Thinking really small about auto production

It's a basic auto manufacturing maxim: If you can't forecast enough volume to warrant the cost of building an assembly plant, you don't build an assembly plant.

But Michael Ableson, CEO of U.K. commercial vehicle startup Arrival, has a new way of looking at things.

Arrival proposes to construct a network of vehicle "microfactories" — built for a fraction of what vehicle plants typically cost, occupying a sliver of the space they require and turning out such low numbers that traditional competitors must be wondering, "Why bother?"

The company expects to have an electric bus microfactory up and running by the end of this year in Rock Hill, S.C., and a second microfactory for electric delivery vans open in England early next year. This month it announced a third plant, to build vans in Charlotte, N.C. Eventually, Arrival envisions dotting the U.S. with small factories.

How small?

The South Carolina microfactory will cost $46 million, including all tooling and equipment, and occupy 200,000 square feet. By comparison, Daimler's recently opened van plant on the other side of the state cost $500 million and covers 1.8 million square feet. Mazda and Toyota are jointly building a traditional light-vehicle plant 400 miles away from Rockville in Huntsville, Ala., that will be 3.1 million square feet and cost $2.3 billion.

"The auto industry believes scale is important," said Ableson, who spent nearly 15 years at General Motors before jumping to the startup in 2019. "But that scale is determined by the enormous capital investment required to build the plant. OEMs spend hundreds of millions, or even billions, of dollars. And to make the economics of that work out, you've got to build hundreds of thousands of vehicles a year there.

"We're taking a new approach."

The South Carolina plant will turn out only 1,000 vehicles a year. The van plant in England will produce just 10,000.

The microfactories will use standard tooling and layout, but production will take place in small work cells instead of on fixed assembly lines. The vehicles will be constructed with low-cost composite panels, meaning there's no need for big stamping presses, and the color of exterior and interior parts will be cooked in during the molding, forgoing a costly paint shop.

Because the production is low volume, it can take place in a building that might have been designed as a warehouse. And because the resulting building specs are less demanding, the plants, as envisioned, can be erected in about six months instead of the usual two or three years.

It's a radical approach to manufacturing, Ableson proudly admits.

"The industry is in a period where a huge shift to electric is happening," he said. "A traditional manufacturer takes years to build a new plant and create a new product. Trying to make business plans for that is tough enough under normal circumstances. But right now, as things change so quickly, it's exceedingly difficult.

"By comparison, we can go into a market and put up a microfactory in six months."