Porsche Taycan - premium EV production powered by sophisticated purchasing and logistics

Porsche is putting enormous effort and investment into its first fully electric vehicle - the Taycan. Albrecht Reimold, Member of the Executive Board responsible for Production and Logistics explains to Lawrence Davies how production and logistics are key to what could be the carmaker’s most important launch since the 911

The Taycan is a giant step for Porsche, with €6 billion ($6.83 billion) in investments and 1,200 new employees taken on for the launch, the EV fits into the ongoing development of Porsche Production 4.0 and an unparalleled knowledge campaign rolled out throughout the entire company: in firmly committing to electric mobility, the sports car manufacturer is undergoing a process of major change.

Porsche EV - a fast and profitable sports brand?

Not since the change from the 356 to the 911 in 1963 has the German sportscar maker seen such a dramatic shift in product, production, purchasing and logistics, as Lutz Meschke, Deputy Chairman of the Executive Board and Member of the Board responsible for Finance and IT at Porsche tells me. “We predict that over 50% of Porsche models delivered from 2025 will be electrified,” he says.

Porsche has been the most profitable carmaker for nearly 50 years and has said that its healthy 10-17% profit margin is still a realistic objective. The changes will involve substantial investments in fields such as development and production, as well as staff training. Despite this, the target profit margin of at least 15% remains unchanged, says Meschke: "In addition to efficient processes, the revenue from digital products and services should also increasingly contribute to our economic success.”

Flexible and lean production

Not since the change from the 356 to the 911 in 1963 has the German sportscar maker seen such a dramatic shift in product, production, purchasing and logistics, as Lutz Meschke, Deputy Chairman of the Executive Board and Member of the Board responsible for Finance and IT at Porsche tells me. “We predict that over 50% of Porsche models delivered from 2025 will be electrified,” he says.

Porsche has been the most profitable carmaker for nearly 50 years and has said that its healthy 10-17% profit margin is still a realistic objective. The changes will involve substantial investments in fields such as development and production, as well as staff training. Despite this, the target profit margin of at least 15% remains unchanged, says Meschke: "In addition to efficient processes, the revenue from digital products and services should also increasingly contribute to our economic success.”

Flexible and lean production

One example of an efficient approach is the new Taycan production and assembly facilities currently being built as a ‘factory within a factory’ at the main plant in Zuffenhausen. This development signals Porsche’s move away from the traditional principle of an assembly line. Albrecht Reimold, Member of the Executive Board responsible for Production and Logistics, explains: “By applying flexi-line production, Porsche will become the first vehicle manufacturer to use driverless transport systems in a continuous series production process.” This will enable the sports car brand to combine the advantages of the traditional principle of continuous production with the flexibility of versatile assembly. It will also allow the number of work cycles to be increased using the same amount of space. Following the concept of “smart, green, lean”, Porsche is also pursuing resource-friendly production. The Taycan production process is carbon neutral, with the future goal in production being to establish a complete zero-impact factory, a factory with no environmental impact.

Purchasing and preparing for EV success

Behind the scenes, Member of the Executive Board for Production Albrecht Reimold is creating key prerequisites for the company’s economic success – an extensive search for new and advanced suppliers, efficient processes to cope with the high demand for customisation and the resulting high level of complexity and sophisticated logistics and supply chain management.

The new Taycan production facility is currently being built in Zuffenhausen, with around €700 million being spent on the buildings and facilities alone. SOP is planned for mid-2019. I ask Reimold if everything is on schedule; he says his business units are keeping to their timetable. “The buildings were completed and most of the production facilities were installed by the end of 2018. We were able to start pre-series production in the new technical sections as we moved towards full production.”

Considering that the Taycan will be a niche model with predicted sales of 20,000 units per year, I wondered why it needs its own paint shop and assembly line. Reimold explains that production of our two-door sports cars in Zuffenhausen is nearing maximum capacity: “We currently manufacture around 250 vehicles per day. This assembly line no longer has any capacity flexibility. This is why we took the decision to build a new paint shop and assembly area as we firmly believe the Taycan has the potential to sell more than just 20,000 units per year. The new manufacturing facility gives us the requisite flexibility for the future.”

Taycan and 911 - flex lines

Given this observation, I ask Reimold if the new Taycan production facility could also be used to assemble the 911 product line. He says that this is possible. “All facilities are designed to be flexible, including those in the body shop as the Taycan will be assembled on an FTS Flexi Line, which could be 40% cheaper than a conventional skillet system.” I am intrigued by this and press him as to where he finds the cost advantage. He says that savings relate primarily to the structural conditions. “A conventional production line, which is significantly heavier than the FTS conveyor technology, would have incurred significantly greater costs in terms of the higher static design of the multi-tiered structure. Another advantage is how relatively straightforward and quick it is to install this kind of system. We are already reaping the benefits of this for the Taycan. The FTS system is easy to move, so we have set it up elsewhere for pre-production testing and are now moving it into the new production hall.”

Porsche is focusing heavily on driverless transport systems (DTS) and is moving away from conventional lines and I ask Reimold to what extent will this approach find its way into 911 production. He says that the flexibility that these systems afford is transferable to 911 production but there are challenges with legacy issues. “The ‘flexi-line’ offers huge benefits in terms of flexibility and investment – we’re talking about savings of around 30-40% here. But a brownfield plant like the one used for 911 production cannot simply be converted overnight.”

Digitising the world’s most popular sportscar maker’s processes

There is much talk of the rise of EVs leading the industry to a new industrial revolution - many observers are calling it Industry 4.0 and I ask Reimold how he sees the technical and, above all, economic advantages of digitalisation in production, i.e. the concept of the smart factory? “People often refer to Industry 4.0 as a revolution. I see it differently. Today, we are continuing to build on what we have created in the past in terms of automation, simulation and virtual product and manufacturing planning. With a greater level of digitalisation and networking in the factory in the future, we are essentially pursuing four objectives: First is optimisation of planning and digital simulation; second is ensuring complete real-time control of the manufacturing process from order acceptance at the dealership to vehicle delivery; third involves the continuous recording and analysis of deviations that occur in the manufacturing process in relation to parts and to the process itself. The fourth and final point is the provision of greater support for people in their day-to-day work.” I ask him to be more specific examples on his last point and he says that the human-machine relationship is key to streamlining new processes. “On the one hand, digitalisation helps us to make the working environment more ergonomic. Human-machine cooperation is a good example of this. It also helps employees to analyse complex processes and procedures that we would not be able to monitor and control without modern data technology. For example, it creates transparency as to where and why a digital flow may not follow the most ideal path. We can then see potential that we might not otherwise detect.”

Sustainable sourcing and production makes good economic sense

Porsche, like most OEMs, consistently promotes the concept of sustainability and has already implemented this philosophy a great deal, including certified alternative energy at all sites and climate-neutral rail transport. Reimold says that sustainability makes economic sense but that it is a complex challenge. “Our previous experience indicates that, overall, sustainability is cheaper. However, it may sometimes cost a little more because it is the right thing to do for the company and for society in general. Promoting sustainability is always better than not doing it. After all, the indirect benefit is also important – doing a good deed for our environment and the world. Ultimately, sustainability is a puzzle made up of many small, individual actions that will one day combine to achieve a major, tangible success.” I ask him to be more specific and he says that suppliers must also play their part in improving sustainability. “We intend to use a range of individual measures to create a Zero Impact Factory, which is not only carbon-neutral, for instance, but which manufactures products that are 100% recyclable. This will ensure we are not taking away any more precious resources from Mother Earth. We also have to convince our suppliers to join us on this journey.”

I wonder where Porsche is on this ‘journey’? Reimold says that the Taycan project has been a good starting point. “With the Taycan project, we have deliberately begun to focus on sustainability in terms of both material selection and process design. Of course, the complete transition cannot be achieved overnight. But we are working on it. We are already about to achieve a milestone on this path: start of production of the Taycan in Zuffenhausen is expected to be carbon neutral.

“The Zero Impact Factory is our vision for 2025. We still have a great deal to do. But we can’t make progress without a vision.”

Producing Porsches close to the customer - the US and beyond

Porsche management have told me in the past that establishing a Porsche production site in the US or China could be a possibility and I ask Reimold if this attitude has changed in the light of geopolitical changes and aggressive market influences. He says that the decisions will be capacity-driven: “Solely for reasons of capacity, there is currently no pressing reason to commit ourselves to other production facilities. We are, of course, also dealing with current changes, whether it is the punitive tariffs being introduced by the US or the localisation rates that foreign automotive manufacturers have to comply with in China. We are keeping an eye on new framework conditions and legal requirements so that we can react quickly if necessary. Nevertheless, we are not making any specific plans at present. From our point of view, there is currently no compulsion to react in the short term.

Leipzig plant coming of age

Several hundred million euros are being invested in expanding the Leipzig plant in the former East Germany and the next generation of Macan is expected to roll off the production line there after 2020. Since the foundation stone was laid in February 2002, Porsche has invested more than €1.3 billion in the development of the Leipzig plant, transforming a pure assembly plant into a fully fledged factory, as Reimold says: “We manufacture the Macan and Panamera in full there and have also become a VW Group supplier – currently of vehicle bodies for Bentley’s Flying Spur, Continental GT and its convertible variant. The renewed expansion in Leipzig will future-proof the factory, also because the location offers the most favourable conditions in terms of investment requirements and operating costs. This is the result of an internal invitation to tender, that was won by Leipzig.”

Being more specific, I ask him what the technical highlights of the future Macan production in Leipzig will look like. He says that the largest single investment planned is a new and highly flexible body shop, with a view to achieving an increase in model variance. “The requirements of lightweight construction are continuing to increase. This means an even greater material mix, which we also have to master in production with the associated innovative joining technologies. For the new Macan, we will use aluminium mixed with high-strength steels, a combination not previously used in this vehicle.”

Suppliers help saving cost and logistics overlap with 911

I ask Reimold how suppliers can contribute to cost optimisation measures, he says it is as much about avoiding duplication and improving material handling as it is about the cost of the components. “A factory works in a highly efficient manner if the right material is available in the right place at the right time – at the best possible cost. We work very closely with our suppliers to achieve the optimum result in this area. In doing so, we analyse the processes between the supplier and ourselves very precisely, for example using test items. The question on our minds is: can we eliminate costly duplicate work?”

I ask him if there will be two separate plants on one site, with the Porsche 911 and Taycan being produced independently or will there be synergies in production and logistics? He says that there will be some overlap. “Yes, there are overlaps, starting with the logistics processes, and we are also building a new paint shop that all models could be painted in. We have built lots of flexibility into production so that the 911 can also be produced in the Taycan assembly plant – though not vice versa.”

I wonder if this means that if the Taycan does not get off to as strong a start as anticipated, Porsche could utilise the line for a petrol-engined model? He says it could be done but that he sees the Taycan as all-EV: “Yes, we have the technical capacity to do that; but we are absolutely certain that it won’t be required. Based on feedback from the market, the calculation of 20,000 Porsche Taycan models in the first year may be a rather conservative estimate. I’ve had the pleasure of driving the car myself, and I can only say it’s absolutely fantastic! Which is the response we’ve been hearing from all sides.”

Partnerships and a personal view

Reimold has been the member of the Board of Management for Production since 2016 and on a personal level, I wonder what inspires him about being with the sports car maker in this area. He says the combination of producing bespoke vehicles and Porsche’s sophisticated purchasing, production and logistics network keeps him constantly inspired. “It is the challenge of showing a high level of individuality while at the same time designing a highly efficient manufacturing system that makes individuality possible in the first place. This is the only way that we can master the complexity resulting from the diversity of customer requirements – in production, logistics and interaction with our suppliers. Porsche traditionally has a low level of vertical integration at around 20%. Our partners undertake excellent work on our behalf, both in terms of technology and organisation.” 

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