The push toward alternative and fuel-efficient cars is creating new challenges for automotive manufacturers in terms of revamping their core processes in preparation for mass-produced, non-internal combustion engine vehicles.
Among the challenges is to successfully gauge how much to adjust processes to accommodate alternative fuel models, especially given that there remains uncertainty as to the long-term viability of ‘green’ cars in the marketplace. According to a recent consumer survey conducted by Accenture, only 46 percent of U.S. respondents supported a full transition to plug-in electric vehicles. Moreover, J.D. Power and Associates predicts that all-electric vehicles will be less than two percent of global sales by 2020.
Further exacerbating the challenge is that, despite tepid consumer acceptance and sales predictions, electric vehicles are on the road now. And, governments around the world are pledging billions to plug-in electric vehicle development and consumer subsidies in an effort to increase their number. Therefore, the only certainty is that some degree of alternative fuel transportation will be part of the foreseeable future.
To be prepared, automakers must be ready to modify their platforms to support a variety of fuel technologies, including pure electric and plug-in hybrid electric vehicles, as well as gas-powered cars and trucks. Adopting this strategy will not only act as a hedge against the direction alternative fuel vehicles may take, but serve as a way to prepare for a future that will include them.
There are three initial actions companies can take as green technologies and infrastructure mature. It starts with the need to develop partnerships to meet customer demand. Companies should also continually listen to the voice of the consumer. Once they have the consumers’ viewpoint they must accordingly, revamp organization core processes.
Accenture research has shown that when considering sources from which they would prefer buying charging services, consumers’ top choice would be utilities. Seventy-seven percent said they would prefer buying charging services from such companies. This suggests that auto manufacturers and utilities should pursue commercial partnerships to help both manage and optimize the entry of alternative fuel vehicles into the marketplace. For auto companies, in particular, this will include the need to work more closely with battery suppliers.
In addition to range and infrastructure worries, mass-market consumers have concerns over the higher purchase prices and battery-charging costs typically associated with green cars, as well as charging times for them, and the total cost of ownership compared to conventional vehicles. But, as the alternative fuel ecosystem evolves, perceptions may change. For example, while seven out of 10 consumers said they would prefer plug-in hybrid electric vehicles over all-electric automobiles, younger consumers voiced the strongest preference for pure electric cars. Forty percent were more open to them versus 27 percent of all respondents. This suggests that the market could shift in the near future.
Finally, within each organization, no matter which alternative technologies take hold, companies will need to begin revamping their core processes in several ways. Major car design changes will be required with core parts like the combustion engine, fuel tank, and electronics replaced by e-engines and batteries. Standardization of core components, driven by government regulations, grid infrastructure restrictions, and partner requirements, are likely to play a role. Manufacturing plant changes and new competencies, such as chemical and electrical engineering will need to be developed. And, new sales, marketing, and branding strategies, as well as road assistance services, and battery-recycling processes will be required.
Whatever the future holds, automakers will need to be flexible in their core manufacturing processes to accommodate a range of transportation technologies, including alternative fuel vehicles, to stay on the path toward high performance.
James Robbins is automotive industry & industrial equipment industry North American managing director with Accenture (www.accenture.com), a global management consulting, technology services and outsourcing company.