Local Motors and the Future of Vehicle Manufacturing

 

Source: Saul Loeb/Getty Images

Source: Saul Loeb/Getty Images

Out under the scorching Arizona sun, the next evolution in entrepreneurship is taking form. A unique vehicle builder, Local Motors, is taking the sharing economy to a whole new level, along with a new and developing system of production. The company, based in Chandler, Arizona, has garnered enough attention to open its own retail stores, secure contracts with some of the world’s largest companies, and even get one of its vehicles into a big Hollywood movie, Transformers: Age of Extinction.

It’ll also be making an appearance in a new video game, and recently made an appearance on NBC’s Today Show for that matter.

So what is Local Motors doing that really sets it apart from the crowd? Well, the answer is just about everything. The company has managed to blend co-creation with the world of small-scale, micro-manufacturing to bring a whole new world of projects to life. One of the most popular of its products, an off-road rally car called the Rally Fighter, is the result of this system in which people from around the world collaborate on designs, and then Local Motors uses 3D printing technology, among other processes, to produce a finished product. By using a combination of crowdfunding and crowdsourced materials, Local Motors has been able to build a company that can set up shop literally almost anywhere, and produce products based on local tastes.

The idea of micro-manufacturing actually goes back to production changes made in Toyota plants, in which the auto maker implemented a “just-in-time” philosophy to improve efficiency and better pinpoint hiccups in the process. Now known as the Toyota Production System, the production setup can produce quality vehicles, one at a time, that fulfill the company’s stringent requirements. It’s the idea of building vehicles one at a time that was the key and the idea of manufacturing on a micro scale that have allowed companies like Local Motors to flourish.

Local Motors Shop Opening

Through Local Motor’s unique business approach, the question does bubble up of whether or not it could, somewhere down the road, pose a threat to the incumbent auto heavyweights. While that is quite an undertaking, there are examples of car companies that have sprouted up from almost nowhere in recent years. Tesla is the first that comes to mind, and it is a company that has also taken a different approach to manufacturing than larger companies like General Motors or Ford.

By utilizing small production factories with lower overhead and crowdsourcing research and development, Local Motors has been able to find a way to circumvent the extremely high barrier to entry on the auto market. Now, it’s true that the company doesn’t produce anything that can compete with any major car companies’ products, at least not yet. But armed with armies of co-creators and a lean manufacturing model are a great way to attack the industry with a small amount of capital.

To showcase that the company has in fact been able to gain some traction, Local Motors has opened retail stores in recent months, along with one of its microfactories, to Knoxville, Tennessee. As the East Tennessee Economic Council released in a statement, the company leased around 20,000 square feet for a new microfactory. The other big piece of news is that General Electric is also planning to build a microfactory of its own in Louisville, Kentucky, in conjunction with Local Motors. The two companies have partnered up through an initiative called FirstBuild, in which GE is looking to take the Local Motors business model and apply it to the appliance industry.

By partnering up with GE, Local Motors has been able to get some big-time validation from a decorated Fortune 500 company. From what it looks like, GE is looking to see what kind of designs it can get from the open source community in an effort to bring some freshness to an industry that has become stale over the years. Thanks to Local Motors’ microfactories and 3D printing capabilities, new prototypes and ideas can quickly be assembled and tested. GE has already been able to reap the benefits of partnering with smaller companies, as seen in its new air conditioner design that was the result of a partnership it put together with New York invention lab Quirky.

Local Motors has put a lot of work into getting its infrastructure into place, and getting some products to market, so what’s next for the blossoming company? Well, its plans are pretty ambitious. In fact, the company plans on opening up to 100 microfactories across the country over the next decade. While that may seem a little too ambitious, it is more than feasible considering the approach the company takes.

By creating so many local microfactories, Local Motors will be able to create much more than it does presently, and allow for tons of opportunities for its base of designers. The small production scale also allows it to take on and complete new orders relatively quickly, and offer residents of nearby communities the chance to become more familiarized with its products due to the vast amount of locations it will be occupying.

The company’s vehicles are already gaining popularity, although most of the attention has so far gone to the Rally Fighter. Local Motors also creates a motorcycle called the Racer, a motorized bicycle called the Ariel Cruiser, and even an adult drift trike called the Verrado. The offerings don’t just stop at vehicles, however. It also produces a number of other products, including furniture, silverware and garage accessories.

What the future holds for Local Motors in uncertain. But by bringing its own brand of micro-manufacturing, lean production requirements and platoon of crowdsourced product designs, it’s primed to shake up an industry long-dominated by an aging business model. It’s obvious that the company is grabbing some attention, not only by Hollywood, but by others in the business community as well. An ambitious plan to quickly take its micofactories to a bigger scale by building up to 100 over the next decade is sure to spread Local Motors’ name even further, and new retail stores will have even more consumers buying in.

While Local Motors may be running a pretty unorthodox venture, the company’s unique blend of crowdsourcing and micro-production may inspire an entire new business model that gains traction over coming years.

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