Dyson has abruptly cancelled its secretive electric car project, citing a lack of commercial viability. It had been pitched as being ‘revolutionary’…
Returning The Keys
When Sir James Dyson announced that his company would be designing and manufacturing a ‘revolutionary’ electric car, eyebrows were raised. This wasn’t necessarily plain cynicism, either. The company is known for its home appliances and cutting-edge vacuum technology. In addition, cracking the automotive industry is notoriously tricky. Profit margins are extremely tight and global market conditions are increasingly competitive. This is even more so the case for electric cars, which remain a niche segment of the industry; despite immense investment and government-backing. To many, then, it’ll come as no surprise that Dyson has scrapped the project for not being “commercially viable”.
In an email to employees Dyson wrote, “we have tried very hard throughout the development process, we simply can no longer see a way to make it commercially viable”. Stressing that the car hadn’t been a product failure he added, “the Dyson automotive team has developed a fantastic car; they have been ingenious in their approach while remaining faithful to our philosophies”. He stressed that efforts would be made to protect the some 500 jobs employed in the company’s automotive division. In addition, he suggested that the technologies developed for the vehicle, which had received a £2.5 billion investment, would be used elsewhere.
It’s Hard Because It’s Too Easy
Dyson is a highly profitable global enterprise boasting some of the top engineering talent in the world. Having announced the EV project back in 2017, its put together an EV that’s (according to reports) functional in of itself. Insiders claim that the first of the vehicles had been assembled and were being tested before the cancellation announcement was made. But despite the company’s talents, they’ve demonstrated a problem with EVs; they’re too easy to make. Think about it, a traditional car that uses a combustion engine has around 30,000 individual parts and components. An electric one, however, will use around 11,000. So it’s not surprise that an enormous amount of both legacy and start-up automakers have taken to building them.
The result of all this enthusiasm, accessibility and competition are incredibly small (if any) profit margins. Everyone’s making them and exceptionally few people are buying them; in the UK, all-electrics represent around 1% of the market. Leviathans like the Volkswagen Group can afford to invest billions on cars that won’t make them any money. Perhaps with the hope that, in time, consumers will develop a genuine appetite for them; if they’re not forced to via legislation. Dyson should have considered the story of Elon Musk and Tesla, which is even more remarkable given the amount of failed projects over recent years.
Excellent Cars, No Money
A decade ago, who knew of Tesla? Well, not many people outside of California and the broader United States. Now, however, it’s a global automaker with an impressive range of manufacturing sites, technologies and awards under its belt. It’s done what many people said was impossible, it’s forced its way into a fiercely competitive, stubborn and ruthless industry; largely dominated by players who’ve been around for decades or longer. Even more impressively, it’s done this by rolling out exclusively electric cars and long before anyone sincerely believed that they had a future, let alone a bright one. Yet, despite all of this, Tesla isn’t making money. In fact, it’s only report back-to-back profits once and that was in the fourth quarter of 2018. They’d made $139 million, which is loose change for car makers.
Tesla has been extremely successful in raising capital via investment; and lucky in that its CEO, Musk, has been willing to dip into his own pockets to keep the project alive. For Dyson, this simply wasn’t viable. For a start, it was planning on tapping into Asian markets, especially China. Which is why it had controversially relocated its headquarters to Singapore (Dyson is an outspoken Brexiteer). But China has a surfeit of EV manufacturers and its automotive industry is experiencing extreme difficulties; with sales and consumer confidence declining considerably. Reports were that the Dyson vehicle would be upmarket, not something for the average consumer. This implies that the plan wasn’t to pursue vast, volume production. That’s usually a safer bet as the luxury segment is usually more stable. So the failure of the project is even more telling.
Still, A Darn Shame
Many people will know doubt feel like saying, ‘told you so’. But the failure of Dyson’s project is lamentable for a number of reasons. Most obviously, it’s bad news for the 500 or so experts and highly-skilled staff that now face the prospect of losing their jobs. It’s bad news for motoring enthusiasts who were intrigued and excited about what the vehicle might be like and whether it truly was ‘revolutionary’. The technology, after all, was supposedly unlike anything we’d seen before. But more generally it’s bad news for electric cars. Whilst few people doubt that we’ll all be ditching combustion engines sooner or later, the transition is taking a long time. Billions of pounds worth of investment, government and activist agitation and vast marketing campaigns haven’t really animated consumers.
The problem with electric cars is that, whilst nearly all of us expect to drive one soon, most of us aren’t serious about getting one; the neighbour should get one first and we’ll observe how they get on. They’re simply a day-after-tomorrow concept for most drivers. Until this changes, can we really expect automakers to invest billions when they’ve no real reason to expect to see a return? Old habits, after all, die hard.
We’ll Refer To Electric Cars As Just ‘Cars’ By 2030 – https://autoserve.co.uk/motoring-news/electric-cars-just-cars-2030/
Electric Car Drivers Could Save £41,000 Over A Lifetime – https://www.autoserveclub.co.uk/blog/electric-car-drivers-save-41000/