With the rapid emergence of EVs and their predicted increase in market share in Europe, China and the US in the coming years, the time for entering the market has never been better. For some, it may be the perfect opportunity to bring completely new vehicles to this dynamic, interesting, and lucrative market.

While many are poised to spearhead the new trend, however, there are still a number of hurdles for any new player seeking to gain a foothold in the new vehicle market. Particularly when it comes to automotive production facilities, new entrants face two main options: Either they take matters completely into their own hands and establish the necessary production facilities, processes, and workforce independently, or they choose to find a  supporting vehicle manufacturing partner.

This article will highlight the key characteristics of vehicle and contract manufacturing for new entrants as well as give a general overview of the benefits and potential challenges if choosing this option.

REQUIREMENTS FOR BUILDING AN AUTOMOTIVE FACTORY

The requirements for establishing an automotive production chain can be easily underestimated at first glance. The main reason is that establishing an automotive production ecosystem consists of a multitude of complex tasks with a high degree of sub-tasks and deliverables. In addition, many external factors also must be considered when opting to build a new factory entirely from scratch:

• Site selection alone encompasses a plethora of tasks. Firstly, the location should already offer a favorable legal landscape such as the availability of funding programs or a reasonable wage level.The site should also be in a politically stable region.
  
  
• In addition, legal frameworks in regard to security and quality standards or climate regulations also need to be factored in.
  
  
• Any site is also heavily dependent on the availability and skillset of a local workforce. Vehicle manufacturing requires a large, trained workforce for numerous fields of expertise. Also, questions regarding working hours, schedules, or employee benefits and sustenance should be be considered.
  
  
• Suppliers are another key factor of each production site. Ideally, the chosen location should be in proximity of all core suppliers in order to ensure a seamless supply chain and low transport distances from supplier to factory.
  
  
• The production volume intended does not only impact time-to-market and resource costs, but also the quality and quantity of tools, as well as the general production facilities as a whole. For more information about the importance of production volume, see
  "5 Challenges Every Automotive Startup Faces."

Even after a site is chosen, it will take several years until construction is complete and the production itself is ramped up. During these years, the new entrant will need to invest asignificant amount of time and money into establishing and maintaining the facility’s construction and organization.

THE BENEFITS OF VEHICLE MANUFACTURING PARTNERS

Partnering with contract manufacturers can effectively allow new entrants to gain access to an already established production site - including an existing skilled workforce and running production and organization processes:

• The key benefit of vehicle manufacturing partners is the fact that contract manufacturers not only take over the vehicle production but also the whole process of industrializing the vehicle concept. This includes the conception of the factory, the process and system planning, as well as the control and monitoring of the system installation.
  
  
• In addition, all production and organizational processes are already set up and tested. This means that new entrants can immediately benefit from fullyproductive facilities with proven processes and standards.
  
  
• Another important benefit of vehicle manufacturing partners is, that they can provide the entire infrastructure necessary for vehicle production. Partnering usually also enables access to an established production ecosystem. Of course, this also includes all quality, technological and sustainability standards.
  
  
• Lastly, it will be easier for a new entrant to locate a suitable supply network as they can leverage the existing supply network of their partner.

This allows new entrants not only to focus on building their brand; it also shortens their time-to-market and reduces risks significantly – two factors which might profoundly impact the success of new entrants within the market.