Traditional automakers, existential threat

[sandpiper]

What’s Actually New In The Electric Car World?

This is an interesting article that I just came across. It and the included links do a good job of presenting the concerns that I have respecting the transition to EVs and what could happen if it goes too quickly. People outside of the auto industry don't always fully appreciate the astounding mass of investment that exists in these conventional drive trains and what we could be losing if we have a massive consumer adoption.

While the transition is both necessary and arguably overdue, there is an enormous risk to the economies of the North America and Europe. Our economies, still, are heavily intertwined with the auto industry. And, with the exception of the drive train, virtually everything in a car is built by companies other than the automakers - and much of it is imported. With the death of the ICE, we could be Kodak-ing our single largest industry, and rendering the lifetime skill set of millions of engineers, technologists and workers obsolete.

I have serious doubts that the traditional makers will have the capacity to re-invent themselves so quickly. Historically a step shift in technology in a large industry means that old players are replaced by new and that the old wither and die, simply because the old players are huge and can't adapt quickly enough. And certainly the signs are all pointing that direction. If that happens in the first world, we can expect an economic bombshell.

I'm not arguing against EVs. Again they're necessary and, I think, inevitable. But, looking forward, our political leaders should be doing absolutely everything that they can to support Tesla and others. They may well be the phoenix that rises from the ashes of the 20th century auto industry.

 

[malcolm]

I have serious doubts that the traditional makers will have the capacity to re-invent themselves so quickly. Historically a step shift in technology in a large industry means that old players are replaced by new and that the old wither and die, simply because the old players are huge and can't adapt quickly enough.

True, Kodak didn't see the signs and didn't implement painful changes early enough. Konica-Minolta sold their photographic division to Sony. But Nikon made the transition. Likewise Canon.

Casualties may be spread across US, Euro and Far Eastern auto makers or they may be focused in fewer nations. The jury is still out on whether Dieselgate will be a timely corrective for VW/Audi. A number of manufacturers are dabbling with a range of PHEVs and BEVs with varying levels of enthusiasm.

Maybe something will come out of China. Or Apple

 

[ecarfan]

With the death of the ICE, we could be Kodak-ing our single largest industry, and rendering the lifetime skill set of millions of engineers, technologists and workers obsolete.

The EV transition will not happen nearly as rapidly as did the widespread adoption of digital cameras because cars are so much more expensive than cameras.

It will take several decades for EVs to replace ICEs. That said, the change will negatively impact those people who are, for whatever reason, unable to learn the new skills necessary to transition to EVs. But I don't think it will be as severe as you describe. Many auto industry workers will be able to make the change to building EVs.

And the good news is that Tesla is a US company building cars in the US. It's not like when Kodak's jobs all moved out of the country. Of course Tesla will build some factories overseas, since cars are a global market. But I doubt Tesla will close it's US factories (yes there will be multiple US factories, there are already two) or move its design and engineering teams out of the country.

 

[sandpiper]

The EV transition will not happen nearly as rapidly as did the widespread adoption of digital cameras because cars are so much more expensive than cameras.

It will take several decades for EVs to replace ICEs. That said, the change will negatively impact those people who are, for whatever reason, unable to learn the new skills necessary to transition to EVs. But I don't think it will be as severe as you describe. Many auto industry workers will be able to make the change to building EVs.

And the good news is that Tesla is a US company building cars in the US. It's not like when Kodak's jobs all moved out of the country. Of course Tesla will build some factories overseas, since cars are a global market. But I doubt Tesla will close it's US factories (yes there will be multiple US factories, there are already two) or move its design and engineering teams out of the country.

The workers are not the cause of the issue; they will be affected. My concern is what you see happening with the Bolt. With that vehicle, GM really isn't doing very much. The non powertrain components are already mostly outsourced. And now the powertrain itself, which GM previously held tightly, is being outsourced to Korea. What's GM's contribution? What are all of those brilliant engineers that built their careers around the ICE powertrain contributing? Nada. And you can't just retool an engine plant in Detroit to build batteries.

The key bits of knowledge required to build a solid, reliable powertrain, that the automakers held, will become increasingly irrelevant. Once all of the new bits - the motor, inverter and batteries - become commoditized, then there really isn't much that prevents any well financed group from building a good car. And so I expect you'll see a huge inrush of, probably quite good, Chinese cars assembled with very low paid labour.

Once you have Model 3 quality cars coming to our shores for half of the price of a Model 3, what do you think will happen? Tesla is providing hope, but I'm very concerned about Apple-izing the whole North American and European auto industry.

 

[gavine]

Once you have Model 3 quality cars coming to our shores for half of the price of a Model 3, what do you think will happen? Tesla is providing hope, but I'm very concerned about Apple-izing the whole North American and European auto industry.

Cars are much more of a status symbol than a phone. People don't just buy the cheapest car, even if it's a good car. Sure, some do, but a cheap Chinese EV is not going to put Tesla on their heels. Tesla is now a successful brand that won't be put-away by cheaper alternatives. Also, many choose a car based on looks so there will always be brand preference based on design/aesthetics.

 

[neroden]

My concern is what you see happening with the Bolt. With that vehicle, GM really isn't doing very much. The non powertrain components are already mostly outsourced. And now the powertrain itself, which GM previously held tightly, is being outsourced to Korea. What's GM's contribution?

Body styling and marketing. Since Al Sloan, that's been their specialty anyway...

Unfortunately for GM, the body styling on the Bolt is getting poor reviews and the marketing is being hamstrung by the dealerships. So they really are in trouble.