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DCMME Conference Highlights Impact of Electric Vehicles on Manufacturing

Friday, October 15, 2021

General Motors announced plans recently to introduce a $30,000 electric SUV, part of its bid to overtake Tesla as the leading manufacturer of electric vehicles in the United States. Ford Motor Company, meanwhile, announced that it is partnering with a South Korean supplier to build three battery factories and an electric truck plant in the U.S. at a cost of $11.4 billion.

While electric vehicles account for more than 25 percent of auto sales in several European countries, they’ve captured only a sliver of the U.S. market so far. But the shift from internal combustion (IC) engine vehicles to EVs seems inevitable, partly because of government regulations to reduce greenhouse gas emissions.

“We are in a transition to electrical vehicles. It’s real and it’s coming faster than most Americans know,” said Rick Dauch, president and CEO of Workhorse Group, a Cincinnati-based company focused on manufacturing drone-integrated electric vehicles for the last-mile delivery sector.

Dauch was speaking at the fall conference of Purdue University’s Dauch Center for the Management of Manufacturing Enterprises (DCMME), held on Oct. 8 in the South Ballroom of Purdue Memorial Union. About 150 people, including students, faculty, staff and industry representatives, attended the conference both in-person and virtually.

Dauch and other speakers made presentations on the theme of “Manufacturing Opportunities with the Global Electric Vehicle Transformation,” sharing not just the benefits that electric vehicles might bring, but also the potential challenges and downsides. 

Dauch provided an overview of the electric vehicle’s impact on the auto industry and shared his experience driving a Tesla, noting that EVs—with no exhaust systems, fuel systems, and transmissions—need far fewer components than IC vehicles. That poses a challenge to the automobile industry’s Tier 1 and Tier 2 suppliers, many located in the Midwest and focused on IC parts.

“It is both a risk and an opportunity,” Dauch said. “If a supplier is asleep at the wheel today, they may be out of business in five years, because half their business is going to disappear.”

Part of the challenge for manufacturers is figuring out when to make the shift, said Robert Bierwagen, vice president of digital strategies at MPI Corporation, whose holdings include a supplier of transmission parts.

“There’s no question that we’re going to see a transition,” Bierwagen said. “The thing that’s in question is how quickly it’s going to happen. And as a supplier, we have to invest in new tooling, new systems and new processes, and we have to pick the right time to do that.”

Because they use fewer parts, electric vehicles require less labor. That’s a concern for the United Auto Workers union, which released a report in 2019 suggesting that labor hours could drop 30 percent per vehicle.

Danny Ernstes, the Indiana CAP Coordinator for UAW Region 2B, said the UAW wants to ensure that government subsidies and tax breaks for the electric vehicle transition are contingent on high-quality jobs being created for American workers.

“This is a great opportunity to invest in U.S. manufacturing, produce the vehicles of the future and create high-quality jobs,” Ernstes said.

Some manufacturers may transition to supplying parts for EVs, but others may have to look beyond the automotive industry as part of an agile strategy to reduce their risk, said Ananth Iyer, director of DCMME and the Susan Bulkeley Butler Chair in Operations Management at the Krannert School of Management. He presented DCMME research that suggested several risk-reduction strategies for manufacturers.

“A whole bunch of companies might be retraining their people to start being involved in other parts,” Iyer said, “but some might be developing the management capabilities and developing the skillset to be able to consider the requirements of adjacent industries that could use the same part.”

Electric vehicles have fewer parts, but one of those parts, the battery, is critical to their operation. Not only does an EV need a powerful battery, charging the battery can be burdensome for drivers, as well as a strain on electric supply systems.

Vani Dantam, who has 40 years of experience in the transportation and energy industries, shared his expertise on battery production, detailing the technical requirements of setting up a battery plant. Working for Lucas TVS Industries, he is currently the chief project consultant for a lithium-ion battery plant being built near Chennai, India.

While the EV transformation will create the need for more charging stations, many drivers will seek the convenience of plugging in their cars as soon as they return home from work. This could be taxing for electrical systems, said Jeremy Konkle, chief operating office of the electric cooperative Tipmont REMC.

But the current infrastructure can serve customers’ needs, he said, as long as they are flexible, perhaps by using technology that allows the charging to begin after 10 p.m., during off-peak hours.

“They could use that excess capacity that we have in the electrical system, from already-paid-for infrastructure, and accomplish what they need—a charged car when they go to work in the morning,” he said.

Other speakers at the conference included Jonathan Schalliol, director of Heritage Group Ventures; Robin Fleming, CEO of Anvl; Sydney Hollingshead, development engineer for Cook Biotech; and Amanda Raver, powertrain manufacturing engineer at Subaru of Indiana.