Fiat can do it in 12!

[Twiglett]

We sure are a confident bunch, aren't we?

I don't think the traditional automakers are "shaking in their boots" or having emergency meetings in their war rooms over the number of Tesla Model 3 preorders. At most, they are raising their eyebrows and watching (for now).

Those companies are profitable right now, selling what they make today. They aren't ignorant nor stupid. Right now, they still see the EV market as extremely small. Hell, even if Tesla builds a million cars a year, that is still considered a niche manufacturer in the car business. That's how big the global automobile industry is.

However, if they start to lose enough sales to Tesla, they will react to the market forces and start to develop competing products. If you recall, the same hing happened with the minivan in the '80s. Chrysler was the only one making them, and the other auto makers thought they wouldn't sell. They did, and then everyone had one to sell. Same with SUVs.

Granted, the roll out of an EV is more difficult now than just making another ICE car, but it is not an impossibility. The traditional auto makers have far more resources available than Tesla, and they can move faster than you would think (although certainly not instantaneously).

Sometimes the second mouse gets the cheese.

You make it sound like that isn't the plan all along though.
The hilarious part is they will still think is just about the car. The advent of the Tesla type of EV is important because it is competing against ALL ICE cars not just the pathetic, short range efforts on the market right now. GM/Ford still think its about competing with other EV's while they still sell all the ICE they can build. They don't yet realize they are like Nokia.
Fiat is even funnier - This is what comes to mind when someone mentions them.....

• Fiat = cheap, fragile but pretty but not very effective with silly electric systems.
• Alfa=not a question of IF it will breakdown, but when.
• Ferrarri=Expensive art that's bought as an investment not a car.

 

[Thomas Allen]

The Kodak example is brought up here a lot, but it's not quite accurate. My parents had a Kodak dealership and sold products to professional photographers all over California. They had the only direct dealership in Central California at one point. My father was also a professional photographer, but he was a frustrated engineer at heart. He studied the chemistry and technical aspects of photography and Kodak used him as a beta tester because he could give such precise feedback.

Kodak say the coming of digital photography and tried to pivot, but there just wasn't enough there to generate the kind of income film brought in. With film there is a very long logistical tail that Kodak made big profits supplying. Not just the film, but the chemistry to process it, various darkroom supplies, photographic paper, etc.

With digital photography, you have memory cards, batteries, and a limited amount of special printer paper. The majority of digital pictures never get printed and batteries are available everywhere from many manufacturers and there were a lot of memory card makers when Kodak tried to break into the business.

Kodak was in the position of Exxon-Mobil if the world suddenly switched to electric vehicles over the course of a couple of years. There is some market left as there would be some application for fossil fuels for many years to come, but if demand for oil cut in half or more in a short time, oil companies would be in a world of hurt. That's the position Kodak was in, the market shifted to a technology that didn't need them anymore.

There still is a small market for film, but the bulk of the photography market has gone digital because it is so much simpler and cheaper as well as flexible.

IBM once manufactured mechanical calculating machines. Their leadership realized that mechanical devices were the past, and building computers to perform the same functions was the future. Kodak invented the digital camera sensor. The they chose to bury it rather than make it the centerpiece of their future. Their leadership lacked vision and took the easy route of business as usual. I was a Kodak dealer for more than 10 years. I saw the digital train coming down the tracks. I sold out in 1995 to someone with less foresight than I had. GM, Ford and Fiat/Chrysler will go the way of Kodak, Ancso/GAF, and all of the other film manufacturers. Today Fujifilm is the lone survivor. They embraced digital rather than living in denial.

 

[FloridaJohn]

Of course, on the other hand, both Nikon and Canon transitioned from film to digital cameras quite nicely.

 

[glenhurst]

I expect most of the existing car companies will survive the transition to BEVs, but some won't. It's interesting to ponder which ones will fail, or will be absorbed by other companies. Perhaps it will be like televisions: None of the big TV manufacturers 40 years ago are still in that business; most of those companies don't even exist any more.

 

[Red Sage]

We sure are a confident bunch, aren't we?

Yup. Shole iz. For good reason.

I have been watching the traditional automobile industry for around three decades. Many of the things that have gone wrong for them have been pretty obvious, as much as thirty years ago. Several of the advances that have been made in the industry have been at the behest of Federal authorities -- and have been fought against tooth and nail every step of the way. There was a point in the early 1990s where it seemed a true 80 MPG to 100 MPG vehicle was just a few years away...

Then all of a sudden all the emissions and crash testing rules changed practically overnight -- apparently because the majority of automobile manufacturers were angry at Honda. They had broken the 'unwritten rules' by actually complying with CARB, EPA/CAFE, and NHTSA requirements with a single 'foreign' car -- the Accord -- that was built in Marysville OH. The whole industry, rather than following in Honda's footsteps, copying their methods, improving their own cars... Instead, they sabotaged the automotive industry as a whole and set back everyone, including Honda, by twenty years just so they would have a convenient excuse as to why their vehicles were all gas guzzlers.

• The Accord was classified as Midsize because of its interior passenger and cargo volume, which traditional automobile companies felt was 'cheating'. Because all their Midsize cars were larger, and heavier. They had claimed for YEARS that BIG cars were SAFER cars. But even so the Accord got better crash safety rankings than anything else in class. Three new crash tests were created... 1) Rollover; 2) Offset Frontal; and 3) Pole Impact at Driver's Door. All of them designed to kill Hondas -- and endorsed by other manufacturers. To survive those tests, all new vehicles became larger, heavier, with beefier supports for rooftops. Those have increasingly lowered visibility, causing the need for backup cameras and blind spot sensors. Meanwhile, fuel economy averages began to drop due to all the extra weight and have only just begun to climb to Honda's late 80's levels due to hybrid electric technology.
• The Accord had been the first Midsize car to meet Corporate Average Fuel Economy (CAFE) requirements in the US. And for the first time in like, EVER, all the other manufacturers practically demanded that the EPA immediately INCREASE those requirements so that was no longer true.
• The Accord was the first Midsize car with an Internal Combustion Engine (ICE) to be classified as a Zero Harmful Emissions Vehicle by the California Air Resources Board (CARB). But the rest of the automotive industry lobbied CARB to retest the cars, find out everything that was coming out of the tailpipe, and reclassify everything -- even at those low levels -- as being 'Harmful', even though they hadn't been before. Since then no ICE vehicle has received the designation again. (Though later, the term Partial Zero Emissions Vehicle [PZEV] was coined for those that had an automatic shutoff in traffic.)

So, yeah... I am extremely confident that traditional automobile manufacturers will continue to 'miss the boat', continue to 'watch and see', continue to remain 'on the fence', continue to 'shoot themselves in the foot', continue to use half measures... And fail miserably as a result.

Why? All because of Pride, Prejudice, and Perspective. They don't have my sympathies in the slightest.

 

[Red Sage]

So you're contention is that only Tesla is capable of building a battery factory?

I didn't say it would be easy for a competitor to get into the market, but if there is consumer demand and money to be made, there will be competitors.

Perhaps the next Gigafactory will be built by someone we aren't even thinking about right now. Who makes Duracell batteries? Do you think they might want to get into the EV battery market?

These points have been brought up gazillions of times. The problem is not ability. There are lots of capable engineers at every traditional automotive manufacturer. They are good, and sometimes GREAT, at what they do.

What they are not so hot at is taking electric vehicles seriously. They have spent DECADES denying that electric vehicles can be a viable means of transportation. They literally believe their own [BOLSHEVIK].

The problem is a lack of motivation. A lack of dedication. A lack of vision.

That is brought on by Pride, Prejudice, and Perspective. Pride in what they have accomplished thus far. Prejudice over electric vehicles. Perspective that is borne of having been 'right' for so long, that they cannot accept that they are now WRONG.

The problem is not ability. The problem is willingness. None of the traditional automobile manufacturers, even those who have seen some success already such as Nissan, are willing to build the very best electric car possible.

Because in the end... They know full well that if they build a car to take on and 'kill' the Model ☰...? It will also KILL everything else in their own product line.

 

[chuhouse2003]

Even though they come out with a competitive EV, who would want to buy products from a company whose CEO doesn't even support their own products?

 

[Red Sage]

I agree. My only point is that Tesla's success does not mean the end of the existing car industry. Other companies will feel the market pressure and adapt. Some faster than others.

Most companies are taking a wait and see attitude. When they have seen enough, they will react. Yes, they will be far behind Tesla at that point, but their resources are greater than Tesla's and they will be able to accomplish more in less time. Such is the way of the "second mover."

Tesla's success (which in itself is not a sure thing) does not mean the demise of everyone else.

Sure it does. Everyone that is 'on the outside' has taken a 'Wait and See' position. Mercedes-Daimler-Benz and Toyota both had a seat at the table, less than two years ago, before they both divested of TSLA.

I believe they wanted to leverage that position into bullying Tesla Motors to support their efforts with Gasoline Hybrids and/or Hydrogen Fuel Cell electric vehicles. I'm sure they were both taken aback when Elon Musk told them, "No. We aren't going to do that." So, when they decided to take their ball and go home, Elon was like, "Bye!"

Every electric vehicle that Tesla Motors has produced so far has been desirable. All of them. That will continue to be the case with the Model ☰. That much is evidenced by the large number of Reservations they have received for it in the past two weeks. It's now approaching an amount that even I, your Friendly Neighborhood Over-the-Top Optimistic Tesla Motors Certified Apologist Fanboy, sees as being three times the Reservation quantity I thought they might have in place by October 1, 2017.

Everyone else in the automotive industry sees their vehicle fleets as rolling spare parts conveyances. They look at profitability not just for the vehicle rolling out of the factory, but for all the spare parts they expect to supply over the following 15, 20, or 30 years it is in service. Because people who buy cheap, old, busted, used cars can't pass by an AutoZone or NAPA Auto Parts without making a stop. Vehicles that burn more oil than gasoline always need new hoses, filters, gaskets, and seals. Nigh a month goes by without a need for another distributor, alternator, water pump, or fuel pump. Out of warranty repairs are big, big business. And that doesn't even count consumables like tires and windshield wipers.

That is the potential revenue they 'lose' by switching to electric vehicles. Because you simply cannot build an electric car that is designed to fall apart. If it works correctly from the start, it will likely keep going for the next 100 years without issue. It doesn't have to deal with constant expansion and contraction of superheated parts. It doesn't have to manage dealing with corrosives and carcinogens and dissimilar metals all mated together with hope and a prayer.

This is what gives pause to traditional automobile manufacturers. They must somehow convince their engineering staff, shareholders, and their real Customers 'independent franchised dealerships' to accept the new realm of automotive excellence -- and the short & long term diminished rewards that will result of them. No one is willing to take that 'risk' -- of getting fired, run out on a rail, kicked to the curb, laughed out of the building... Simply for suggesting that maybe it would be a good idea to manufacture even 1% of their annual output as a kick ass fully electric car.

Meanwhile, Tesla Motors will continue to grow, and traditional automobile manufacturers will continue to 'wait and see'... As their own market share dwindles percentage point by percentage point, one year after the next. And some day, when electric cars have gone from being less than 1% of the market to over 30% they'll wonder, "What happened? Wasn't anyone watching this? Why weren't we warned?"

 

[wallet.dat]

And it will fall apart in 13...

FIAT = Fix It Again, Tony

I don't see how they'd produce a competitor within 12 months when it's nigh impossible for any of the big three to use motors with more than something like 50 horsepower worth of output.

 

[wdolson]

IBM once manufactured mechanical calculating machines. Their leadership realized that mechanical devices were the past, and building computers to perform the same functions was the future. Kodak invented the digital camera sensor. The they chose to bury it rather than make it the centerpiece of their future. Their leadership lacked vision and took the easy route of business as usual. I was a Kodak dealer for more than 10 years. I saw the digital train coming down the tracks. I sold out in 1995 to someone with less foresight than I had. GM, Ford and Fiat/Chrysler will go the way of Kodak, Ancso/GAF, and all of the other film manufacturers. Today Fujifilm is the lone survivor. They embraced digital rather than living in denial.

Fuji Film had the advantage of being more diversified than Kodak by the 1980s. Kodak was focused exclusively on photography, but Fuji got into optics in the 1940s and they formed a partnership with Xerox in the 50s. When the time came to spread into other areas away from film and processing products, they had more corporate experience in other areas they could build on.

Kodak did a crash course trying to make the transition back to a camera company (they were the biggest name in cameras in the early 20th century), but they were moving into a market already crowded not only with well established camera companies like Canon and Nikon, but also tech companies like Hewlett Packard. The pie was just too small to get a big enough foothold. My father had a small Kodak digital camera he used for test shots and he stocked Kodak batteries, which were very good quality, but it was too little too late.

Other film companies are/were Agfa and Ilford. Ilford is still around, but Agfa fell on hard times and went bankrupt.

Of course, on the other hand, both Nikon and Canon transitioned from film to digital cameras quite nicely.

Traditional camera companies have made it on the quality of their optics rather than the medium they use. The transition for them was less chaotic than for film companies.

 

[WarpedOne]

Though 400,000 is a drop in the bucket for an industry producing 100 million cars and light trucks a year.

Totally and utterly misplaced comparison.
400k orders does not compete with 100M different ICE cars out there, it does not compete with trucks, it does not compete with cheap 8k econoboxes, it does not compete with Tata cars, etc.

It competes in a market of 20-50k ICE sedans. Not ICE SUVs, CUVs, trucks, vans, just ICE sedans.
How many are produced in a year? 10M?

400k is 4% of those 10M. And is two weeks after the reveal. And only after reveal part 1.
There is going to be reveal part 2. What will the number be then? 1 or 2M?
Remember Elon saying he did not expect such response, not *before* part 2.
2M pre-orders will be 20% of target market. It took 7% to sink GM.

Good luck.

 

[Josh the German]

"Adding Italian Style" to it means making it totally unreliable.

This is definetely not true. The "Fix it again Tony" age is gone. We are driving affordable Italian cars (Fiat, Alfa Romeo, Lancia). Highly reliable and stylish. 200.000 mls without any problems is standard. Everything else are prejudices and the always horrible marketing of FCA and legal predecessors. The cars are really well designed and well put together.

Best regards from Germany

Josh

 

[AustinPowers]

Of course, on the other hand, both Nikon and Canon transitioned from film to digital cameras quite nicely.

Makes one wonder which car company might be the Nikon or Canon of cars in future vs. the Kodak.

Ironic side note: my very first digital camera was a Kodak DC4800
(Cost me almost 1,800 D-Mark back then, those were the days...)

 

[wdolson]

Totally and utterly misplaced comparison.
400k orders does not compete with 100M different ICE cars out there, it does not compete with trucks, it does not compete with cheap 8k econoboxes, it does not compete with Tata cars, etc.

It competes in a market of 20-50k ICE sedans. Not ICE SUVs, CUVs, trucks, vans, just ICE sedans.
How many are produced in a year? 10M?

400k is 4% of those 10M. And is two weeks after the reveal. And only after reveal part 1.
There is going to be reveal part 2. What will the number be then? 1 or 2M?
Remember Elon saying he did not expect such response, not *before* part 2.
2M pre-orders will be 20% of target market. It took 7% to sink GM.

Good luck.

Valid point. I looked up some sales numbers, I could only find US figures and the 400K reservations are world wide, But in the US total midsize sedan sales in 2015 were 2.4 million with the Nissan Altima, Toyota Camry, Honda Accord, and Ford Fusion dominating. Compact car sales were 2.2 million with the Toyota Corolla and Honda Civic dominating. Small luxury sedans sold 611,000 with the BMW 3 Series t the top. Midsize luxury cars sold 327,000 with the Lexus ES as the top seller.

I don't know if the Model 3 will be classified as midsize or compact. It's footprint is that of a compact sedan, but it will probably have the space of a midsize. I also don't know if it will be considered a luxury or standard sedan, the more basic trim models will probably be more comparable to Toyotas or Fords, but the more loaded models will probably be more like a BMW.

Even if just 1/4 of the reservations were in the US, that is a dent. If Tesla draws more drivers from one brand than others, that brand is going to suffer badly. The BMW 3 Series sells just shy of 100,000 cars a year in the US.

In any case, I think we're in agreement that the major auto companies will likely keep dismissing Tesla as nonviable until the Model 3 is so popular it's eating deeply into their sales, and then they will scramble, but too late. Mercedes and BMW have taken the Tesla threat a bit more seriously, because they have seen their top of the line cars lose ground to the Model S. GM, Ford, and Toyota can't document many lost sales to the Model S, so they are writing Tesla off as a boutique car maker which will go away eventually.

 

[wdolson]

Makes one wonder which car company might be the Nikon or Canon of cars in future vs. the Kodak.

A more accurate analogy would be Nikon and Canon are car companies and Kodak is Exxon-Mobil. Most of the companies that made cameras in 1990 are still around in some form, but Hasselblad went under in large part because the company kept changing hands and they couldn't keep a focused R&D effort going. For a lot of former camera companies, their core business is now something else. They may still make digital cameras, but the market for purpose built cameras has shrunk since everyone got one on their phone.

That may happen to some car companies who find something else to make. Many will probably merge and we might end up with VW-Nissan-Renault of something like that. If Elon Musk succeeds in opening up space flight for a fraction of the cost, that could start a building boom of stuff to go into space and car plants are some of the best heavy industry facilities in the world. Some may be re-purposed to build space craft to go to the asteroids. (Elon Musk wants to start a colony on Mars, but the real economic wealth is in the asteroid belt.)

 

[WarpedOne]

Even if just 1/4 of the reservations were in the US, that is a dent. If Tesla draws more drivers from one brand than others, that brand is going to suffer badly. The BMW 3 Series sells just shy of 100,000 cars a year in the US.

There is yet another dimension to this 'problem': 20k-50k segment is 'bread and butter' of many premium brands. BMW loses money on their 6 and 7 series. Those are hallo cars to help sell 3 and 4 series.
When that bread and butter goes away, what is left? Even bigger loss in hallo-segment.

Many will probably merge

This is a sure bet.

 

[Garlan Garner]

Ford is managing to turn a profit while growing 3% a year. To paraphrase Elon, Tesla plans on "growing production 50% a year as far into the future as he can reasonably project."

Oh no - Only 50% growth in production - Then I won't get my car until 2022.

They only make about 50K cars a year - right? Did you see how many pre-orders there are right now? Approx 400K?

AAARRRGGGHHH..... I thought I was in line at the dealership a long time.........4AM till 10AM .

I suppose every hour of waiting in line on 3/31 is going to equate to a year of waiting for the actual car? About 6 years? LOL

 

[AustinPowers]

BMW loses money on their 6 and 7 series.

Do you have evidence to back this up? I find that hard to imagine.

 

[ElectricTundra]

Of course, on the other hand, both Nikon and Canon transitioned from film to digital cameras quite nicely.

Yes, but they had some big advantages over the car companies. The relative cost to transition wasn't nearly what it is for auto companies, many photographers have a huge investment in lenses and other peripherals that make switching manufacturers difficult and expensive (not to mention an amazing dedication to specific brands), and there was no upstart threatening to take their marketshare.

 

[SOLARUSA]

Fiat Chrysler CEO says can build Tesla Model 3 rival if makes business sense

Marchionne said he did not understand how the Model 3, Tesla's first mass-market car, could be sold for 35,000 euros ($39,600) at a profit. "If he can show me that it can be done, I will do it as well, copy him, add Italian style to it and put it on the market within 12 months," he added.

Where's the leadership? Sergio Marchionne sounds much like Gil Amelio did when Amelio was running Apple into the ditch. He must be getting ready for retirement - otherwise I can't imagine wanting to defend those statements to his own BOD. As for "copying", Elon's not only laid out the model for others, but provided access to the core tech. And if Sergio STILL can't understand how to pull it off, perhaps a call to Stephan Niemand is in order - he seems to grasp the paradigm better.

If I were holding any FCAU, I would be probably be considering dumping it after reading this piece.