Dyson Scraps “Not Commercially Viable” Electric Car

Dyson has scrapped its £2.5 billion ‘N526’ electric car project with Sir James Dyson announcing that it was “not commercially viable”.

So Close

The project, which could be traced back to 1993 with the development of a cyclonic vehicle exhaust that could cut 95 per cent of harmful emissions, evolved into the full-blown development of Dyson’s own electric car.  The ‘N526’ project employed 500 UK workers (aimed to roll out the first vehicles for sale in 2021) had a driveable prototype and was on the verge of kitting-out its production factory in Singapore before the plug was pulled on what some saw as the founder’s expensive “vanity project”.

Battery Work To Continue

Despite the project to build a whole car being scrapped, Dyson has announced that work will continue on improving the battery technology that would have been used in the car.  Dyson had originally planned to invest £1 billion in development of the car and invest another £1 billion in developing the electric battery technology, something that was closer to its existing business.

Even though there was great sadness among Dyson employees, and a question mark hangs over the future of those employed in the UK electric car division, Sir James Dyson said that his company had successfully built a “fantastic electric car”.

What Went Wrong?

Producing vehicles and competing in a car market where there are already well-established and experienced car companies such as Volkswagen that is spending £50 billion on its own electric vehicle requires massive amounts of money, capital investment, and the addition of different core skills and competencies to the ones that Dyson has.  Also, Singapore (compared to China or Malaysia) looked likely to be an expensive place to manufacture the vehicles.

Even though Dyson’s team was able to relatively quickly produce a working prototype, and convince some media commentators that it would become a serious challenger with a high-risk, high level of difficulty ‘new product in a new market’, it looks likely that the numbers didn’t add up and Dyson chose to ‘stick to the knitting’ (its core business) and not to risk the whole company and its brand on the expensive venture.

Harley Davidson Too

Just as Dyson announced that it was scrapping its electric car project, U.S. motorcycle giant Harley-Davidson announced that it was halting production of its first electric motorbike.  In Harley Davidson’s case though, the stopping of production was down to an issue with its charging system.

What Does This Mean For Your Business?

Sir James Dyson’s positive view of this being more of change of direction of a project (which is not likely to be the last change of direction) must mask some sadness that the company came so close to producing an electric car which may have been well received on the back of the company’s adventurous and innovative image.  The numbers, however, simply wouldn’t stack up, and the announcement of Dyson pulling the plug is unlikely to have come as a major surprise to the long-established automotive players who know just what it takes to produce, supply and compete successfully in the car market.  That said, relatively new car market player and likely of competitor of Dyson, Tesla has established itself as a real contender in the electric car market with its Model 3.