The global opportunities presented by a transition to net zero are enormous. The implementation of new technologies and the exponential growth of existing ones that support decarbonisation has already seen the creation of entirely new sectors, such as renewables, while other have grown rapidly in response to new legislation and consumer trends.
A perfect example of this is electric vehicles (EVs). In this market, Tesla has led the way, creating affordable, desirable cars that have changed the game. However, many automotive companies, big and small, are now looking to catch up.
And they have good reason for this. Europe is leading the charge with commitments to ban the sale of new petrol and diesel cars, with countries such as the UK, Sweden, Denmark, Slovenia and Ireland having announced bans from 2030, and others such as France and Spain targeting 2040. The governors of several US states have also called for a ban, with California being the first to commit to a 2035 date.
Creating the manufacturing facilities to support EV transition
With the implementation of hydrogen fuel a way off due to its carbon-intensive production process, EVs are the obvious replacement. This is already creating a need for an effective manufacturing base not only for the vehicles themselves, but for the batteries needed to power them.
My own manufacturing and automotive background provides a real insight into just what automotive companies will need to support a full transition to EVs. I have worked across Europe and South America with Jaguar Land Rover and Ford and have spent time in Japan with Mazda. In my new role at Arcadis as Global Solution Director for Industry 4.0, I am now focused on the future of manufacturing and energy transition, as well as how we get there.
The global challenges currently facing the industry are extremely difficult, particularly those exacerbated by Covid-19 and the situation in Ukraine. With many companies running ‘just in time’ operations, a lack of visibility about what material shortages are coming in the short and medium term can have knock on effects throughout the supply chain.
Things like chip shortages, for example, have been particularly disruptive. A lack of semiconductors has forced manufacturers to remove certain optional or popular features such as heated seats from their car ranges, but with the chips also vital for more necessary car components like fuel sensors, it has in some cases halted production and restricted full vehicle lines.
How to address the challenges?
With so much global volatility, business as usual is not possible and automotive businesses are having to be more flexible in terms of sourcing than ever before.
They have to think differently about what they source, where they source it from and what their general strategy is around certain components. Can they make a component themselves, or is the better alternative to allow expert third party companies do it for them, removing many of the associated supply chain risks?
One of our key capabilities at Arcadis is to help develop and manage a strategy to cope with this volatility. We use our industry knowledge to look at sourcing, manufacture, and where the weak links are in the supply chain, before presenting a range of options. We lay out the risks and costs clearly and ultimately ensure our clients can implement an effective strategy that works for them, whether that is self-sufficiency or an alternative.
An example of this is with EV batteries. I know from first-hand experience how excellent the manufacturing capabilities of the automotive industry are, but there is a gap when it comes to expertise around the design and implementation of gigafactories.
That is why Arcadis has created a unique offering for the automotive industry in this particular field. By bringing in experts such as myself, we have developed the capacity to not only manage gigafactory facilities commercially in terms of constructing the building and contract management, for instance, but we can also develop and perfect the manufacturing process.
We understand the layout and facilities required for various battery product designs and we have a good understanding of the client need across all technology areas, from initial product development through to translating the designed product into a set of manufacturing processes, and then manufacturing that said product.
Applying learnings worldwide – from vehicle manufacturing to battery production facilities
By harnessing our global capabilities, we are also able to ensure that regional conditions are of paramount consideration. We have designers working in the UK, in the Netherlands and in North America, enabling us to work closely with our global automotive clients, such as Jaguar Land Rover and BMW, as well as the emerging EV battery suppliers in Europe and North America. We also work with EV charging companies, such as Texas-based Wallbox, who we recently partnered with to manage the design and development of their new EV charger manufacturing facility in the US.
Fundamentally, what we can offer clients now goes beyond our traditional Programme Management Consulting role. It comes down to knowing the manufacturing and management process from beginning to end. We have in-depth capabilities across all technology areas to understand not only the sequencing required to build the vehicle, but also the design and construction of the battery itself.
The industry needs to move at pace towards high-quality EV products that have speed to market, and it needs a manufacturing base that enables it to address post-Covid price inflation, as well as labor and skills shortages - as laid out in our recent ICC report.
Automation could be key here, and is an area in which the industry already excels. But there are other considerations that need to be taken into account. The manufacture of lithium-ion batteries, for example, requires certain equipment such as ovens and sterile environments called ‘clean rooms’, as well as very low humidity environments for the processing of lithium electrodes known as ‘dry rooms’. These specialist rooms are in short supply, not least because they are used by the pharmaceutical industry and have been vital in the production of Covid-19 vaccinations, and so we need to have a strategy in place to address the problem.
Creating the right manufacturing facilities for EVs
Typical gigafactories are significantly large, technically challenging pieces of infrastructure. As such, building them means ensuring not only having the right delivery strategies in place, but also sufficient capability and capacity. All this, while also contending with associated inflationary issues around construction materials, particularly steelwork, cladding, and mechanical, electrical and plumbing engineering.
The creation of vehicle manufacturing facilities is complicated and challenging. Ideally, it would be better to produce EVs in existing petrol and diesel car facilities, not just in terms of cost but also when it comes to limiting the carbon emissions associated with building new facilities.
The problem is that EVs require a completely different set up, which makes building multi-platform vehicles in the same factory, on the same line, difficult. A combustion engine vehicle, for example, works using a source of energy in an engine compartment under the hood and it has an exhaust and a gearbox. An EV has neither of these, and its power source typically comes from a set of batteries running the length of the vehicle located in the floor structure.
So, if the structure and the layout of the cars are fundamentally different, that drives a whole new set of complexities. It affects process in terms of how you build both the car and factory. And it affects material handling, in the sense that different types of materials have to be delivered and stored differently. All this means that space is a real issue.
The future of automotive manufacturing
Arcadis’ knowledge of the big challenges facing the automotive industry - and our resources to overcome them - can be vital tools when faced with such complex problems. We can manage the process, not just in terms of battery production, but also in terms of how the EV itself comes together.
This is something we have spent a lot of time working on to get right. We have reorganised our business to adjust to what the market and our clients will need in the coming years, and part of my role is to ensure all the functionality we have on a global and regional scale works together to provide a holistic offering for our clients, wherever they are in the world.
It is a challenge I am greatly looking forward to. It is fantastic to see the transition to EVs picking up pace and I am immensely proud to be at the forefront of a move to a leaner, greener automotive industry that will transform how we build, drive and think about cars.
Contact David at david.aimablelina@arcadis.com
