Can ICE Manufacturers Survive?

[Steph]

What criteria are you basing this list on?

I think some here are being a bit blind to the sheer might of the big players. How are we so certain that Tesla will be one of the survivors? Suppose the market goes to EV very quickly. Who is best funded? Who has the most capacity? Who has access to the most resources? If VW or Ford decided to go all in on EVs tomorrow, it'd be game over for Tesla. Sorry. GM makes about as many Camaros in a week as cars that Tesla has made in its entire existence. You can argue if you want that Tesla has been the latest EV catalyst, but when the majors decide there is a valid business case to get into the game on a grand scale, Tesla will find it hard to make substansial gains. Even 20,000 Model S cars is chump change in a 10 million plus a year U.S. market.

It's just a little game, who knows the future?

Some will die, some will survive, many new players may popup. It's all good. It's a new market.

Tesla is a few years ahead on everybody. Research and development take time, no matter how deep your pockets are, time advances at the same rate for everyone.

Let's see how it goes, we're only months away now!

 

[mattjs33]

First, GM or ford would have to make EV's that people want to buy. Good luck with that.

Qwk, how are you ol' buddy? I've missed you.

GM and Ford together sold nearly five million cars last year. They weren't all to idiots who didn't know any better. I don't think it's too much of a stretch to imagine GM or Ford being capable of turning out huge numbers of electrically powered cars were they so inclined. I know you find this hard to believe, but all of the few hundred thousand people who work for GM and Ford are not morons who have learned nothing in their collective 200 plus year history about designing, engineering, building and selling cars. I fail to see how the yet-to-be-released Model S is the death knell for these companies simply because at present its parent only builds electric cars whereas the others do not.

 

[qwk]

No, most of the people at those companies aren't morons, BUT when your business model depends on government intervention (read huge cash infusion) every couple of decades, sooner or later it will be game over. There would be no Chrysler or Gm if it wasn't for the taxpayers.

 

[mattjs33]

There probably wouldn't be a Model S either.

 

[qwk]

Yes, but there is a big difference in a loan to expedite the development of new technology, and just throwing money at an existing business that doesn't seem to want to change for the better and is going to be BK in the future anyway.

 

[mattjs33]

I'm sorry, I didn't realize you were on the board at GM and had insider knowledge into their existing business model and future plans.

You and many others should be happy that we saved GM and gave Chrysler to to Fiat because it saved hundreds of thousands of jobs not only directly, but also countless thousands more in the companies that supply them with components and raw material, and yet still thousands more in the companies in the business of transporting such. You thought the recession was bad enough as it was? The ripple effect would have gone exponentially beyond what your narrow view affords. I for one am happy to have saved GM and the endless list of people who are still employed and providing for their families as a result. For the record, I don't believe that GM or Ford or Chrysler are too big to fail. I just don't think that it's automatically going to be because the yet-to-be-released Model S will so obviously be the single most fantastic car ever in the history of cars ever.

You should be grateful GM is still around if for no other reason than it gives you something to hate.

 

[vfx]

Home movies 16mm, 8mm, Betamax,VHS, DVD, Netflix

Blockbuster was unstoppable and disgustingly made Hollywood edit films for "clean content" and laughed at Netflix more than once.

 

[Dan5]

Yes, but there is a big difference in a loan to expedite the development of new technology, and just throwing money at an existing business that doesn't seem to want to change for the better and is going to be BK in the future anyway.

I almost forgot about that. Another point regarding which companies will exist and which will not
Look at what they did with the DOE loan money
Tesla and Nissan developed ground up EVs- spent it wisely
Fisker built a ground up hybrid - I think in a few years they'll be gone
Ford (who got the most) retrofit a Focus and slapped a plug on C-Max. More or less if you can't develop a ground up EV for 10X the money of other companies received, there's a big problem- This is the reason why I think they'll eventually (decades away) go under.

 

[ElSupreme]

Being first to market helps. But by no means you are going to win. HD-DVD beat Blu-Ray to market, by a few months. Betamax beat VHS by over a year. The Compaq (HanGo) Personal Jukebox (HDD based media player) beat the first iPod to market by 3 years.

Here are a lot of reasons why the big auto manufacturers aren't going whole hog into the EV market.

First-mover advantage - Wikipedia, the free encyclopedia

This is not to say there are disadvantages to moving late (also in the article) but the big players have a lot more to lose if they move early. If they move early enough, and look at what has been done well they will be fine. Sure I bet at least one manufacturer will not make the jump but you cant fill the millions of cars a year production with all new players. I just can't happen.

 

[Robert.Boston]

A lot of companies want to be second -- not first, and risk an embarrassing fail, nor third and be left too far behind.

 

[Yggdrasill]

I think it's pretty far-fetched that Tesla will absolutely dominate the marketplace within a few years, but I don't think this is the goal, either.

Tesla will in all probability continue to make good electric cars, and continue to be known as the car company that makes good electric cars. That sort of reputation is great for carving out a niche in the automotive market. Basically, I think Tesla will dominate the high-end EV market in the short term, while the current big players will be stuck making cars like the Leaf. It's pretty easy to make a cheap electric car - the problem is making a *good* electric car, and that is where Tesla has a head start. In time, some of the other companies will catch up with Tesla, but I think Tesla will still thrive. If there's room for BMW, Mercedes, Audi, Ferarri, Lamborghini, Porche, Aston Martin, Alfa Romeo, Rolls Royce, etc, there's also room for Tesla. Especially once some of the other companies start to go under.

The question is, just how many of the current car companies will go under? I think it's a significant percentage, but I don't know whether it's 20% or 80%.

 

[Fr23shjive]

I don't know how far fetched it is to think that Tesla will completely dominate the EV market. They've shown that they are a resilient company and willing to make adjustments if necessary. I think if Elon sees that there's an overwhelming demand for EVs and the other automakers aren't willing to supply the demand he'll do it himself. Whether that means that Tesla will open another factory to increase output or build power trains for other automakers to increase their output, I think he'll make sure that EVs aren't ignored and simply become a niche market.

He's said before that his ultimate goal is to make EVs mass market, not niche. If the demand is there I think Elon will make sure that it's filled, with or without, the large automakers.

 

[Dan5]

Here's the modified list and reasoning for 20 + years in the future

Dominant share:
Tesla (1st to market, longest range, has patents and implemented)
Nissan (2nd "cheap" one, has patents and implemented)
GM (Volt and has patents from EV1)
Mitsubishi (1st cheap one, has patents and implemented)
BYD (cheap + long rang)

Survivors
Toyota (Rav4 original patents + partners with Tesla)
BMW (I series patents + target audience)
Honda (pipeline, late to market, but will survive if able to undercut)
Audi (have the E-tron, but it's comparable to the Model S, but costs more)

Minor players (always be a market for high end cars)
Bentley
Aston Martin/Jag/Tata
R&R/VW
High end Italian car sports manufacturers
Persu (minor player for hybrid 3-wheel "toys"- the Carver tech is pretty cool)

Fading or gone
Mazda (No released tech, way to late to market, projected 2014? or 2018? )
Zenn (Partnered with EEstor drained their finances)
Fisker (DOE money issues)
Ford (do not have a ground up EV or PHEV, only modified cars, will not be "gone" but delegated to only F-series trucks, if they can't make one with $5 billion loan, they can't make one without > $5 billion investment)
Fiat (developing tech, not released)
Chrysler (developing tech, not released)
Mercedes (backed hydrogen and their EVs at higher cost are not better than the others as mentioned as survivors)
Kia (Ray way too slow for comparable costing EVs)
Hyundai ( Hyundai focusing on hydrogen, refusing to make EVs)

 

[ElSupreme]

Here's the modified list and reasoning for 20 + years in the future

Dominant share:
GM (Volt and has patents from EV1)

Survivors
Toyota (Rav4 original patents + partners with Tesla)
Audi (have the E-tron, but it's comparable to the Model S, but costs more)

Minor players (always be a market for high end cars)
R&R/VW

Fading or gone
Ford (do not have a ground up EV or PHEV, only modified cars, will not be "gone" but delegated to only F-series trucks, if they can't make one with $5 billion loan, they can't make one without > $5 billion investment)
Kia (Ray way too slow for comparable costing EVs)
Hyundai ( Hyundai focusing on hydrogen, refusing to make EVs)

Out of the top 5 auto makers you have only 1 remaining. You have to make 5m+ cars a year to be in that category. 3 of your new behemoths COMBINED currently make about the same number of cars a year as BMW.

Current:
GM ~8.5M car/year
Toyota ~8.5M car/year
VW ~7.5M car/year
Hyundai/Kia ~5.5M car/year
Ford ~5M car/ year

New (assuming NO annual world vehicle volume growth over 20 years)
GM Need no growth to meet 8.5M car/year
Nissan Need to grow ~4% per year to go from 4M to 8.5M car/year
Mitsu Need to grow ~9.5% per year to go from 1.2M to 7.5M car/year
BYD Need to grow ~12,7% per year to go from 0.5M to 5.5M car/year
Tesla (assume 20k/year) Need to grow ~32% per year to go from 0.02M to 5.0M car/year

Only Nissan's growth rate is even conceivable over a 20 year period. And this assumes no World Volume vehicle growth.

Besides it won't matter until EVs are 5% (probably 10%) of the market before you would need to have an EV or be left behind. I think Tesla will be a player but not in the top 5, but for sure in the top 20. Tesla would need ~17 more NUMMI plants to be able to produce 5.0M cars / year. It is just too hard to raise capital to grow that fast.

 

[richkae]

I don't think the Volt is sufficient evidence that GM will survive the transition. It is a good start, but not sufficient.
Look at Kodak, they had digital cameras very early, I had several of them. They still failed to survive the transition from film to digital.

I think you need to look at each companies strength and weaknesses. If a company makes most of its profits from SUVs and trucks it is in trouble. 2008 proved that those segments are the most vulnerable to high gas prices.
Companies with strength in fuel efficiency and small cars will be able to cling to the ICE the longest.

 

[Yggdrasill]

I don't think the Volt is sufficient evidence that GM will survive the transition. It is a good start, but not sufficient.
Look at Kodak, they had digital cameras very early, I had several of them. They still failed to survive the transition from film to digital.

I think you need to look at each companies strength and weaknesses. If a company makes most of its profits from SUVs and trucks it is in trouble. 2008 proved that those segments are the most vulnerable to high gas prices.
Companies with strength in fuel efficiency and small cars will be able to cling to the ICE the longest.

Is it a good thing to cling to the ICE, though?

I think companies that have fuel efficient ICE cars might say to themselves "We don't need to make EVs, we can just make sure our cars use the gas efficiently!", and that strategy might work fine for a couple of decades, until oil prices increase sufficiently and EVs improve sufficiently. Where does that leave the company? Suddenly they need to make EVs, and all the other companies have a 20 year head start. That means they're toast.

Think of a frog in a pot of water, where the temperature increases by 1 degree per minute. Eventually, it can't cling on to life any longer. The companies who find themselves in the boiling water right away might take action immediately and get themselves going in the right direction.

 

[qwk]

I'm sorry, I didn't realize you were on the board at GM and had insider knowledge into their existing business model and future plans.

You and many others should be happy that we saved GM and gave Chrysler to to Fiat because it saved hundreds of thousands of jobs not only directly, but also countless thousands more in the companies that supply them with components and raw material, and yet still thousands more in the companies in the business of transporting such. You thought the recession was bad enough as it was? The ripple effect would have gone exponentially beyond what your narrow view affords. I for one am happy to have saved GM and the endless list of people who are still employed and providing for their families as a result. For the record, I don't believe that GM or Ford or Chrysler are too big to fail. I just don't think that it's automatically going to be because the yet-to-be-released Model S will so obviously be the single most fantastic car ever in the history of cars ever.

You should be grateful GM is still around if for no other reason than it gives you something to hate.

You don't need to be on the board to realize that the GM dinosaur moves too slow to react to competition. What have they done different after the bailout? Tell me, I'm all ears.

To me the Volt is a joke. I drove one and was very unimpressed, and frankly for almost the cost of a base corvette, it's a no go for the majority who can afford it. The operating cost in the US is not less for the majority of folks, given the price. So why would you buy one again? Can you imagine the cost of ownership when the car gets 10 years old? It is much more complex than just an ice.

What does losing jobs have to do with anything? If Gm and Chrysler both wend under, yes people would have lost their jobs, but the demand for vehicles would have been nearly the same. Other automakers would have surely picked up the slack, that's a given. Yes, it would have probably taken some time, but the results would have probably been better. After all, patching those companies only prolongs the pain, instead of fixing the problems from the get go.

I also didn't say that Tesla would be a major automaker in the future, if they even make it at all. Tesla seems to be making a few little mistakes here and there which might all add up and bite the company in the arse someday. That being said, for the money, there is no better EV product than a model S. Yes, it may cost more, but I have learned long ago that you get what you pay for. It's much better to buy a quality product once, then keep buying junk over and over.

 

[Dan5]

Out of the top 5 auto makers you have only 1 remaining. You have to make 5m+ cars a year to be in that category. 3 of your new behemoths COMBINED currently make about the same number of cars a year as BMW.
.

That is true, but the way I picture it, it's going to be a lack of demand (cars last longer, easier to replace parts) coupled with vicious pricing cycles (the winner is who can make it the cheapest with acceptable range). I think the behemoths 20 years from now will be lucky of any of them sell 5 million. If we take a snapshot at the current time and assume EVs will become the dominant force in 20 years; BYD (in price will replace Kia/Hyundia, and they have the Chinese government and Buffet as backers- almost unlimited capital), I think either Tesla will buyout a VERY weakened skeleton-like Chrysler (15 years from now) or Toyota (if severely weakened), but still have low manufacturing compared to the rest of the "behemoths" - I do see Tesla taking out the Cadillac and Lincoln brands, There is also the possibility that BMW may be the new mid level priced (Ford) instead of Mitsubishi- BMW is undercutting Ford for a similar sized EV.
Nissan could overtake VW (Nissan already has the Leaf, VW is release a Leaf-like Golf).
It may not be 100% right, but 20 years ago people scuffed at Kia/Hyundai and they are up there now. Same thing with Toyota 40 years ago, 5 years ago if someone said Tata will take over Aston Martin and Jaguar, I would have laughed. Disruptive technology, greed, embargoes, and new markets tends to have significant impacts to large manufactures which are incapable of capitalizing

 

[jaanton]

GM (Volt and has patents from EV1)
...
Toyota (Rav4 original patents + partners with Tesla)

Patents from EV1? Patents don't last forever and the EV1 was what? 12 years ago? With patents lasting 17 years that doesn't look like a win for 20 + years in the future. Getting patents and letting them rot is a bad idea.
Will expiring patents help open up the EV world?

 

[richkae]

Will expiring patents help open up the EV world?

Yes they will. Unfortunately some come too late. Texaco ( later bought by Chevron ) bought the patents on the Nickel Metal Hydride batteries used in the 2nd gen EV1 and buried them.
The NiMh technology has some advantages over LiIon and we would certainly be farther along now if their development had been continued instead of being killed.