There’s an electric vehicle race. And China is winning.
Starting small with Industry 4.0 will help automakers surge ahead
Never say never — especially when it comes to the electric vehicle gold rush.
After previously saying it wouldn’t produce a pure electric vehicle because the market lacked potential, Toyota announced in mid-November that it would start selling electric vehicles in China and India in 2020.[1]
It’ll have a lot of competition.
Tesla struck a deal earlier this month to open a new factory in Shanghai. Volkswagen plans to invest more than €10 billion ($11.8 billion) to build electric and hybrid cars in the country over the next eight years.[2]
So why are Toyota and other international automakers accelerating into China and India?
Anti-pollution regulations and improved battery technology, for one. China aims to have two million EVs and hybrids on the road by 2019, and India plans to ban gas-powered vehicle sales completely by 2030. Battery capacity is substantially higher, but batteries only cost 20% of what they did five years ago.[3]
China is also the world’s largest maker and buyer of electric cars — and the national government is pushing companies to design and build them on Chinese territory.
The Angle:
With all the hype surrounding Industry 4.0, only 16% of manufacturers have an overall Industry 4.0 strategy in place.[4] And many companies still struggle with how to take even the first step to a creating a smart factory and beyond.
But companies should focus on a specific pain point they can solve today versus becoming overwhelmed by a big utopian idea like Industry 4.0.
“A big misconception with Industry 4.0 is that you have to tackle everything at once,” said Jiani Zhang, Watson IoT Director of Product Management. “The most practical way to implement industry 4.0 is to start small and go from there — pick a problem or use case on one line and solve it. Then you will be able to comfortably repeat it on multiple lines.”
As automotive manufactures set up new plants in China and other markets, they can consider emerging technologies to uncover those nuggets of insight across their manufacturing processes, supply chains, and end-to-end ecosystems.
But are they currently equipped to get the most out of their factories?
“Many manufacturers are not using artificial intelligence, Internet of Things, and repeatable processes that will create a digital factory of the future,” said John Kitchingman, Vice President, Global Sales Leader of Automotive and Aerospace and Defense, IBM. “The product development lifecycle is the same today as it was 20 years ago. It still takes three years to get a new car from concept to coming off the production line.”
Ready or not, the game-changing transition electric vehicle production is coming. By 2030, 58% of the total lightweight automotive market will be EVs.[5]
Try our Model Factory simulator to see AI and data solutions in action.
[1] https://www.engadget.com/2017/11/17/toyota-electric-vehicles-china-india/
[2] http://money.cnn.com/2017/11/16/investing/volkswagen-electric-vehicles-china/index.html
[3] https://www.bloomberg.com/news/articles/2017-11-17/toyota-plans-to-sell-electric-vehicles-in-china-from-2020
[4] https://www.mckinsey.com/business-functions/operations/our-insights/industry-40-looking-beyond-the-initial-hype
[5] http://www.businesswire.com/news/home/20171115005827/en/Demand-Green-Vehicles-Boost-Electric-Vehicle-Battery
