From cost to capability: Technology Multiplier in EV manufacturing strategy

Abstract

In an increasingly dynamic and uncertain global environment, companies face significant challenges in aligning production strategies with long-term competitiveness and innovation. Many firms focus on short-term cost savings through outsourcing and relocation, which can negatively impact internal knowledge, capabilities, and long-term growth. This study explores the strategic decision-making process of production segment allocation, emphasizing the need for a systematic and holistic approach. Using the Analytical Hierarchy Process (AHP), key decision factors are introduced, including cost, innovation capability, and social impact. The qualitative study is applied to the case of electric vehicle (EV) battery production, where in-house production, outsourcing, and joint ventures are evaluated. The results reveal key drivers such as design capabilities and customer centricity, highlighting the strategic importance of maintaining core technological capabilities in-house. The study provides a foundation for the concept of a ”Technology Multiplier” to quantify the long-term value of in-house production in terms of innovation, adaptability, and competitive advantage, offering a new framework for strategic manufacturing decisions.