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Up until the early 1970s, the automotive industry followed a single path for gas vehicles: More power meant a bigger engine, resulting in more weight, more cost, and, in most cases, worse fuel efficiency.
But then came the fuel crisis in the mid-1970s, which resulted in an innovative new device that could deliver both power and the fuel efficiency customers were suddenly demanding — the turbocharger. While the first automotive applications appeared in 1962 for racing, the technology truly began its journey toward the mainstream in 1973 with the debut of the BMW 2002 Turbo, proving that smaller engines could punch well above their weight.
It seemed to defy physics — using a new device that turned wasted energy into power for more compression to make a smaller engine behave like a much larger one. In 2011, Ford introduced its version of the turbo, EcoBoost, on the F-150 pickup truck in the U.S. Ford’s bet was that turbos would redefine the industry, including the F-150, even as others were skeptical of customer adoption.
Sales skyrocketed, and the industry followed suit: Now, nearly 75% of F-150 trucks are sold with turbocharged engines,1 and nearly all our gas-powered vehicles offer it.
Today, the industry faces a similar challenge with electric vehicles, where the engineering solution for range anxiety has mostly been to increase the size of the battery in the vehicle. But the battery is the most crucial component to tackle affordability because it accounts for somewhere around 40% of the vehicle’s total cost and upwards of 25% of its total weight.
Just like when automakers simply made bigger engines, adding more battery makes the vehicle heavier, more expensive, and creates a massive physics challenge.
Our big bet for electric vehicles? Obsessing over the vehicle as a system to get more miles out of a smaller battery and radically simplifying the system to reduce the number of parts so we can deliver a new family of affordable electric vehicles to driveways around the world.
Hunting Trade-Offs with Bounties
Affordability is not a marketing tagline for us. To truly make vehicles built on this platform affordable, starting with a mid-size electric truck, we needed to hunt down the cost opportunities.
We started by creating a team within the skunkworks operation, tasked with developing range, efficiency, and performance metrics for priorities such as weight, drag and rolling resistance, and ultimately battery size. That team armed every engineer with a new way of evaluating tradeoffs — we call them bounties.
Historically, engineers in traditional automotive companies can be siloed in departments that match the component or system they are assigned to. They’re expected to advocate for the part they are working on while decreasing its cost, often without the context of understanding how it impacts the customer’s experience or performance of the vehicle.
For example, the aerodynamics team always wants a lower roof for less aerodynamic drag; the occupant package team wants a higher roof for more headroom, while the interiors team wants to decrease the cabin size to reduce the cost. Usually, these groups negotiate until they find a middle ground, one that inevitably ends in a tradeoff led by yet another department tasked with making tradeoffs on behalf of the customer.
Bounties change the negotiation, making the true cost of a tradeoff much clearer by connecting it to a specific value tied to the range and battery cost. Now, the aerodynamics team and interior team share the same goal, and both understood that adding even 1mm to the roof height would mean $1.30 in additional battery cost or .055 miles of range. With bounties, each team has a common objective to maximize range while decreasing battery cost — a direct linkage to giving our customers more.
This is just one example of countless bounties our team focused on. When we met targets, we would set more difficult ones to challenge ourselves further. One of these areas was our energy management system.
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- Unless legacy automakers reform or replace the predatory dealership model, they're gonna continue to struggle in the EV marketplace. The underlying problem is the dealership model relies on service and support which gas vehicles need but electric vehicles don't.Going forward, instead of supporting automakers and dealerships through maintenance and repair costs, car owners will have to have subscriptions to access self-driving, internet, infotainment and other data-driven services - and perhaps to even operate the vehicle!
Put simply, unless they revise or get rid of the dealership model, Ford and GM will be leaving the passenger auto market. You won't need a factory service center to do OTA updates and feature upgrades. The subscription model will provide reliable revenue streams at a fraction of the current expense for "automotive technicians" and service equipment.
The only snag to their strategy is that, while it's impossible for another manufacturer to offer a gas car that doesn't need repairs, it is possible to offer an EV that doesn't require a subscription to own. As for the dealerships... Ford, GM and other legacy automakers need to join forces and go to war against NADA to get the exclusionary laws and regulations - most of which are at the state level - changed. It's gonna take time and money, but it can be done. If employee non-complete clauses must be time limited and cannot be unconscionable, the same must apply to exclusionary dealership agreements.
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