Revolutionary UK vacuum cleaner business, Dyson, has failed in its attempts to create a new Electric Vehicle. Curiously, Dyson did everything differently in his attempt to create a car, compared to how he went about his breakthroughs in vacuum cleaners.
James Dyson this week abandoned his electric car endeavors by writing an email to all of his employees, after those on the project were told rapidly that the adventure had come to an end. It was just as abrupt as his confession that he would enter the business four years ago, and just as badly explained.
We have no special insights into the situation, but here are a few observations. James Dyson simply tried design after design for his humble vacuum cleaner, each time trying to make it as different from the originals as he could – new was good, and he did it more or less on his own. But Dyson only confessed this week that his EV design was “not commercially viable” after four years of work, a team of 500 employees, acquiring a battery business, and employing leaders from the car industry, who’s only role must have been to tell him “No, that’s not how you make a car.”
The manner in which Ford, General Motors, VolksWagen, BMW and even Honda have tried to resist the rise of EVs, suggests that the car industry itself is the last place you would seek advice. For the most part they believe that EVs are unnecessary and won’t catch on, despite the issues around climate change.
Of course such people are good for creating a supply chain for all the non-essentials – seats, tires, dashboards, the panels, the steering – but not the drive train or the battery – essentially the only new parts.
When you need to completely “reinvent” something it is best kept in the minds of as few people as possible, between one and four – Dyson had 500 people working on this design.
Speculation and leaks from the industry have it that Dyson was virtually home and dry, he had a design, some prototypes, a supply chain and was about to build the factory, when he realized that his budget of $2.5 billion would be broken, and he may in fact break the rest of the company on his pet project. It’s too late to change it now, but why, you may ask, did he try to set it up in Singapore – sure he wanted to be close to his chosen markets, Asia and China, but why not make it in China or even India, where the workforce would be cheap and where there are already 500 rivals on the road – any of which might need a leg up financially – a cheap entry point.
Also why did he aim for the luxury end of the market? It is already a space occupied by the market leaders and especially Tesla.
He could instead have chosen to tough it out in the power cycle and scooter market, an original new market, taking off in Asia, with no parallel elsewhere.
In China, more than 300 million motorized two-wheelers are on the road, and electric vehicles make up around 10% of these sales and global sales of electric bikes last year reached 40 million, of which China accounts for 90%. That would be a good cheap introduction to build a revenue base that was inside EVs which could act as a springboard into EVs. Perhaps he should have used his chosen EV battery in all his other devices first, and created a separate factory for it, and then supplied it into the EV market directly, before he created his own EV? That would have been a far cheaper strategy.
So what does he do now? It is likely that he may try one of these approaches latterly, especially partnering with those EV makers who he might have competed with, and perhaps offer them a longer lasting battery option. He might, but realistically this is the market that killed him. In our last forecast on batteries used in the grid, we could see that the top ten global battery suppliers had scheduled the creation of battery factories capable of churning out some 839 GWh of lithium ion batteries a year by 2024. This will likely top out at 1,685 GWh by the end of our forecast in 2030.
A new supplier operating in this market would have to spend over $2 billion to create a single factory and over the next five years would likely need one in the US, one in Europe and one in Asia in order to survive. Any player without $6 billion to spare would be at a disadvantage.
And that’s what everyone from the conventional car companies would have been telling him, that and their insistence that all the money is made at the high end of the market (a well known aphorism in car circles which may not be true in EVs) would have been enough to make their attendance toxic.
The truth is that Dyson is great with design, and he should have shut himself in a room with 4 top brains and come out with his own design. What he is not accomplished with is handling people, and he has just been handed a $2.5 billion lesson in this which has little to do with what is possible or not in the car industry.