Maybe not a full-scale brand like Toyota or Honda but a “boutique” sports car manufacturer such as Pagani, TVR, Rimac, etc. Some processes can probably be performed by hand (assembly, welding, painting, etc.) and not need expensive ABB, Fanuc, Dürr, Samsung, Kuka, etc. robots. Also: things like engine, transmission, differential, brakes, steering/suspension, airbags, sensors, lights/reflectors such as Hella 4169 etc. can probably be purchased instead of manufacturing yourself.
Expenses I can think of:
- Establishing the actual corporation, LLC, etc
- Buying/renting a large warehouse
- Sheet metal stamp/press for body parts
- Metal forge for suspension components
- Mold for polypropylene bumpers
- Mold for ABS parts (mirror caps, handles, etc)
- Machine to create all the glass
- Fiberglass station
- Welding equipment
- Paint line, paint booth and oven/curing
- Interior/upholstery department
- Storage aka parts department
- Lifts/dollies/conveyor belts for assembly line
- Crash testing 7 or more cars to legalize them
- Getting the cars federalized/legalized/homologated
- Getting the factory certified, similar as above
- Payroll for managers, marketing, laborers, janitors, maintenance, etc.
- Insurance and lawyers
- Upfront capital for purchasing raw materials
Obviously the starting price would be several million dollars even in a country like Vietnam, India or Mexico - but does anybody have a more specific answer? Can it be done for under $10m? Under $50m? Under $100m? Under $250m?
It would probably be low volume production due the cost effective nature, but the number still interests me.
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I think that you’d want to start as a “kit car” company like Local Motors, Factory Five, Superformance, Rossion (Q1), etc.
Kit cars don’t have the same regulations as production cars. The testing for these regulations (crash testing, etc) will cost many millions of dollars to complete.
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Economic barriers to entry are typically listed as the key hurdle in new entrants to the car industry. This may come down in the future as skateboard electric power trains become more widespread.
But it’s not just stuff you think you can make yourself, a lot of it is finding and ordering parts from those parts that already exist. Sourcing parts and establishing contracts for delivery and quality and having the cash to pay for those is insanely complex.
That said, of course you can become a coach builder for very little money relatively speaking. This means churning out one offs at huge sale prices because you can replace expensive equipment (see: capital investment)with inexpensive equipment and labor.
Scaling is damn near impossible and almost killed Tesla numerous times - it will probably kill some of the newer competitors like Lucid over time once VC firms are no longer subsidizing loses
Can we define start? Like do you mean just open the doors and introduce a concept/prototype, actually making it into production, or how much you’ll spend before turning a profit?
For the sake of argument, we can explore one and/or the other. I suppose profitability is more nuanced because it has more to do with “playing your cards right” (designing the right product, marketing it well, etc.). Whereas the manufacturing is more of a base cost, regardless if the product takes off or not.
I was the 309th employee at Tesla back in 2009, I was sub 200 at Lucid Motors. It takes an absolute mountain of cash to start a car company… As a field engineering technician, I assisted at crash test for a many weeks, and the money it takes to do this is insane…That combined with actual production factory setup, stamping tools, dies, etc… Imagine a bonfire of cash fed by a dump truck.
Speaking of which, I really don’t see how the Cybertruck passes any of that crash testing safety stuff / pedestrian safety.
You might not see it because you have zero fucking clue what you’re talking about lmao.
But the experts who approved its safety rating sure do! Sounds like you should lose some more money shorting Tesla
Are we talking hundreds of millions, or hundreds of billions? And either way, how much would that scale down for a smaller operation, something like what Factory Five does?
Genuinely asking and curious, to be clear. The number of “moving parts” in big businesses boggles my brain to the point that I wouldn’t even know where to begin.
You can check financial statements for these recent EV startups to get an idea but Lucid lost $631M in Q3 this year. Their cars cost $470M to make, R&D cost $231M, and business costs were another $190M. They only had $138M in revenue. I think Lucid’s costs are wildly out of scale and probably something fishy is happening behind the scenes but that’s a data point
I love that the first use of capital is filing the llc papers, like a $150 cost.
Yes yes yes there’s establishing the articles of incorporation and legal costs, but its still funny in comparison to the other costs required.
This is a fun thread to think about
Looks like a high schooler doing homework about a fancy car start up lmao. Like all the mold this mold that which exist and operate by themselves, just sitting there to be ordered ~ rolled eyes
They’re also usually C corps.
i’m either blind or you did not mention probably the most important thing, engineers and designers.
Bout tree fiddy
It can varry depending on how you want to scale it just like any business. not everything has to be crashed and tested to meet NHTSA standards, companies like SCG I recall do not or didn’t do crash tests, cars sold in limited quantities don’t have to be crashed long as they are sold under the 250 limit a year of which would mark them as a kit car manufacturer which I recall some former automotive company did years back to not get into trouble with the U.S goverment. As for companies like Pagani and Ghost Squadron vehicles, there’s been exemptions under show and display that let them bring the cars into the states without a crash test of said models. I know the egg did crash tests with the same reusable chassis which is actually really cool but most companies do not have that level of engineering and care because of our capitalistic approach.
TLDR: cost can be very low if you can start from scratch if you really wanted to out of your own garage post material marketing molding manufacturing like many other companies have done with tube frame kits such as DF Goblins and various other that just borrow other platforms: G35 vaydor as an example. however the higher you want to reach a level of standard the more it will cost an it gets expensive real quick to the point profitability becomes non existent as an actual car manufacturer unless you go mainstream and sell in mass which just means more and more money dumped into the company.
I’ve worked at multiple startups, and I’d say the average investment needed before a vehicle was on the road was $1.5b, and before a real sale occurred to a member of the public, closer to $2.5b
Billions. I remeber reading somewhere that bringing a completely new car to market for gm cost about 1 billion dollars. So it has to cost more for a new company with nothing to do it surely.
As the most recent example of a new manufacturer building at scale, it would be interesting to see how much money Ineos used to capitalise and spin up their automotive division that builds the Grenadier.
You could do it much cheaper depending on you definition of “car”. Custom designed and built monocoque? Very expensive. Glorified kit car? Much easier!
- Tube frame chassis are easy to build by hand with a few jigs.
- Use other OEMs suspension, engines, transmissions.
- Register each car separately as low volume rather than attempt type approval
These guys build road legal cars and sell them to the general public https://www.mksportscars.com/
They definitely did not start with hundreds of millions of seed capital.
Ineos could be a good example. They publish Annual Reports since the start of the company in 2018.
Uh, years of R&D before anything is brought to market is probably quite expensive. Way more than “a few million”.