Understanding ROI and amortization

Do you know how and where your product fits into the "greater scheme of things". Or, are you following the herd? I hate to use the term "fanboy" but some forms of idol worship just don't "fit" well. In the 80's it included BIG hair for the metal band fanboys. Upon reflection most would agree, not a good look!

So, today lot of companies and people are falling all over themselves proclaiming that Giga-Castings is the only way to make cars. I am a big fan of HPDC aluminum components, I tried to get Rivian to cast the front shock tower for the R1T. Casting does makes sense with certain size and investment limitations.... But, Big Giga-casting not only requires a 20 million dollar investment in tools and machines but you need to set up a new building to hold the beast special deep foundations. Right sizing the "chunk" you wish to cast is key! If you want to see what in my opinion is the BEST execution of HPDC was the Cadillac CT6 before Tesla went overboard with this stuff, Cadillac mastered the BIW HPDC execution!

All of this leads (IMHO) into a consideration that most folks are not taking time to deliberate... ROI for investment and, AMORTIZATION of the cost for the engineering resources required to make things happen! Forget the idea that turning 90 degree corners from vertical side structures to long thin horizontal floor pan like geometry creates crazy mold turbulences and will mean having thicker walls (floor)and, to spend time in "straightening fixtures" to deal with the wild warping. Unless you make 100,000 units a year the numbers do NOT make sense. Even when you crank out 100,000 units a year the burden per piece can be 200 dollars! And the bigger you get, the more the capital investment... go figure.

So, lets take a look at what happens to companies that do NOT make 100,000 units a year. Outside of China and Tesla NO EV MAKER builds 100,000 units a year. Let's take a look at where specific EV markets are. Rivian has both passenger and commercial vehicles, total volume still less than 100k. Nikola will never ever see 100k the total market in the US is only 250K. Smaller companies like Bollinger and Harbinger will feel real good if they can sell 10,000 units a year (and they will both have great products)! In that case you are looking at a 10 year tooling payback schedule..... Kinda like taking on a 30 year mortgage while you are still in elementary school... huge burden without a clear future, how many EV "want to be" makers have already fallen? MATCH your processes and materials to YOUR volumes!

For investors in EV makers, the investment in Giga-Casting means more time spent without profits... Do you have 17 years of funding to sustain a company that is NOT profitable? Can anyone in a publicly held corporation justify these BIG dollar risks? Has anyone considered evaluating the Return on Retail??? I would guess NOT because no consumer EVER said "I want to buy that product because it is cheaper to manufacture" NOPE! What consumers do say is "I want a less expensive car" "I want a durable and serviceable car"

All of this brings me back to Design for Excellence DfX. Using DfX leverages the knowledge and expertise of the entire organization... marketing, supply chain, manufacturing, quality, testing. By infusing the knowledge and experience of the entire organization into your product design / plan, not only can you assure a good match of volume to process. But, you can avoid delays in your NPI / Launch and optimize PROFITS!