For years auto manufacturing has been a bellwether of how things are made, and usually what happens on car and truck assembly lines soon makes its way into factories making everything from Jello to jet skis.
Toyota’s pioneering “just in time” (JIT) manufacturing in 1973 is a good example of how the Japanese auto giant changed the landscape for every other successful automaker as all faced an earthquake in the energy industry shaken by a global oil embargo. JIT soon morphed into “lean manufacturing” which tied assembly lines more closely to component manufacturers — vacating huge parts warehouses in favor of timely arrivals each day of trucks bearing soon-to- be-installed parts. The system worked, and promised to be a valuable manufacturing strategy in the future. But there’s a new challenge afoot — further upstream than the assembly line.
In a recent deep-dive into Chinese auto-making prowess, Reuters interviewed officials of Chery and BYD, two of China’s leading auto exporters, along with a host of other market observers in a project that unveils what likely is the next “earth shaking” trend in manufacturing — company engineering nimbleness and a reliance on AI and simulators to dramatically reduce development time for new products.
The report chronicles a hastily-called weekend meeting of Chery engineers and suppliers to the company’s proving grounds in Zhaoyuan in late 2023. During that meeting the suspension and steering system on the Chinese version of Chery’s Omoda 5 SUV was totally overhauled to meet driving conditions in Europe, a key market in Chery’s planned global expansion. In less than 2 months of the Zhaoyuan all-nighter Chery began shipping the EU-spec Omoda 5 to dealers, complete with new steering, traction control, brakes, vibration dampeners and tires.
“You can forget doing something that fast with a European (and quite likely American) automaker,” Riccardo Tonelli, Chery’s senior vehicle dynamics expert told Reuters. “It’s impossible.” Tonelli led the Chery overhaul, and estimated the same kind of project would take well over a year for other automakers to push similar improvements through their bureaucratic organizations.
Reuters says the fast-growing Chinese auto industry has cut vehicle development time by more than half, to as little as 18 months for all-new or redesigned models, leading to statistics that show the average age of a Chinese-brand electric or plug-in hybrid model on sale domestically is 1.6 years compared with 5.4 years for foreign brands.
Industry experts say slashing years off vehicle development cycles saves capital, lowers prices and ensures Chinese automakers have the freshest models during the technological revolution at play in the manufacturing world.
The challenges such innovations have on competing global automakers are significant, particularly since China’s industrial base is tightly woven into a command-economy — where a company like BYD deploys nearly as many (900,000) auto workers as Toyota and Volkswagen combined. Many of those primarily young workers often pull 6 12-hour shifts per week for modest salaries and live in company-subsidized housing, ride company transportation to work and send their kids to company-sponsored schools.
Also, BYD manufactures about 75% of its own parts (remember Henry Ford’s success at the Rouge River Plant?) rather than relying on suppliers, another factor in ensuring speedy development and lowering costs.
Another factor in China’s ability to bring new products to market so quickly is its engineers have concluded global industry-standard vetting processes are wasteful in “pursuit of quality,” explains Allen Han, a professor of automotive studies at Shanghai’s Tongji Univ. and a veteran employee of Ford and two Chinese automakers.
Instead, Chinese automakers release “good enough” vehicles quickly, with far fewer prototypes and a fail-fast philosophy akin to that of Silicon Valley tech startups, leaning more on simulations and artificial intelligence (AI) than real-world testing for safety and durability. Industry watchers say the Chinese philosophy treats model launches more like the start than the end of development — relying heavily on frequent upgrades based on consumer feedback.
While all auto manufacturers have embraced digital design, virtual reality and AI, the Chinese have pushed further into the technologies to shave months off development time. For instance, Zeekr, another “major” in Chinese auto making uses AI to mine its 20-year-old digital library to tell engineers which existing parts might work best and cost the least in new applications.
While it’s easy to argue about differences in political-management practices used in the People’s Republic of China, and to poke fun at the paternalistic “company town atmosphere” of subsidized housing, transportation and education for employees, and to question the AI-tested “expected durability” of Chinese auto exports, the bottom line is availability and cost.
Today, China’s assembly lines can knock out 54 million vehicles annually, nearly double the 27.5 million their factories produced last year, and with supply exceeding demand domestically car makers there are slashing prices.
Any guess where that manufacturing excess leads next? Industry watchers estimate if China’s auto production goes fully global, BYD will quickly supplant Toyota as the world’s top-producing car manufacturer.
