Dyson, a British company best known for its business in hand dryers and vacuums, has announced that it will terminate its EV project. According to the company, it had developed a ‘fantastic car,’ but saw no path to commercial viability for the vehicle. Its efforts to find a buyer have been unsuccessful according to a letter published on the company website.

Dyson claims to have invested £2.5 billion pounds, or roughly $3.2B, into building an electric car since launching the project in 2015. Company founder James Dyson didn’t even reveal the existence of the project until 2017 after it had been running for two years with an estimated 400 engineers. In 2018, the company talked about its plan to come to market with a series of vehicles, beginning with what would essentially be a test vehicle to construct a supply chain and route to market. The plan seems to have been similar to Tesla’s, which came to market with the Roadster and then expanded into the Model S, Model Y, and Model 3.

Patent drawings surfaced earlier this year, shedding light on at least one of Dyson’s designs. The car had unusual proportions, with large, narrow wheels and high ground clearance. It was intended for the Asian market. Dyson actually announced that it intended to move its headquarters to Singapore in order to be closer to its customer base; it’s not clear if that plan has changed at all now that the vehicle is canceled. Dyson was supposed to handle design, manufacturing, and distribution of the car.

While the company has not given any additional details on why it canceled its vehicle, launching any new vehicle requires a great deal of investment into R&D. Launching a new car when you lack a supply chain or sales network is even harder. A ~$3.2B investment is an enormous amount of money to pile into a vehicle, but it may not have been enough money to pay for the R&D on the car and establish the networks that Dyson needed to build in order to achieve its goals.

Dyson’s statement emphasizes that the firm intends to expand its solid-state battery manufacturing and efforts to develop computer vision, machine learning, AI, and other types of sensor systems. The company isn’t wrong to foresee a challenging situation in the EV market. Multiple established vehicle manufacturers, including VW and GM, have announced major efforts to commercialize BEVs. The EV market as a whole has seen a sharp sales decline in the past few months.

Part of the reason EV sales are down in comparison with 2018 is that EV sales shot up substantially in the back half of last year. Tesla accounts for a huge percentage of total EV sales on a monthly basis and Tesla’s tax rebate dropped by 50 percent at the end of 2018. While sales figures for Q3 2019 are sharply lower than a year earlier, there’s also the fact that car sales have fallen off a cliff across the entire US market. Bloomberg described September car sales for Toyota and Honda as “disastrous.” Toyota sales fell by 16.5 percent, while Honda sales fell by 14.1 percent. US vehicle sales have slumped in 2019 and the UK/EU situation is uncertain due to Brexit. Dyson’s previous decision to build a factory in Singapore also raised eyebrows; average salaries in Singapore are quite high, making it difficult for a newcomer to compete on price against more established companies.

If Dyson had developed significant improvements to EV components, we may still see the fruits of that labor in licensing deals with other companies, but the vehicle push is over. Car companies remain one of the most difficult markets to break into, even for an already-successful firm.

Now Read: