3D printing.
One day if customers change their mind about level of customization for cars, cars would be treated as if house, which many people spend time to customize. This disruptive conceptual change would redefine the role of automotive OEMs and their supply chain, putting cars off the assembly line.
QUESTIONS
What kind of emotion autonomous driving cars would offer to people?
Who would be the target customer if people can design their own car?
(775 words)
REFERENCES
(1) B. Roca et al., Getting past the hype about 3-D printing. MIT Sloan Management Review 58, no. 3 (Spring 2017): 57–62.
(2) Matthias Holweg. “The Limits of 3D Printing.” Harvard Business Review Digital Articles (June 23, 2015).
(3) “History of 3D Printing: It’s Older Than You Are (That Is, If You’re Under 30).” AUTODESK. Accessed November 12, 2018. https://www.autodesk.com/redshift/history-of-3d-printing/
(4) Alan S. Brown. “Chain reaction: Why additive manufacturing is about to transform the supply chain.” Mechanical Engineering 140, no. 10 (October 2018): 30–35.
(5) “HP launches world’s most advanced metals 3D printing technology for mass production to accelerate 4th industrial revolution.” Manila Bulletin (October 21, 2018).
(6) Lauren Loew. “3D Printing Continues Making Inroads In Auto Industry.” Mondaq Business Briefing (September 14, 2018).
(7) James M. Amend. “Volkswagen Takes Big Step in 3D Printing.” WardsAuto (September 12, 2018).
(8) “Ready for mass production: Volkswagen uses the latest 3D printing process for production.” VOLKSWAGEN. Accessed November 12, 2018.
(9) Richard A. D’Aveni. “The 3-D Printing Revolution.” Harvard Business Review May 2015.
In response to your question about the level of customization that consumers will demand from car manufacturers in the future, it is important to also take into consideration the financial profile of car manufacturers. As an industry, car manufacturing has been plagued by very low return on investment (ROI), which in large part is driven by competition across manufacturers to constantly innovate and provide many options/models for consumers.
While innovation/options typically translates into higher prices, in the auto industry, consumers have come to take innovation for granted and manufacturers have found that they need to innovate out of necessity vs. to drive higher returns/margins. As such, there has been a lot of consolidation in the industry, both through M&A, and within organizations to simplify their product offerings to drive higher ROI. Given the trend toward increased standardization (e.g., small SUVs use same frames as larger sedans) to improve the returns profile, even if consumers demand customization, it is unclear whether the auto industry would meet that demand. As such, AM will may end up being more compelling in terms of simplifying the supply chain / inventory requirements for making spare parts on demand as opposed to enabling a structural increase in the level of customization consumers demand in the future.
I really like the pioneer position VW’s is taking on using 3D printing more broadly in the automotive industry. I believe it can bring VW some competitive advantage that will definitely set them apart as innovative.
Regarding the question on who would be the target customers if people could design their own car, I can think of two main audiences: car enthusiasts – people that like cars as a hobby, who understand something about aerodynamics and mechanical engineering and would enjoy the opportunity to design their own vehicles, and people with some kind of disability, who could actually tailor the design of the car to better fit their needs
Interesting read. With regards to your question about target customer if they could design their own car, my starting point would be to consider car companies today that are closest to that: ultra-luxury manufacturers such as Rolls Royce or Lamborghini. What AM does to car manufacturing is reduce the cost, and thus price, of customization, and thus democratize customization in doing so. As with other technologies such as televisions, Personal Computers or air travel, that rode down the cost curve, I see the diffusion of customized cars not necessarily being tied to a “target customer” but rather a general trend affecting the population at large.
I liked this post! I found your second question quite interesting: who would be the target customer if people could design their own cars? I dont believe there will be a point anytime soon where customers will be able to design their own cars. 3D printing might be able to offer a bit more customisation, since larger order sizes of the same parts are no longer important, but designing a new car is another story. The reason why I think that is because car manufacturers would need to thoroughly test the quality of each permutation of car rather than just producing a lot of units of a car that is already tested. The question for me is: how could this testing be speeded up if customers really wanted to design their own cars?
To your question about the target customer for 3D printed automobiles, I believe this product would be demanded by any consumer that is cost conscious if AM producers are able to scale appropriately. Further, cars produced using AM would save at multiple points in the supply chain. By reducing the middlemen between OEM’s and dealers, VW could offer a standard model to a large geographical area by systematically placing these machines in high density areas.
The question you pose about our emotional attachment to cars that are produced by hand is very interesting. Cars and the physical goods that exist below the hood have for a long time been something tied to emotion, even youthful romance (think Grease Lightning!). A lot of people still enjoy assembling and disassembling automobiles. It is not simply a pastime, it is a source of pride, that somehow, someway we developed this incredible steel ‘box’ originally with our bare hands. Thinking about a single machine popping out cars as a popcorn machine pops kernels is disconcerting.
There are around 20k-30k parts in a passenger car. Most of them are very small parts, such as bolts and nuts, and they are cross-overed between different models, therefore they require very high volume production. I do not see that additive manufacturing would be less costly and more convenient for those small parts going forward since they are produced in millions, however for the very large and complex parts (e.g. parts of the engine, exhaust, shafts) it can be a game changer for the suppliers in the medium run since tooling is very costly.
I agree that safety will be the main concern of the OEMs going forward. On the other hand, with mass adoption of additive manufacturing, costs will go down and quality will increase with higher competition in printing hardware manufacturers. In addition, developments in material sciences will play a key role in finding the right material (durable, low-cost and sustainable) to produce auto parts that will transform the industry.
3D printing is, presently, an alternative manufacturing process that allows greater creativity and individualization when creating small batches of product. I like the way that you incorporated the acknowledgment that we are still fairly far off from 3D printing entire vehicles, but I do agree that at the very least, 3D printing can help aggregate suppliers, and cut down on the high volume of specialized OEMs that a typical auto manufacturer has to source from.
I also agree with the author that one competitive advantage for more upscale carmakers with regards to 3D printing is the level of customization that the manufacturer can provide potential customers. Since luxury goods are valued more for their reputation and design (as opposed to pure functionality), their customers would also be willing to tolerate a longer lead/manufacturing time if it means that spending a premium will get them a vehicle specific to their preferences. For these personalized orders, I think 3D printing will be able to balance much of the tradeoffs regarding speed and cost, since the user has already demonstrated a willingness to pay for a differentiated product (and willing to subsidize the increased variable cost of 3D printing), and would be more patient since they understand they are deterministically responsible for the delay, and thus giving the 3D process more lead time.
One concern I do have with this analysis is if VW is the right standard bearer for automotive 3D printing. We’ve discussed how upscale customer customization is one potential method of unlocking the inherent competitive advantage of 3D printing, and while VW may be perceived as a more upscale brand, I am uncertain how its primary reputation as a semi-luxurious, safe, family-friendly, middle-of-the-road vehicle1 would play towards actually attracting that demographic. In this case, there does not appear to be an organic demand from the existing customer base for this feature. Investing in technology is critical for industries with tremendously long development cycles like auto manufacturing, but it also feels like they are trying to be in first place, but with no specific use case in mind. It’s possible that they can discover a competitive edge through further research in the space, but there is also a risk that they are developing a technology that is better suited for a competitor.
1. Bartlett, J. S. (2018, February 22). Which Car Brands Make the Best Vehicles? Consumer Reports. Retrieved from https://www.consumerreports.org/cars-driving/which-car-brands-make-the-best-vehicles-2018/