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The Bugatti Veyron. What was the point?

Clarke Gable was a big fan of iconic British sports car maker, Aston Martin. Legend has it that he once visited the factory in Newport Pagnell to see the latest model being built. Following a tour of the workshops and an agreeable lunch, the Hollywood legend turned to David Brown, the then entrepreneurial owner, and said “I’d like to own one of these new Astons. But as a famous movie star, I’ll bring valuable publicity to your company, so I’d only like to pay cost price.”

“That’s awfully decent of you Mr. Gable” replied Brown. “Most of our customers pay around £2,000 less than that.”

I’m reminded of this story because Volkswagen Group has just sold the 450th and final Bugatti Veyron, marking the end of one of the most exclusive supercars ever built. The last Veyron (imaginatively named La Finale) will be on display next week at the Geneva auto show before heading off to its new owner somewhere in the Gulf.

In all 450 Veyrons were sold for an average price of about EUR 2.3m each. Sounds good? Analysts Sanford Bernstein estimate that VW lost a jaw-dropping EUR 4.6m on every Veyron sold, putting David Brown’s negative margins in the shade and making the mighty Bugatti one of the biggest financial failures in the history of car-making.

Assuming the analysts are right, the group would need to sell more than 5,000 Polos to recover the cost of selling one Veyron. VW, which shifted 10.14m cars last year, can easily afford this kind of vanity project. Even losses of EUR 200m per year amount to less than rival OEMs spend on Formula 1.

And like F1, the theory is that prestige projects such as the Veyron showcase the technological excellence of the parent company. But is anyone really buying a Golf on the strength of the fact that a tiny, elite sub-set of the VW group is able to make a car which is capable of 253mph and convey its owner to the opera in comfort and style? I’m not convinced.

Mazda famously used the now iconic MX5 roadster as a “halo car” to raise the sporty credentials of its otherwise ordinary family models. But the MX5 is a perfectly attainable proposition for most Mazda customers. It could easily be a second car, or retirement treat. It’s a common sight on the roads, helping to lend the marque a more youthful, fun image. And whether it actually raises the status of Mazda’s saloon car range or not, the MX5 has always made a healthy contribution to the bottom line. It makes sense. I’m not so sure the same can be said for Dr. Piech’s masterpiece, brilliant though it is.

Personally, I think I love and hate the idea of the Veyron in equal measure. I admire the undeniable feats of technical excellence and refusal to compromise on the part of the engineers who created it. At the same time though, I can’t help but find it vulgar, excessive and a little pointless. 10 radiators? 8mpg urban? EUR 28,000 for a set of 4 tyres that have to be changed every 2,500 KM?

VW is already working on a successor to the Veyron. No doubt it will be even more spectacular than its predecessor. Doubtless the well-heeled of Moscow and Dubai can’t wait to find out what it will look like. I’m more interested to know if VW will find a way to make it pay for itself.

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Will you be printing your next car?

The quick answer is: probably not. Not if you’re buying it within the next 20 years or so. But longer term, major advances in 3D printing (or additive manufacturing) are set to kick-start a new industrial era and the automotive industry will see profound change as a result.
 
Last week at Chicago’s International Manufacturing Technology Show, Local Motors, a low-volume maker of open-source motor vehicle designs, showed off the Strati, the world’s first automobile to be created entirely using direct digital manufacturing. In doing so, they might just have given us a glimpse into the future of automotive design, production, distribution, marketing and service.
 
It took 44 hours to print the cars 49 key components using a massive 3D printer called a BAAM (Big Area Additive Manufacturing) machine from Cincinnati Incorporated. The BAAM can render 18 Kg of carbon-reinforced ABS plastic per hour, and is large enough to produce the body as one single piece. During the show, the Local Motors team assembled the printed pieces, dropped in the engine and bolted on wheels, tires, seats, windshield, and interior. Today's average production passenger car has between 5,000 to 6,000 parts, making the Strati a remarkable study in simplification if nothing else. The complete vehicle tips the scales at around 680 Kg, including a drive train taken from a Renault Twizy EV that propels it to a top speed of 40 mph with a range of 120 miles. An IC engine could be fitted, and Local Motors have set themselves the goal of getting the Strati to run at highway speeds. According to Local Motors CEO, Jay Rogers, a base-model 3D printed car could sell for about $18,000 once production ramps up.
 
The quality, speed and cost of 3D printing will have to improve significantly before the process can be used to create actual components sold to regular customers, still less complete vehicles locally assembled while you wait. But the technology is improving daily and the benefits it promises are compelling. Imagine being able to configure your highly personalised vehicle, place the order and be driving it within a couple of days. And consider the efficiency and environmental benefits. Traditional manufacturing is pretty wasteful and dirty. 3D printing offers the potential to cut waste and reduce carbon footprints significantly. Fewer materials are wasted, as only the raw materials needed to create the object—be it plastic filament, metal powder, or carbon fibre —are actually used. Then there is the potential to remove inefficient transport from the production process. Today components and vehicles often travel across many continents to get to their final destination. With 3D printing, the production and assembly can be local. Raw materials are the only things that will ship, and they take up far less space.
 
A number of OEMs already use 3D printing to create prototypes and test parts. When the technology percolates down to the production level, high-end and niche automakers will likely benefit first, though the potential is clearly there to transform the efficiency of making OE and replacement parts for any mainstream vehicle.
 
It’s very clever stuff and we can expect to see plenty of exciting announcements over the coming years. Perhaps the biggest fly in the ointment (or resin) will be in the form of intellectual property threats. 3D printing will mean that expensive components can be reverse-engineered or replicated and sold at cheaper prices more easily than ever before. The black market in counterfeit components already costs the industry billions each year. More importantly it costs lives as a worrying number of accidents are caused or exacerbated by sub-standard fake parts bought, often on-line, by unwitting consumers. Protecting their IP, their reputation for quality and their customer's safety will be major challenges for all industrial companies in what many are already calling "the next industrial revolution".

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Can automakers learn to embrace cyber security?

A group of IT security researchers have called upon the car industry to ensure cars are built to withstand attacks from cyber criminals.

The group, which calls itself I am the Cavalry, formed at last year’s Def Con security conference to try to promote greater cooperation between the IT security community and the consumer goods manufacturers. It has written an open letter to the CEOs of the major car companies, urging them to take the issue of automotive cyber security more seriously. Specifically, it is asking automakers to sign up to the Five Star Automotive Cyber Safety Program which sets out five key ways the industry can make its products safer. These include: safety by design, third-party collaboration, evidence capture, security updates, and segmentation and isolation.

The modern vehicle is effectively a computer on wheels. It is heavily controlled by software and embedded devices and increasingly connected to the internet in order to take benefit from a growing number of infotainment and safety applications. Just like any other computer connected to the web, the modern car is capable of being hacked.

Should we be worried? Probably. At the extreme end of the threat spectrum is terrorism. The advent of vehicle connectivity happens to coincide with the replacement of previously mechanically governed systems (brakes, steering, throttle control) with electronically governed by-wire systems. It will (in theory) be possible for determined, well resourced terrorists to make vehicles crash. Regardless of how many fatalities resulted, it is likely that thousands of people would be fearful of using their vehicles for a time and the resulting disruption and economic damage could be significant. Of course such an attack would require extraordinary coordination and would be fiendishly difficult to carry out – perhaps more so than other, more low-tech options available to terror groups.

There is also a concern that malware of any kind, even that created for “sport” by hackers (like many of the viruses which plague PCs) could enter the vehicle via the infotainment system and permeate safety-critical systems, whether intended or not. While there are good reasons to worry about the vehicle safety implications of car-hacking, history suggests that the connected car has more to fear from good old-fashioned theft and extortion. Picture the scene. You return to your vehicle on a cold, dark evening. Your electronic key will not open the doors or start the ignition. You receive an SMS from the criminal gang who have hacked the vehicle demanding an electronic payment of EUR 100 to unlock the vehicle. Vehicle connectivity opens up countless new opportunities for relatively low-level financial crime perpetrated on a mass scale by criminal gangs, whether the driver’s financial details are stored on-board the vehicle or not.

Look at the last 20 years of security challenges in credit cards, ATM machines, on-line banking and e-commerce. Again and again, criminal gangs have found it relatively easy to recruit talented IT experts, to share information internationally and to devise cunning methods to commit fraud and steal money from banks, businesses and their customers. Information is shared, bought and sold on the so-called dark web and new methods can be rolled out so quickly, it’s difficult for even the most responsive companies to prevent attacks.

If they are going to protect their customers’ safety and security, not to mention their own reputations, automakers and their suppliers will have to get very serious about secure hardware and software. The will need to embrace encryption. But they will have to do more than that. They will have to re-invent complex, global business systems and processes within their own organisations. From the R&D centres right on down to the dealerships, they will have to become companies which have security at their core. Remember the old cliche about the chain only being as strong as its weakest link? More often than not the weak link turns out to be human. The banks and financial institutions have always known this. They have become masters of digital security, spending billions on technology and systems and still they face a daily battle to stay ahead of the bad guys. The automotive industry has a lot of ground to cover, and not much time, to establish a secure basis for the era of the connected car.

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