German automakers used to be able to crank out zillions of new cars with fat profit margins every year. As important as the transition to electric cars and trucks may be, those profit margins are a thing of the past. Today’s manufacturers have to think smarter if they want to be profitable in the future.
In the German auto industry, Volkswagen has been pushing the EV revolution forward more aggressively than most of its peers. It has developed a new modular chassis and a new computer operating system for electric cars. Both have required a substantial investment by the company, one that it hopes to amortize in part by offering them to other companies on a subscription basis.
One way to make electric cars more appealing to prospective buyers is by lowering their prices, which remain higher than conventional cars when it comes to comparing window stickers. CleanTechnica readers know electric cars are cheaper in the long run, but for many car buyers, the bottom line is “How much is my monthly payment?” which never includes such things as fuel and maintenance costs.
Volkswagen is addressing the profit squeeze by finding ways to make its manufacturing process more efficient. Its new Industrial Cloud, developed in cooperation with Amazon Web Services, is one way the company plans to manufacture its products more efficiently. Three factories — Chemnitz, Wolfsburg, and Polkowice — were linked together in 2019. This year, 15 more facilities will be added, says Gerd Walker, head of production for Volkswagen, in a press release.
In the first step, the company defined 15 areas which are available as standardized apps for all factories. The main focuses are on predictive maintenance of machines and the reduction of reworking (post production repair) on vehicles through artificial intelligence. The implementation of those first 15 apps is expected to save the company €200 million between now and 2025.
The digital integration involves collecting data from several hundred thousand machines which will be analyzed by standardized apps on the Cloud. “We have the know how within the Group to derive efficiency potentials from this data and we are considerably expanding our expertise,” says Roy Sauer, head of enterprise & platform architecture. At present, there are 220 people working on the project and the number is due to rise to about 500 by the end of 2020.
Just as Volkswagen is making its MEB electric car platform and operating system available to other companies, it will make its Industrial Cloud available to others as well. The techniques are applicable to all manufacturing, the company says, not just the automotive sector. Discussions with a number of other partners from various sectors have already reached an advanced stage.
When the Industrial Cloud is fully implemented, it will collect data from all 126 Volkswagen production facilities around the world. The company expects such digital integration will save it several billion euros, money that can be used to lower the price of electric vehicles and make them affordable to a broader range of customers.
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