Customization vs. Scale – How BMW Imagines the Future of Cars

BMW Group seems to regard additive manufacturing as a source of new products and innovative business models rather than a manufacturing process to resolve existing issues.

Commenting on the BMW Group’s investment in Desktop Metal, Uwe Higgen, Managing Partner of BMW Group’s internal investment unit, said that additive manufacturing “is shaping the way cars will be imagined, designed and manufactured” [1]. Desktop Metal, a start-up co-founded by four professors from the Massachusetts Institute of Technology (MIT) in 2015, was the company to most quickly reach a valuation of more than $1 billion in the US [2]. It was no coincidence that an automaker was one of the first to invest in this company that pushes the boundaries of additive manufacturing.

The automotive sector faces distinct challenges. While increasing price pressure has been addressed in previous decades with incremental improvements of economies of scale through consolidation of the supplier base [3] and increased platform sharing [4], recent market developments seem to require more radical solutions. Customers demand more frequent product launches due to global competition [5], governmental regulations have increased the pressure on car manufacturers to reduce emissions [6], and the concept of shared mobility has the potential to reduce the size of mature markets [7]. To resolve these issues, companies need to find innovative ways to shorten design cycles, decrease emissions through weight reduction, and, perhaps, increase the margin potential through reduced manufacturing costs. Many believe additive manufacturing could be the solution to these issues [8].

BMW has always been at the forefront of material innovation. The company partnered with Boeing in 2012 to better understand the implications of heavy carbon fiber usage [9] and then invested €100 million in 2014 to build a plant dedicated to carbon fiber production [10]. It took a similar approach to additive manufacturing. After its first experiments in 1990, BMW continually introduced additive manufacturing for prototypes, partnered with leading companies [1] and universities [11], and selectively used the technology in series production [12]. Recently, BMW announced that it was opening a dedicated additive manufacturing center with in-house production capacity in 2019. The center, which is 6000 square meters in size, will accommodate 80 employees and will be equipped with over 30 production systems, allowing for large-scale production [13]. So far, BMW has used additive manufacturing for either high-end or small-scale applications in the i8 Roadster, MINI [13], and Rolls-Royce Dawn [14]. However, it seems that BMW’s longer-term strategy is to enable decentralized production and true vehicle customization [15]. These capabilities would not only allow for a greater variety of product offerings and country-specific versions but also align BMW with the general social trend of individualization. The ability to produce a personalized car could provide the company with a superior competitive advantage and potential for upselling, which could serve as an effective measure against the threat of shared mobility. However, this strategy would imply that BMW regards additive manufacturing as a source of new products and innovative business models rather than a manufacturing process that helps to overcome the issues of existing product offerings.

One of the challenges automotive companies face is that the economies of additive manufacturing are different than the economies of scale used by carmakers to maximize productivity. Accordingly, a product that has been designed to fit well with existing manufacturing processes is not necessarily comparable with a product that is optimized for the additive manufacturing process. Thus, to increase opportunities to use additive manufacturing in series production, BMW and other automotive companies need to reassess not only their manufacturing processes but also their products; new product designs using other materials, forms, colors, and textures might be better suited to additive manufacturing. However, established companies face a distinct obstacle when trying to imagine radically new product designs: an enormous amount of capital has been invested to refine the existing product design and the corresponding manufacturing process. The step change that is needed to make the product design and manufacturing process compatible with additive manufacturing requires further large capital investments and time. Established companies would need to discard great advancements on the learning curve and start fresh.

The shift to electric cars is another step change that heavily affects the manufacturing process. So far, only a new market entrant, Tesla, has been able to accommodate this shift on a large scale. Tesla was able to rethink how its product should be designed and produced without any preexisting restriction. Perhaps a new market entrant is needed to imagine a new car design that allows additive manufacturing to become the solution for issues facing automotive series production, as many believe it to be. (737 words)

 

[1]        E. Griffith, “Google, BMW and Lowe’s Invest in Metal 3D Printing Startup,” 2017. [Online]. Available: http://fortune.com/2017/02/06/desktop-metal-funding/. [Accessed: 10-Nov-2018].

[2]        C. Schubarth, “These 10 unicorns flew the fastest to billion-dollar valuations,” 2018. [Online]. Available: https://www.bizjournals.com/sanjose/news/2018/05/02/unicorn-startups-desktop-metal-grail-essential.html. [Accessed: 10-Nov-2018].

[3]        A. Maurer, F. Dietz, and N. Lang, “Beyond cost reduction: Reinventing the automotive OEM-supplier interface,” 2004. [Online]. Available: https://www.bcg.com/documents/file14316.pdf.

[4]        D. Balu, “Automotive Platform Sharing: An Overview,” 2004. [Online]. Available: http://www.frost.com/sublib/display-market-insight-top.do?id=20843788. [Accessed: 10-Nov-2018].

[5]        BMW Group, “Automotive Product Development Cycles and the Need for Balance with the Regulatory Environment,” 2017. [Online]. Available: https://www.cargroup.org/automotive-product-development-cycles-and-the-need-for-balance-with-the-regulatory-environment/. [Accessed: 10-Nov-2018].

[6]        P. Nieuwenhuis and P. E. Wells, The automotive industry and the environment: a technical, business and social future. Cambridge, U.K.: Woodhead Publishing Limited, 2003.

[7]        Frost & Sullivan, “Global Automotive Industry Outlook, 2018,” 2018. [Online]. Available: https://cds-frost-com.prd1.ezproxy-prod.hbs.edu/p/71319/#!/ppt/c?id=K26F-01-00-00-00. [Accessed: 10-Nov-2018].

[8]        C. W. J. Lim, K. Q. Le, Q. Lu, and C. H. Wong, “An Overview of 3-D Printing in Manufacturing, Aerospace, and Automotive Industries,” IEEE Potentials, 2016.

[9]        E. Taylor and D. Lalor, “BMW to collaborate with Boeing on carbon fiber,” 2012. [Online]. Available: https://www.reuters.com/article/us-boeing-bmw/bmw-to-collaborate-with-boeing-on-carbon-fiber-idUSBRE8BB0IQ20121212. [Accessed: 10-Nov-2018].

[10]      MarketWatch, “BMW, SGL to put €100 million into carbon fiber,” 2014. [Online]. Available: http://www.marketwatch.com/story/bmw-sgl-to-put-100-million-into-carbon-fiber-2014-02-17. [Accessed: 15-Apr-2014].

[11]      BMW Group, “Pushing material boundaries. BMW and Massachusetts Institute of Technology Self-Assembly Lab collaborate to design the first printed inflatable material.” [Online]. Available: https://www.press.bmwgroup.com/global/article/detail/T0281110EN/pushing-material-boundaries-bmw-and-massachusetts-institute-of-technology-self-assembly-lab-collaborate-to-design-the-first-printed-inflatable-material?language=en. [Accessed: 10-Nov-2018].

[12]      J. Meister, “BMW Examines Past, Present, Future Use of 3D Printing,” 2015. [Online]. Available: https://www.ecnmag.com/news/2015/11/bmw-examines-past-present-future-use-3d-printing. [Accessed: 10-Nov-2018].

[13]      BMW Group, “BMW Group plans Additive Manufacturing Campus: Technological expertise in industrial-scale 3D printing to be consolidated at new location,” 2018. [Online]. Available: https://www.press.bmwgroup.com/global/article/detail/T0280159EN/bmw-group-plans-additive-manufacturing-campus:-technological-expertise-in-industrial-scale-3d-printing-to-be-consolidated-at-new-location?language=en. [Accessed: 10-Nov-2018].

[14]      E. Richardson, “BMW Group refines additive manufacturing on premium Rolls-Royce brand,” 2017. [Online]. Available: http://www.ai-online.com/Adv/Previous/show_issue.php?id=7533#sthash.uK7fzIw9.dpbs. [Accessed: 10-Nov-2018].

[15]      3Dnatives, “BMW accelerates the integration of additive manufacturing into its production cycle,” 2018. [Online]. Available: https://www.3dnatives.com/en/bmw-additive-manufacturing190420184/. [Accessed: 11-Nov-2018].

 

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4 thoughts on “Customization vs. Scale – How BMW Imagines the Future of Cars

  1. It is incredible to see the opportunities additive manufacturing has for the automobile industry, especially as society moves to a shared economy where ride-share apps are being used more often. Paired with automation, I wonder if there will be opportunities for BMW to scale tweaked versions of their vehicles for these technological endeavors. I was also particularly struck by the ways in which this approach can address many of the sustainability challenges faced in the industry — particularly in optimizing material use for cars. As the investment in this field grows, will be interesting to see how we measure the environmental impact of this manufacturing and eventual scalability!

  2. I think this is an exemplary piece that thoroughly explores the unique reasons the auto industry stands to benefit from additive manufacturing- shorter design cycles, price pressures, and even shrinking markets due to ride sharing. I found it particularly interesting to consider decentralized production as potential solutions for high shipping costs, local design preferences and ultimately, complete user customization! I also appreciated the way the author highlights a central tension for all manufacturers- do you use the additive manufacturing as a competitive edge in product design or as a way to optimize manufacturing? I also agree that while large companies may make meaningful use of additive manufacturing, there is a fundamental way in which they are wedded to their pre-existing investments in traditional manufacturing. It may indeed require a new market entrant with no legacy capital sunk in traditional manufacturing methods; they will have the freedom to design a production process that can make full use of additive manufacturing.

  3. Thank you for the very nice write-up of challenges that car manufacturers face with additive manufacturing adoption – I enjoyed reading it. While there’s been a lot of buzz in the recent years about the potential of additive manufacturing to disrupt current status quo, I actually have seen very few (if any) examples of successful commercialisation of additive manufacturing at scale. For the automotive industry, as you mentioned, the main competitive advantage that additive manufacturing provides might be with product design rather than shortened product development life-cycle / cost optimization. With that said, the ultimate question I have is how much demand is it out there for fully customized cars that come at substantially higher cost (vs. traditional vehicles, at least in the beginning)? While I can see how high-end car manufacturers with established premium brand names might be able to benefit from this overall trend of personalization, the value proposition doesn’t seem to hold for the vast majority of lower- and medium-end manufacturers, and thus putting a limit on the total market opportunity.

  4. Such a fantastic view into the intersection of addititive manufacturing & the automotive manufacturing industry, particularly at a trendsetting company like BMW. To be frank, most discussion of “3D printing” conjures images of smaller printers not used to produce items at the size scale of an automobile. My biggest questions after reading through this though are twofold. First, what are some very specific product innovations that BMW plans on attempting with additive manufacturing (e.g., is it a detail like a spoiler, or an entire car body)? Second, who are the suppliers building the additive manufacturing equipment that BMW is using to fill its warehouse, and will that technology ever develop to be able to produce automobiles at the same speed & scale that manufacturers like BMW currently produce their goods?

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