January 22 2009 / by Garry Golden
We might be closer to reframing the public conversation about the future of the auto industry.
The real problem for the auto industry is its manufacturing footprint, not its carbon footprint.
Of course we must build more efficient vehicles.
But the industry's problems have nothing to with small cars vs big cars, or fuel efficiency.
The real problem is the manufacturing intensity of building mechanical engines, and their inability to produce multiple chassis on one factory floor. The other problem is that they build new cars then have them sit on dealership lots until someone buys it.
Yes, we must reduce the eco-impact of vehicles, but to get there we must recognize that the real revolution is changing how we build cars, not how we fuel them. Need more evidence?
Fiat exchanges Access for Equity
Fiat is negotiating a 35% stake in Chrysler in exchange for access to its small vehicle manufacturing capacity and revival of its European brands in the US.
But we should not be confused. The future is not 'small cars', but leaner manufacturing.
Does Chrysler need small vehicles to meet current market demand? Probably.
But the real takeaway is Chrysler's inabilty to build different types of vehicles (small or large) without major retooling investments.
So the company exchanges access to manufacturing for equity.
The future is modular manufacturing
The future is a factory floor that can build multiple chassis using modular electric motors and energy storage devices (batteries, fuel cells and capacitors).
What does the auto industry need to do?