Economies of Scale are Impressive
April 7th, 2007 by AndrewOn Wednesday I went on a tour of the Honda plant in Alliston. They build Civics there. 800 of them every day, in the one plant I toured (they make 800 more in the other one, plus assorted other models). When you think of the sheer volume of vehicles that actually represents, it’s pretty staggering. But even more staggering is actually seeing it happen, and realizing that cars are not simple products. They are in fact, very, very complicated.
Even a simple 4-cylinder engine has upwards of 40 moving parts, and an entire car is the culmination of thousands of individually engineered parts designed to work as one system. The body panels are formed by gigantic hydraulic presses. The tooling dies for each panel are massive blocks of machined steel weighing dozens of tonnes, and costing millions apiece. The panel fit tolerance on the assembled exterior panels is about one millimetre. Every station on the shop floor has just enough material to last until their next shipment, so the shop floor is a flurry of supply carts carrying parts carefully organized in chronological order. The robot arms, conveyer belts, supply carts, and workers all come together in a pretty captivating dance. It was mind-boggling stuff.
What’s most impressive about this, though, is that automakers are able to deliver a finished product for $15,000. It doesn’t take more than a few pieces of limited-production “designer” furniture to equal the bill of a brand new car (which warrants a whole other rant, really). Car companies are able to do this partly through efficient manufacturing, but mostly because they’re producing vehicles in such enormous volumes so that they can take advantage of economies of scale. While this is clearly unsustainable in an open-loop system where the final products inevitably end up in the landfill, it offers hope for the future. It turns out that a lot of sustainable technologies are a lot simpler than what we use on a day to day basis - an electric motor has exactly one moving part. Battery chemistry already exists for viable electric vehicles, it just happen to be prohibitively expensive because of the volumes involved. One Tesla electric car uses 6831 lithium-ion cells, just like a laptop battery. We make a lot of li-ion consumer electronics, but once enough companies take the plunge and use batteries for transportation, costs will necessarily drop enough to make it reasonably affordable.
There’s no good reason for cars to be as cheap as they are, except that we make a lot of them. Sustainable technology is only expensive until we make enough of it to matter.