Will Tesla and Google Kill the German Car?
spiegel.de
spiegel.de
Tesla makes ~1k cars a day. VW is at 30k+....and has been for years.
Propulsion tech aside that's one hell of a learning curve advantage.
It just seems to me these legacy automakers who haven't done much at all are in for a rude awakening. If battery costs keep declining, anyone who isn't using a battery is going to get smoked on costs, and this is in a carbon-tax free scenario. In many economies with environmentally friendly policy, we should see EV's smoke ICE vehicles on cost MUCH sooner.
To date, EV sales are still a bit of chicken-and-egg, and Tesla does have a clear charger network advantage in parts of the world. But EV sales are a very small fraction of overall automotive sales, and until that changes, any doom and gloom on the traditional automakers is still exaggerated.
Tesla built GF1 in the Reno desert because, at the time (2013) [1], they forecast that at 500k/vehicles a year (which they're almost at), they would be consuming worldwide battery cell manufacturing capacity. And here we are with everyone else playing catch up trying to eek out the batteries they need to deliver EVs to compete against Tesla.
[1] https://www.tesla.com/sites/default/files/blog_attachments/g...
Demand ^ Emphasis mine.
Well you wouldn't have to worry about this regardless unless you are the competition. But otherwise it's like saying "I'll worry about EVs when I can charge them in 3 minutes at every corner". If you worry only when the threat already materialized then it was pretty short sighted. Which is an ironic attitude considering we're literally talking about companies ignoring reality until it hit them in the face and the threat materialized.
VW is not behind most of the market; they're leading it. Tesla's huge early lead will stick around for a very long time, if not indefinitely. They'll become a player as big as VW and Toyota. But, these other manufacturers will catch up and begin to compete just fine.
There's plenty of manufacturers that should be concerned (Ford being the biggest one). VW (and by extension, Audi, Porsche, etc) is not one of them.
Personally I have been very positively surprised of Tesla after owning one for a few months and I it would take very much to make me give up all it's niceties but I think the Polestar is a sleeping tiger when it comes to sales. It seems to generate a bit of grass root buzz in the EV communities here in Norway.
So some of the incumbents are finally taking the shift to new power trains seriously, but there will be slaughter for those who can't keep up in the long term.
Not very much. It really doesn't matter what kind of powertrain you have in your vehicles, the biggest part of the manufacturing process is everything else that makes up a vehicle. Frame, suspension, brakes, doors, windows, seats, dash, cabin interior, lighting, electronics, safety systems, sensors, testing, inspection, etc. etc. etc. On top of that, plenty of automotive plants these days get fully-assembled engines and sometimes driveshafts as well from other factories for efficiency and bolt them into vehicles rather than doing build-up from scratch.
I've spent quite a bit of time in vehicle factories of several OEMs. I would estimate that less than a quarter of an average factory line is used for powertrain.
*Note: Parts here means only powertrain parts. Tesla, for example, is notorious for having massive delays in repair parts availability for things like doors, trim, and windows.
They also spend €13.6 billion on r&d every year.
VW group is pushing EVs via all of its major brands (VW, Audi, and Porsche at the very least). These models are also not being treated as one-off afterthoughts (GM style) or cars with a totally different design language from the core brand (BMW i3 style), but match the design language and performance characteristics that I would expect of each brand, all with increasingly impressive battery ranges.
They have the global manufacturing/supply chain well figured out, design modular chassis that see use across almost every vehicle in its brands' portfolios over each decade, and this translates to getting nearly-unbeatable pricing from intermediate parts suppliers.
Tesla has a lead on both the battery and software, but while other brands are catching up significantly on these fronts, Tesla does one thing better that I don't see any other manufacturer daring to tackle: vehicle purchases. Every stage of buying a car at a dealership is worse than the last, and maintaining these frustrating middle-men and their shopping lots full of unsold vehicles adds unnecessary cost to every vehicle's consumer price.
Tesla's Chinese Gigafactory is just popping out it's first Model 3's now, and will ramp up to a similar output in the coming months, so they're about to double their output, and start building another Gigafactory in Europe starting next year.
That would leave some, but not much time for VW to get their house in order before they face a serious challenge. But that assumes that Tesla's and VWs markets are the same, whereas I believe VW also has much lower-priced market segments than Tesla.
Right now, Tesla's GF1 and 3 have that locked down with a significant head-start in time as well as tech. They started in 2013 because they foresaw that 500k cars per year would use up the entire world's battery production. They also acquired Maxwell tech to further stream line their cell production with denser and easier-to-manufacture cell chemistry. All of that will be big hurdles for other OEMs to overcome (and that is IF they dedicate resources to it without half-assing it for compliance purposes).
Learning curves are a tricky beast though. While the incremental benefit during the early stages is enormous, it doesn't act as a particularly good competitive moat.
Someone with say a large budget and global operations can easily stomp on it. The fact that VW's INITIAL planned capacity (800 p/d this spring [0]) is almost equal to Tesla's total capacity after all their ramping up should be quite informative as to how fragile Tesla's lead is.
The traditional car makers clearly got sucker punched here by a masterful Musk move...but I didn't hear any giants drop yet. Which to me suggests they might be swinging back somewhere in the future.
[0] https://insideevs.com/news/380318/vw-id3-production-30-day/
The big problem is what will they do with all the unemployed workers? One of the big things coming out of the GM negotiations was the question of the future of a reduced size of the workforce needed to build electric vehicles.
Or rather it's more likely that they're just taking the big switch as a chance to redesign everything. Incl production processes.
That would have happened by next cycle anyway in my view. Electric merely hastened it a bit.
Going from 0 to 1k is very difficult. Going from 1k to 30k, much easier.
So even if German manufacturers were unable to compete with Tesla or Chinese electric manufacturers at all which is in itself a questionable assumption, the lions share of the market will still be traditional engines.
The entire article is very confused and mixes up autonomous driving with electric vehicles and the emissions scandal so it's heart to discern a clear point, but saying that Google is a competitor of Volkswagen is just a category error.
https://about.bnef.com/blog/electric-transport-revolution-se...
„Based on analysis of the evolving economics in different vehicle segments and geographical markets, BNEF’s Electric Vehicle Outlook 2019 shows electrics taking up 57% of the global passenger car sales by 2040, slightly higher than it forecast a year ago. Electric buses are set to hold 81% of municipal bus sales by the same date.”
Yeah, who wants to put up with converting to and from UTF-16 all the time when you're just trying to get to work in the morning?
Who has the most to lose at peak car? Certainly not Tesla. They'll shift to selling more utility battery storage, or Class 8 semis. In California, lots of solar/battery business to be had in PG&E territory alone for the next decade while PG&E and CA gov flounder about nationalizing that infra (which is a matter of when, not if). What will other light auto automakers make as demand falters? Cutbacks.
Sure, Tesla has large amounts of debt. This is the best macro economic condition to have it in (low interest rates). They just need to keep ahead of the debt service curve (profit + cash flow). And if we're about to enter a contraction/recession, interest rates are not going to be going up (insert most recent fed rate cut here). Will it be easy to refinance that pile of TSLA bonds coming up for maturity? I say yes, but what actually happens is anyone's guess. They could do another equity raise and dilute existing shareholders with some grumbles but everyone would go along for the ride (me included).
Smart folks argue Tesla is an energy company that happens to sell cars. Close. Tesla is a financial engineering act that converts mountains of capital and customer dollars into energy and auto products (Solar City was similarly a financial engineering act, PPAs for customers funded by bond markets before solar got so cheap PPAs no longer made sense).
Usual disclaimer: TSLA investor, vehicle owner.
Having worked in the automotive sector of German and Japanese carmakers, with European, Japanese and American plants I have to say news coverage on the industry to me has devolved into something more resemblant of sports gossip. I.E. there is an immense audacity of bystanders with zero experience in the field to make bold claims about things like what the customers really want (the fans), which technology really works (the strategy) or what kind of fallacies CEOs and engineers fall for (team-management) that these bystanders apparently all get.
The car is one of the most successful products in history, I'd like to call it the German iPhone (although it took Americans to make it a mass-market product in the first place). And like the iPhone it has left its visible imprint in our public life. If you think digital detox is a thing, wait for how much bad rep smartphones will get in 50 years (if they continue to exist). Cars shape our surroundings for over hundred years now.
It is no wonder then that cars get to be the scapegoat for all sorts of things. And it is no wonder that people have highly politicized arguments about technologies, markets and processes of which they have zilch experience whatsoever except their own filter bubble inflaters. Go to HN and say something positive about Tesla and watch how you get downvoted. Say something negative and watch how much faster you'll get downvoted. SUV drivers are getting socially leprous [1][2] although it is the strongest selling car of the last decades.
Talking about the automotive sector has become toxic.
[1] https://www.youtube.com/watch?v=9_lz0diqWJU [2] https://www.tz.de/muenchen/muenchen-suv-fahrer-werden-boese-...
It seems the mid-range of the EV market will get very crowded in the near future, and unless Tesla (or for that matter BMW) find some serious advantages I don't see how they'll compete with established automakers who are already pumping out 30x the volume.
* A brand image of luxury, comfort with a touch of 'arrogance', epitomized in the BMW turn signal meme
* Creating a great looking and feeling interior
Just as the apple watch has shaken up the wearables market (see more here https://www.nytimes.com/2019/06/29/fashion/smartwatches-appl...). The same is due to happen to the mass consumer car market.
Because of the two bullet points I do not see neither Mercedes or BMW in trouble. However, VW is another story. I see them being in a 'stuck in the middle' dilemma: Price wise, there is no beating the Chinese which can pump out sub $20k electric cars and the Model 3 has shown that an upper bracket $35k Tesla sedan can fulfill the vital requirements people have for electric cars (range, charging speed, comfort). So in the end, I don't see them dying, just losing a limb or two.
The only problematic brands are the ones like Skoda that try to build much cheaper versions of VW cars (so for them EV might double the end price).
No one knows anything. Will an existing dealer network help or hinder? Will there be a Foxconn of EVs? Will Amazon sell everything? Will there be a 90% reduction in personal car ownership?
The car industry is massively over-invested. Most will die but who or what will replace it?
My $0.02 worth is transport as a service will mean an 80% reduction in car ownership. Only car nuts and people in remote areas will own a car.
[1] https://www.youtube.com/watch?v=hIJeqD3Ax40 [2] https://www.autotrader.com/best-cars/7-best-semi-autonomous-...
No.
My old PC had a Turbo button and it also did not have forced air induction.
You just gave me a hilarious idea for a PC mod.
Vitamix and Robot Coupe both make 'Turbo' blenders.
Intel offers 'Turbo Boost' CPUs.
Miele makes a 'Turbo' vacuum cleaners.
Intuit makes a 'Turbo' tax preparation product.
Porsche buyers know that 'Turbo' means 'it's the fast, non-track variant', and normal people also know it means 'this one is fast'. A few nerdy pedants will get upset, but literally nobody cares about them. They weren't going to buy one anyway.
As a car guy, I strongly disagree. In the car world, nearly without exception, including all previously Porches, "Turbo" is a label indicating that a specific piece of hardware is installed on the ICE: a turbocharger.
This is like putting a "manual" or "automatic" label on an electric. Sure, you could probably consider an electric a manual 1 speed or automatic 1 speed, but it's not going to get anything but marketing BS eye rolls from anyone that knows about cars.
https://www.imdb.com/title/tt0094012/
In any case, Volkswagen is going for Star Wars references with Porsche:
https://www.youtube.com/watch?v=vo95p9mdiWg
https://www.youtube.com/watch?v=gc-fWmWxx4Q
And Marvel references with Audi:
More interest in the driving experience rather than just a form of transportation? As a die-hard auto enthusiast I can assure you that a lot of younger people would be driving Porsches if they weren't so expensive. The 911 is now starting at over $110k and the entry level Boxster and Cayman just under $60k. Porsche's options are also notoriously expensive, so if you don't custom order a barebones model through the dealer and wait for it to be made that $57k Cayman is likely going to cost you $75k+. There are a lot of objectively better performing sports cars for those prices, but none of them have the refinement that Porsche offers. Also, the PDK is quite possibly the best DCT available on a car under $200k. I have a GT-R if that tells you anything about what I value in a car. For most auto enthusiasts Tesla is pretty far down on the list of desirable vehicles for anything other than a dense traffic daily driving commute. I've driven a few Teslas and while they're nice vehicles packed with awesome technology, they don't check the boxes I'm interested in for how much they cost.
https://youtube.com/watch?v=DSRWKxytW40 (Top Gear Model 3 vs BMW M3)
Most enthusiasts will absolutely not end up in a performance Model 3 for quite some time. I've been behind the wheel of one, along with a Model S P90D and a Model X P100D. They have impressive low end acceleration, but from an auto enthusiast's point of view that's where their allure ends. Model 3's (and all Teslas in general) have very poor top end acceleration which is crucial for track use and drag racing, they're extremely heavy for their size, they overheat easily with aggressive driving and most importantly they feel numb and isolated to the driver. Those are all great for a comfy daily driver, but for performance driving they're all negatives.
I'm excited to see how the Taycan fares, because Porsche knows how to design enthusiast cars. If anyone is going to bring EV's to the consumer auto enthusiasts, it's them.