The working method of the big-league automaker has been pretty much set in stone since Henry Ford invented the moving assembly line. Carmaking isn’t a cottage industry—the formula is big, centralized auto plants supplying a whole country or even a continent. The design guys build some models, the suits (Bob Lutz would call them “bean counters”) decide which ones to actually produce, then a couple years later the new model rolls out the doors and everyone prays that it sells.
With his start-up Local Motors, Jay Rogers wants to reinvent how we make, indeed, think about, cars. Instead of one-size-fits-all manufacturing, he wants to localize the plants, crowdsource the designs and running improvements to it, and only push the go button when it’s clear that people actually want to buy the new model.
Your design basically becomes like the 40-year-old Unix computer operating system, with many hands helping to improve it, flaws ferreted out, and the code all published online. If you want to build a car without the factory’s help, go for it—the plans are there to help you achieve your dream. No one’s ever built a car like that—new model designs are universally a closely held secret—but there’s no reason it can’t be done that way.
Local Motors has put the concept into practice, locating a small factory in Arizona to produce the Rally Fighter, which looks like something Mel Gibson would have driven in Road Warrior IV. The target audience of this Corvette-engined macho mobile is local desert rally enthusiasts, and so far 60 of the $75,000 street-legal vehicles have been sold. It’s not a big number, but then Local Motors doesn’t need to sell many to break even.
“I always had the idea of a small auto company that could change the face of innovation,” Rogers said in an interview. “There wasn’t anybody engaging the potential customers early on. Instead, automakers were just hoping they had correctly gauged the market with the cars they made, and then getting unhappy if they didn’t sell.”
Local Motors provides something called The Forge, showcase for a bunch of ongoing projects. Cruise there online, and you can submit designs and improvements, as well as follow along (in video and blog posts) as the concept moves forward. Local held a contest to select a concept for the Rally Fighter, with design students as contestants vying for a $10,000 prize.
For Domino’s, the company is trying to build an improved pizza delivery car. For Peterbilt, it’s trying to revolutionize the long-distance truck. And for cities, it’s designing a lightweight, build-it-at-home tandem vehicle.
An electric car is very much in the plans. “Absolutely,” says Rogers, an ex-Marine and Harvard Business School graduate. “We’re powertrain excited but powertrain agnostic. We want to make a great-looking EV, a city vehicle, and a boat, too. Basically, there are now so many vendors working on electric systems that you can simply plug and play the best technology in the cars you design.”
That makes sense: Crowdsource a design, have it refined by an online community of 20,000, then source all your components from a rich network of EV suppliers. And you can also subtly alter your design to suit different regions, because the vehicles will be built in many small, local factories, each producing 2,000 cars a year. I like the idea of small, very green countries like Iceland suddenly being able to design electric cars to specs that make sense for their own terrain, weather and social conditions. Here's how the Local Motors concept works:
Rogers looks at Tesla Motors, and likes much of the innovation on display, but balks at the way the company produces cars. “Elon Musk is doing exactly what Henry Ford did,” he says. “Tesla comes up with great designs but doesn’t ask anyone’s opinions of them. To work that way requires big money, and in this case a lot of taxpayers’ money, with no assurance of success over time.”
Rogers adds, “There’s a lot of faith involved there, and we’re unwilling to risk our customer relationships on that approach. We want people to be asked, ‘Do you want to buy this thing if we make it? Does it look good to you?’”
The big question remains: Can this model work? It’s innovative, no doubt, but there are precedents. The Business Insider writes that the Rally Fighter “is a ridiculous vehicle that marks a new way of building cars: small-scale, designed by potential customers, and not reliant on massive production facilities that are expensive to change….Rogers’ business is more flexible than that of large-scale automakers, but he faces other challenges. Among them is the fact that Local Motors must rely on people who are not auto engineers to come up with cars that can be built. Yet there are successful automakers who build small numbers of cars for niche markets: Rolls-Royce. Bugatti. McLaren. Their business models work because they charge so much for their products, they don’t need to sell them in large quantities.”
That explains, of course, why Local Motors started out with a fairly gaudy rally car. “In low-volume, production,” said Rogers, “it’s really hard to make a car as cheaply as Honda can. You need something more expensive with great ‘wow’ factor.” That same thinking led to the $109,000 Tesla Roadster. It occurred to me that there are parallels between what Rogers is trying to do and the Rocky Mountain Institute’s noble but ultimately unsuccessful attempt to build the Hypercar, an aerodynamic, composite-bodied hybrid car designed to triple fuel economy.
Greg Rucks, an automotive lightweighting consultant to RMI, is “intrigued” by the Local Motors concept and says that crowdsourcing could have been part of the arsenal if the Hypercar were being built today, instead of 2000. “It’s an interesting idea to outsource the design,” Rucks said. “The Hypercar was developed internally, but with today’s ease of sharing data, something like that could really work. If everything is open-source, then protecting your intellectual property isn’t a huge concern—as it is with many suppliers today.”
Rucks said that working on an open-source design could appeal to suppliers just starting to test their technology to get creative, and take it to the next level. If they have a finished product, they’re more likely to try and monetize it in the existing auto market.
The Rally Fighter doesn’t do it for me, but it probably looks great if you’re an off-road racer, and that’s the point—different strokes for different folks. The concepts get refined by the industrial designers—some trained, some intuitive—who contribute to the final product. Adding to the hands-on approach is a commitment that buyers come to the factory and participate in the final build of their cars.
According to Local Motors’ Amy Romano, “The average build takes about three to four weeks from start to finish. The owner participates in the physical build for at least six days, and is guided through the whole process by one of our builder-trainers and supported by our dedicated Build Wiki. Owner/builders also work with our in-house designers to create their custom car skin.”
The “I built that” process helps build ownership pride, no doubt, but Local Motors has to do it so it can enjoy “kit car” status and escape millions of dollars in crash testing expenses. “I hate the notion of our trying to ‘get out of’ crash testing,” Rogers said. “But in the current economic paradigm including that expense is only affordable by big companies. When you’re spending $3 million on your whole car program, and you have to hire the professional testing labs for a million dollars a day, you’re effectively doubling the price of your car. We do extensively test our cars, however.”
Like Rucks, I find this concept fascinating, and a real opportunity for making cars in a whole new way. Neal Gabler, who wrote about Local Motors for Playboy and spent several days on the factory floor in Arizona, told me, “The level of engagement by the  people who work there is really, really high. They wear the company t-shirts, even though they don’t have to. There’s a lot of esprit d’corps. The employees love the cars, and they love the process.” They drank the Kool-Aid, but maybe it’s good Kool-Aid.