R & D (Research and Duplicate) - Why don't we do it?

[niky]

The business proposition is really simple. On the manufacturing end alone, you need at least 20-40k vehicles a year to make a plant cost effective. 20-40k of ONE model. That's from the perspective of the plants that stamp the body panels and build the chassis.

On e research side, you probably (because I have no exact figures for this) need a hundred thousand or so of one model to justify the engineering and development expense. The engines themselves require billions of pesos to simply develop. Given engine development costs can run into the billions of pesos, you're looking at the need to sell well in the hundreds of thousands to break even over several years of the engine's life.

[EVO-V]

The business proposition is really simple. On the manufacturing end alone, you need at least 20-40k vehicles a year to make a plant cost effective. 20-40k of ONE model. That's from the perspective of the plants that stamp the body panels and build the chassis.

On e research side, you probably (because I have no exact figures for this) need a hundred thousand or so of one model to justify the engineering and development expense. The engines themselves require billions of pesos to simply develop. Given engine development costs can run into the billions of pesos, you're looking at the need to sell well in the hundreds of thousands to break even over several years of the engine's life.

That's a very low estimate for engine development. Billions of dollars go into development of a single engine family. Thing is a lot of car companies share engine technology to diffuse costs.

New factories are now designed to be quickly retooled for a group of vehicles as simply opposed to one model.

The alternative to jumpstart any auto industry is to purchase the old production line of a previous model, give it ridiculous subsidies and impose tariffs on imports. The circumstances, however, will not allow that from happening any more given free trade areas and regimes are in place.

[Helios]

re the local boys involved in manufacturing auto parts, are they using compression molding for curved sections, or am i just smoking weed? given that we can produce an original, sleek contour body shell of a let's say a small sedan, and put on a stock chassis, engine etc., i suppose with a competitive price some will actually buy it. kit cars look like kit cars while mass market cars cost alot to make, so avoid these and focus on the niche market instead. the rally fighter (starts at around 2 million pesoses) was built with that in mind with no less than 10 local motors staff with off-the-shelf components. some companies sponsor other projects and the styling part is handled by the crowd-sourced-design community of which i'm part of. the phils can adopt the open innovation structure once it can gather at least 10 people who can do the job. capital and community, come up with these two components and possibly...

[EVO-V]

re the local boys involved in manufacturing auto parts, are they using compression molding for curved sections, or am i just smoking weed? given that we can produce an original, sleek contour body shell of a let's say a small sedan, and put on a stock chassis, engine etc., i suppose with a competitive price some will actually buy it. kit cars look like kit cars while mass market cars cost alot to make, so avoid these and focus on the niche market instead. the rally fighter (starts at around 2 million pesoses) was built with that in mind with no less than 10 local motors staff with off-the-shelf components. some companies sponsor other projects and the styling part is handled by the crowd-sourced-design community of which i'm part of. the phils can adopt the open innovation structure once it can gather at least 10 people who can do the job. capital and community, come up with these two components and possibly...

Where a company would locate its factory will depend on a few things, mainly market proximity, policies, and cost/availability of skilled labor. Having a factory in Thailand is logistically cheap enough to allow them to ship to the Philippines while serving the rest of South East Asia. The ASEAN free trade agreement allows for more relaxed access to markets.

The technology to manufacture just about every part is already out there. Locally engines for Honda, body parts for a few AUV's, plastic bumpers for the Vios, drive train parts for the Fortuner, wire harnesses for numerous vehicles, lamps, chassis, gears, coil springs, leaf springs etc. are already done here.

MVPMAP has admitted its design faux pas on the PHUV. But you see, the various companies that comprise MVPMAP can only dedicate so much time and management overhead for a project that requires serious attention to detail. There is still no single company that has the incentive to put all these together let alone deal with the inter-corporate politics for something most companies do not expect to see a profit on.

Again that is not their fault. As parts manufacturers their position in the value chain and their business models rely on shipping as many parts as possible. Assembly and design is beyond their core competencies.

Now if its a matter of high-end, one needs to understand that brand management has to be balanced with origin. If a Filipino product has to be introduced in this segment, it has to be EXCELLENT first and Filipino second. Why? Like Manny Pacquiao, the world will not tolerate a non-first world brand if it does not give any of their own industries a run for their money in terms of feature and performance. Lhullier and Tesoro were recognized as great designers first and Filipinos second. Same thing goes for Dado Banato.

That's because the mentality is not racist nor nationalistic, -its function and quality centric.

We have to recalibrate our pride and sense of nationalism to overcome these as secondary wants as opposed to simply pushing for excellence in the things we do and the goods we manufacture.

Yes Filipino companies can be competitive and in fact be the best at what they do. However, the problem largely lies in the fact that the local market is still looking for the cheapest fix it can find. It is difficult to finance R&D when your margins are squeezed by a market that makes a company compete with surplus parts, that they know will be inferior, less reliable and costlier later on, but still cheap enough to work in the short run.

Of course still not an excuse to cease on improvements, but these are the business realities most pundits do not understand.

[niky]

That's a very low estimate for engine development. Billions of dollars go into development of a single engine family. Thing is a lot of car companies share engine technology to diffuse costs.

New factories are now designed to be quickly retooled for a group of vehicles as simply opposed to one model.

The alternative to jumpstart any auto industry is to purchase the old production line of a previous model, give it ridiculous subsidies and impose tariffs on imports. The circumstances, however, will not allow that from happening any more given free trade areas and regimes are in place.

The cost of development can be within just one or two hundred million, if you exclude the cost of tooling for manufacturing. As long as you sell it only to the ASEAN market and don't need to meet ridiculous CO2 and HCO emissions targets.

Buying an engine and upgrading it is possible. We could also purchase technology for things like cam-phasing from suppkiers like Delphi and fuel injection from Bosch or VM Motori, like many small manufacturers do.

Without punitive tarriffs, what we can do is provide big subsidies to locally owned and developed car manufacturers. Such a company would have to start with motorcycles... So it will have the production volume to support an R&D an engineering department.

Nobody will want to risk it, though.

re the local boys involved in manufacturing auto parts, are they using compression molding for curved sections, or am i just smoking weed? given that we can produce an original, sleek contour body shell of a let's say a small sedan, and put on a stock chassis, engine etc., i suppose with a competitive price some will actually buy it. kit cars look like kit cars while mass market cars cost alot to make, so avoid these and focus on the niche market instead. the rally fighter (starts at around 2 million pesoses) was built with that in mind with no less than 10 local motors staff with off-the-shelf components. some companies sponsor other projects and the styling part is handled by the crowd-sourced-design community of which i'm part of. the phils can adopt the open innovation structure once it can gather at least 10 people who can do the job. capital and community, come up with these two components and possibly...

Rally Fighter works because there's a large community and some of them have money. How many buyers could you find here for a space frame toy that costs over two million pesos before sales tax?

[EVO-V]

The cost of development can be within just one or two hundred million, if you exclude the cost of tooling for manufacturing. As long as you sell it only to the ASEAN market and don't need to meet ridiculous CO2 and HCO emissions targets.

Buying an engine and upgrading it is possible. We could also purchase technology for things like cam-phasing from suppkiers like Delphi and fuel injection from Bosch or VM Motori, like many small manufacturers do.

Without punitive tarriffs, what we can do is provide big subsidies to locally owned and developed car manufacturers. Such a company would have to start with motorcycles... So it will have the production volume to support an R&D an engineering department.

Nobody will want to risk it, though.



Rally Fighter works because there's a large community and some of them have money. How many buyers could you find here for a space frame toy that costs over two million pesos before sales tax?

Why build something that isn't compliant and future proofed? If we want to get something done we need to use what has been learned by the industry and begin leap frogging the standard state of the industry. Only with something significantly disruptive can we differentiate products well enough to get anything worthwhile in a very crowded market place.

We have to skip this "puwede na" mentality especially when it works against environmental regulations and general efficiency.

Remember the flight of the kuligligs in Manila? Be thankful there was enough political will to see that such things come to a swift end.

Personally, if we have to develop something, let's do it well, no matter for whatever market segment it will serve.

[niky]

It's not a puwede na thing, but realistically, developing an engine with stuff like high pressure direct injection is aiming for a crowded market with high barriers of entry.

You aim for the developing markets. Develop a small engine that's fuel efficient and sufficiently cheap to maintain. Develop a small car platform that's robust... Or better yet, a utility vehcile platform that's more efficient than current. This isn't aiming low. This is aiming for where the profits are in mass manufacturing.

Sadly, it seems the only segment you can enter where being small is not a disadvantage is making ultra-luxury cars... But it's not a great market, either.

Personally, easiest out... Offer to manufacture the T25 for Gordon Murray. That's already been engineered. It works, it meets all standards. Develop a five-seater variant. And work at reducing tag price to the 400-500k level for the three seater.

[EVO-V]

There are alternative engine designs already out there and can be made using readily available parts and processes.

The thing is, how do you make a business out of this? Yes you do need it to be compliant, it is not an excuse for businesses nowadays to make something that isn't compliant just to make it cheap. The cost will burden the public, e.g. the Manila kuliglig infestation.

Every business is dependent on the market and how it is shaped by policies. Policies will largely depend on what serves the public's greater interest.

[uls]

nobody's investing in Philippine-original motor vehicle mass production coz there's no money to be made

that's the bottom line

people can sit around and discuss this stuff for another 10 yrs and it will be all just talk

[Helios]

agree on all counts except the 'toy' part.
of course it has to exceed beyond the targeted customers' (perceived) expectations if we are to market it as a serious product (want vs need). i see that the auto industry picks up the need of the customers comparatively well, except that some still fail the execution part of the process. the pursuit of balancing form and the functional attributes is never-ending so not everyone is there, yet. the market is still wide open for small and independent coachbuilders. being relatively small and independent allows for some flexibility in the design and building process without restrictions and conditioning of those limited to to work on the same theme for the same market segment. the same tools can be utilised to build related products like helmets, scooters etc. the initial strategy is to build a platform for communication between the manufacturer, the prospective sponsor, and the target buyer. it is critical that the concept vehicle should be able to translate the fascination into a fast purchase, a bystander into a buyer before an actual production initiates. fail this- forget it.

just to be practical, don't stick that philippine brand anywhere near the concept. just 'uv', and scrap the 'ph'. the concept vehicle has to generate a strong international interest to attract the local market.

how many buyers you ask> tap into the bir's unlisted millionaires of the phils, i hear you've got plenty hiding in cafes

[EVO-V]

For coach builders to be successful we need to establish a skills trade. From apprentices to craftsmen. And we need a market that supports that trade and culture.

[niky]

Want a plan that might work?

First, build a motorcycle brand. Capture a big part of the market. That's possible because motorcycle buyers are cheap and more likely to buy crappy things that will break.

The trick is to over-engineer your bike so it won't.

After a few years, you've built a reputation for building cheap stuff that doesn't break. Go upmarket. Do big displacement bikes. Go laterally from there. Trucklets, mini-cars. Build a multi-market customer base. Build working capital. Hell... You aren't getting investors for a car start-up unless:

1. It's a sure thing... Which means you have to have proof of concept and expertise beforehand... Thus you should already be a manufacturer.

Or

2. It's an exciting toy that your jnvestors would buy themselves. Would the Rally Fighter have been as successful if it were a commuter car like the Spark? No. Look at all the start-ups with great concepts that have failed for lack of investor interest. The Aptera was the saddest one.

That's the long and short of it. To make a successful local car industry, you have to start from the bottom then work your way up. The PHUV was aiming straight for the middle... The most competitive and entrenched market segment. To try and build a consumer car also aims for the middle... For a class where customers are spoiled for choice and manufacturers sell at low margins to capture market share.

To understand what works, you should also understand what doesn't. The history of automobiles is littered with the corpses of hundreds of car-making concerns that simply failed. At the end of this decade, we will have dozens more. If you're planning to challenge the big boys, you'd better hope, like Iso, that you have a clever design (the Isetta) that others would like to license from you, or, like Alec Issigonis, you have a design that revolutionizes the industry to the extnet that your car is built straight on for forty years.

[EVO-V]

That could actually work with motorbikes. The industry is pretty capable of supplying just about all the parts.

Now the pickle there is name a business that will have the resources and not just the will to carry out a 25 year plan for manufacturing here.

The PHUV was engineered mediocrity from the start. :D

There is nothing wrong with excelling in building certain components or occupying certain niches. But balance it with the availability of both human and financial capital as these dictate your frontiers.

[niky]

UP already has a few e-Jeeps. They could run electric routes, but I'm thinking up-front and battery costs are holding them back. Wthi daily use, you're looking at reinvesting about 100k in batteries into each e-Jeep every year or two.

For a dozen units, that's 5m up front, and a miklion reinvested every year and a half.

[niky]

The difference is that the overall sunk cost is huge. We already did a profit analysis of the e-Jeep versus a traditional Jeep, and the case is marginal. And the price of the e-Jeep is less than a brand new Jeep.

For buses, an e-Bus costs three to four million more. And realistically, you'd be trying to sell a bus worth 5-7m to operators who usually buy secondhand buses, e-Buses which still cost money to juice up and with the uncomfortable probability of battery failure within a year due to our weather.

There is a business case for it if you can do the accounting properly. But most companies don't balance the expense sheets on such long time scales... Hell, hard to get them to set aside contingency funds for proper maintenance! So it'd be a hard sell.

Just look at the decrepit condition of our buses, million peos secondhand units with bald recapped tires, blown suspensions, wonky brakes and engines 200,000 kilometers overdue for an overhaul...those are the people you're trying to sell an e-Bus to.

[A121]

The difference is that the overall sunk cost is huge. We already did a profit analysis of the e-Jeep versus a traditional Jeep, and the case is marginal. And the price of the e-Jeep is less than a brand new Jeep.

For buses, an e-Bus costs three to four million more. And realistically, you'd be trying to sell a bus worth 5-7m to operators who usually buy secondhand buses, e-Buses which still cost money to juice up and with the uncomfortable probability of battery failure within a year due to our weather.

There is a business case for it if you can do the accounting properly. But most companies don't balance the expense sheets on such long time scales... Hell, hard to get them to set aside contingency funds for proper maintenance! So it'd be a hard sell.

Just look at the decrepit condition of our buses, million peos secondhand units with bald recapped tires, blown suspensions, wonky brakes and engines 200,000 kilometers overdue for an overhaul...those are the people you're trying to sell an e-Bus to.

Another problem would be the setup of our the local public transport sector. LTFRB should just cancel all franchises and grant it to a large company. But, there's a legal implication to it. Plus baka 1 linggo magrarally yang mga operator at driver. hehe.

Anyway, what I am thinking is pushing CNG/Diesel powered buses in lieu of trains for longer routes. A BRT setup on C5 might be good. For shorter routes like UP-Ikot, an electric jeep setup 'might' be a good setup.

And yes, small operators will have trouble with their financial statements. They don't do capital budgeting shiz.

[EVO-V]

If you're aiming for diminished environmental impact, electric vehicles are the worse examples of it. The rare earth metals alone required to produce one Prius will make you cringe on the equivalent toxic refuse that's ejected into the environment.

Carbon neutrality is a funny concept at times, but if that is the aim, our power sources mix, especially with the increased demand from e-vehicles will not get there any time soon.

We exist in a world where the economics of exacting power from hydrocarbons is still more economically viable than anything else. That said we need to re-assess how we use hydrocarbons better rather than shift to currently economically infeasible alternatives.

Stringent environmental standards and strict enforcement will weed out the unfit.

It is no longer an excuse for these operators, considering their access to capital and the profits they make, to not spend for their right to earn their money. If they don't want to comply then they can get out of the industry.

[niky]

Actually, the Prius batteries are recyclable. Studies on the effects of nickel mining also often ignore the fact that all those American SUVs use tons of nickel for wheels, grilles, chrome trim and interiors.

And it's not like the rest of the metals included in every single car on the road, steel, aluminum, magnesium and lead, have zero environmental impact, either.

[EVO-V]

Actually, the Prius batteries are recyclable. Studies on the effects of nickel mining also often ignore the fact that all those American SUVs use tons of nickel for wheels, grilles, chrome trim and interiors.

And it's not like the rest of the metals included in every single car on the road, steel, aluminum, magnesium and lead, have zero environmental impact, either.

The batteries on the Prius are the least of the problems. The rare earth elements used in the drive and recharging systems make it particularly less green.

[niky]

It's also possible to make motors without rare earths. Rare earths just make better motors.

Besides... it's not much per car. And you will only ever have to acquire those metals once, and when the hybrid is disposed, they can be recycled. A Prius is touted to be over 85% recyclable. Which is well above par for automobiles, since many cars are merely 75% recyclable.

Some of the headaches included in recycling cars are the glass (mixed laminate... cannot be easily recycled without burning the plastic off) and the plastics, which are usually not the type recyclers take. This is probably what is pushing the move to more hard plastics in the cabin...