In 1934, Citroen produced the first integrated unibody vehicle, the Traction Avant, which was made for over 23 years and sold 760,000 units. It was the first iteration of the monocoque (meaning 'single shell') chassis: an integrated body and chassis that formed spot-welded and deeply stamped steel sheets into a structural cage from which other components were hung to construct a complete vehicle. Most manufacturers are using, or have used, this process to mass-produce passenger cars and light commercial vehicles.
This environment is now being transformed by the production requirements of battery electric vehicles (BEVs).
With the increased cost of manufacturing BEVs – due to the high cost of batteries and the requirement to reduce the retail price to make them comparable with ICE vehicles – the BEV manufacturing process has to become more cost-efficient. The monocoque manufacturing process is common across most original equipment manufacturers (OEMs), and this process has been used successfully for over 50 years. But Tesla and many other OEMs have announced that they'll be changing their BEV manufacturing processes.
This has been enabled by the improvement in new 9,000 tonne giga-casting (the casting of large complex body parts) processes developed by Idra Group in Italy. Idra produces a sub-casting for both the front and rear of the Tesla's Model Y vehicle, leading Tesla to change its Model Y manufacturing process from monocoque to an 'unboxing process' of assembly. This improves efficiency as it enables the vehicles to be constructed in modules that include a front, rear, battery, and floor section, with the sides and roof being added as the final part of the assembly process.
Also called global automotive modular evolution (GAME), the unboxed process uses giga-casting at the rear and front of the car, these are subframes, allowing Tesla to manufacture both sections in a number of independent modules which are then brought to one central assembly plant. This process should be fully operational in Tesla's main plants in 2024-2025. It's expected that other manufacturers are looking to use this process in 2024 and beyond, including Toyota, Ford, and Kia, among others.
Crucially, it also removes over 100 stamping and welding steps in the production process, reducing the vehicle’s production cost and making it lighter.
Front and rear giga-castings are then attached to the vehicle’s battery, which forms the central part of the chassis. The battery then becomes a core component of the vehicle's chassis. Before the sides are secured to the battery and giga castings, the OEM is able to use robots to install the interior of the vehicle, including carpets, seats, dashboard, and so on. This speeds up production processes and further reduces costs as there's less labour involved.
Tesla explained at Tesla Live 2023 that the company believes that the giga-casting and modular approach to constructing a vehicle could reduce its factory footprint by approximately 40% and total cost of production by 50%.
If we look at this from the opposite perspective, OEMs would reduce both their costs and capital investment in production processes. It could also enable OEMs to build a BEV for c. USD 25,000. Tesla has indicated that such vehicles would be the Model 2 (Project Redwood), a compact SUV. The price of a small SUV would be c. USD 25,000, with some pundits in the UK suggesting that it would be £25,000 (not a straight dollar to sterling swap), which is broadly in line with a current ICE SUV.
The market share of BEVs in the UK has stalled at around 16-18% of total new vehicles registered in 2023. The high price of BEVs has been one of the core catalysts for consumers not purchasing them. However, a much lower-priced BEV, such as the Tesla Model 2, and increased legislation arising from the UK ZEV mandate could once again ignite demand for BEVs. Tesla hasn't provided a precise launch date for the Model 2, but production is expected to start in the second half of 2025.
We anticipate a double "S" curve for BEVs, as illustrated below.
Currently, BEVs are too expensive for the average consumer, which has resulted in a plateau in market share (15%-18%) in the UK for 2022-2023.
The first “S” curve represents the earlier adopters. However, to see a stronger demand curve that will start in 2025-2026, BEVs will need to be significantly lower priced than they currently are.
What remains unclear is how the legacy OEMs will react to the Tesla Model 2, priced at $25,000. Some OEMs are already developing their own GAME processes and will be able to compete with Tesla. However, the timeline for this remains unclear.
For more insight and guidance, get in touch with Owen Edwards. 
