It might be a little early to talk about sinking ford, in the next five years or so I think autonomous is probably more important for them than going electric, but who knows.
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Do diesel trucks offer more towing capacity than gasoline trucks? That may the perception.
My understanding is they have more power under load and better fuel economy, although that might be moot now with all the exhaust cheating stuff, and I think I heard ford or gum are working on plugin hybrids that probably trump diesel too in most ways.
Total digression: iirc there was rumor or talk of not just doing the underwater bond car as electric, but incorporating some of the waterproofing and maybe even propulsion into a future model. looking forward to seeing whatever that yields and if it makes its way into a pickup or something.
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Bangor Bob
Member
The auto industry may soon face an 'unprecedented buyer's strike,' Morgan Stanley says
This looks pretty bad for traditional automakers. New car inventory is at a high of 4 million, about an 85 day supply. Used cars are also losing value rapidly.
Are buyers holding out for something better?
This looks pretty bad for traditional automakers. New car inventory is at a high of 4 million, about an 85 day supply. Used cars are also losing value rapidly.
Are buyers holding out for something better?
This was a big reason why I got the X when I did. My wife wanted to wait, but I pointed out to her that if we did, we may not be able to sell our ICE for a good price. That was only two months ago.
Including nothing (ride share)
Gives new meaning to
Global Warming causing ICE to melt
BTW, this ICE melt could have adverse economic consequences.
- Layoffs in the auto industry
- Consumer lost wealth due to declining used vehicle values
- Declining consumer spending, wealth effect
- Negative equity in auto loans
- Declining sales of new vehicles
- Auto loan defaults
- Loss of consumer confidence
- Declining home sales due to damaged credit
Probably not immediately, but I didn't want to risk it when the Model 3 comes out. Factors that went into my thinking:
1) Lot's of car sales last couple of years. Record amounts. Predictions at the beginning of the year that this year would be soft from the automakers.
2) Articles about how there were a lot of inventory coming off leases this year.
3) Lot's of articles over the last couple years about how banks were profiting from subprime car loans, implied to me excess supply. Also record low interest rates drove car sales, not home sales this time around.
4) I'm a Tesla bull, so I made the assumption that many people (not just ones posting on TMC) were planning to flip their ICE into Model 3.
5) Folks have been posting here on how they were going to get rid of their ICE for a Model 3. Persistent comments with occasional actual threads... such as how people were planning to ditch their Diesel VW, taking their severance money and getting into a Model 3.
I believe that we are at a transitional point in humanity in regard to evolving away from the petroleum driven world. Thus I wanted to be all electric before the Model 3 comes out. Also as I read more about the Cycle theories of economics, it made sense. I believe we are moving into a new disruptive period of the economic cycle and want to be moving with the cycle, not against it.
I had finished reading Prechter's "Elliot Wave Principle" last week. There was an excellent discussion of periodicity of the economic cycles and it's predictive powers. Specifically there is a chart looking at economic cycles (major highs, minor lows and major lows), called the Benner-Fibonacci Cycle Chart.
Essentially major highs seem to follow a 8-9-10 year periodicity. Minor and major lows (recessions and depressions) follow a staggered 16-18-20 year periodicity. Based on the chart calculations the next major high could be 2018. Next major low could be 2021. The caveat is that the chart pattern missed the 2008-2009 major low... predicted 2003 instead. I found this very interesting nonetheless.
What I found REALLY interesting was there was a whole section in the book calculating out how 1987 was going to be a major low point based on periodicity (flash crash anyone?). This book was written in 1978.
Sorry to get off topic, but your discussion about a recession reminded me of this cycle chart.
Congrats on piecing this all together.
Just a week ago I was wondering if we might see a decline in conventional auto sales prior to sufficient numbers of EVs to displace them. This present episode may be an early warning. The anticipation of obsolescence could drive down demand for new and used vehicles. In the present case we seem to have an oversupply of new cars as evidenced by a growing inventory. Thus, OEMs are discounting prices on new cars. This in turn puts pricing pressure on used cars, which spirals back as low price on tradeins and high depreciation leading to demand destruction for new vehicles. So automakers are going to need to cut production to correct the imbalance. But in the obsolescence scenario, new car buyers are holding back, waiting for newer tech to arrive. Thus, sidelined new car buyers would hold their prior cars longer and shrink the supply of used cars. This would resist the fall in used car prices we presently see. So if used car prices are indeed falling, a new car glut is a more compelling interpretation than anticipated obsolescence. Of course, both could happen at the same time.
Sorry for rehashing this, but I guess I just trying to make sense of the process. However it works, I'm pretty sure that the automakers will need to pull back production while accelerating innovation on new models. This is surely a tall order for most incumbents. It's hard to attract capital for new technologies while sales are declining and profit is thin.
Even if automakers correct the oversupply, the anticipation of obsolescence will only grow. Ridesharing options also contribute to ICE falling out of favor.
There is another aspect which I think we have forgotten about. Recall in the depth of the recession 2009 or 2010, there was Cash for Clunkers program. This pulled a lot of used inventory off the market and spurred new car production and goosed the car market. I never actually looked at the numbers, but it would make sense there was a bump of new inventory during the following couple of years. I recall that there was actually a boost in value of used cars afterwards as the inventory for used cars was squeezed.
Also current cars are much more reliable than past cars (especially those clunkers that disappeared) and now these used cars are probably still around swelling inventory and depressing prices. For those who are thrifty, likely still being driven and in use... keeping those drivers from buying a new car.
Thus, IMHO there is going to be a significant glut of ICE vehicles as a whole bunch of factors come into play here. Too many cars coming off leases. Lot's of previous production goosed by low interest rates, loose lending standards, and previous government incentives.
The question is will we see a huge transfer of demand from ICE to Model 3 which will exacerbate the things we are talking about (the proverbial straw that broke the camel's back?). On many levels I hope so, but I agree there could be a tremendous disruption if (when?) this occurs.
Glad you mentioned cash for clunkers. That definitely reveals the importance of the used inventory, a government intervention that altered the market structure.
I suspect that if US automakers are on the verge of failure again such an intervention could be tried again. I sure hope EVs have the upper hand inbthe market before it is tried again. I would not want to see it used to perpetuate longer life of the ICE fleet.
Edit. Car Allowance Rebate System - Wikipedia
I suspect that if US automakers are on the verge of failure again such an intervention could be tried again. I sure hope EVs have the upper hand inbthe market before it is tried again. I would not want to see it used to perpetuate longer life of the ICE fleet.
Edit. Car Allowance Rebate System - Wikipedia
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Interesting quote from the link:
"The Department of Transportation also reported that the average fuel efficiency of trade-ins was 15.8 mpg (miles per gallon), compared to 24.9 mpg for the new cars purchased to replace them, translating to a 58% fuel efficiency improvement.[1]
A study published after the program by researchers at the University of Delaware concluded that for each vehicle trade, the program had a net cost of approximately $2,000, with total costs outweighing all benefits by $1.4 billion.[15][16] Another study by researchers at the University of Michigan found that the program improved the average fuel economy of all vehicles purchased by 0.6 mpg in July 2009 and by 0.7 mpg in August 2009.[17]"
2000 dollar per vehicle for a net gain of 0.6 to 0.7 miles per gallon... Seems kind of paultry. I'm sure we're back down on MPG again.
Suspect after Model 3, if this is re-instituted it would be much higher.
It's a mixed bag. A revenue neutral carbon tax could do more simply to reduce the use of ICE vehicles at lower cost to the economy.
I think the key policy issue around reducing the ICE fleet is how to minimize stranded assets. Loading the fleet up with a bunch of new ICE cars even at higher fuel efficiency just increases the risk. So a carbon tax gets at minimizing use of existing assets (used vehicles) without directly destroying their value. It also inhibits sale of new ICE. So ICE becomes the choice for low, occasional use with higher operating cost. Conversely, EVs become the choice for high use with lower operating cost. We don't need to pile up ICE in junk yards, we just need to keep them parked and available for occasional use.
Uncle Paul
Well-Known Member
I watched a similiar situation when Digital photography started to push out film.
The executives at Kodak felt that there were still lots of profitable years to go, and stuck with film too long.
Now Digital film is 99% of the market, and only a tiny sliver of people still use film.
When battery cars become less expensive to buy and operate than ICE vehicles, very few will be willing to pay a premium to buy a gas/diesel vehicle, and the transition will be done.
Hardest part will be for them to get enough money selling their used ICE cars at an acceptable price.
Gas stations will add charging, convert to mini market, or close, tune up guys will transition to servicing electric vehicles,
Congested urban areas will ban ICE vehicles from entering the city center.
Sticking with the film analogy, there is very little market for used film cameras, except for an exceptional few.
When the autonomous vehicle arrives, driverless Uber service will eliminate the need for over 1/2 of the personal vehicles.
Why pay for a garage and your own vehicle, when a few taps on your phone will have a vehicle show up at your location, and take you to your destination for very little money?
The executives at Kodak felt that there were still lots of profitable years to go, and stuck with film too long.
Now Digital film is 99% of the market, and only a tiny sliver of people still use film.
When battery cars become less expensive to buy and operate than ICE vehicles, very few will be willing to pay a premium to buy a gas/diesel vehicle, and the transition will be done.
Hardest part will be for them to get enough money selling their used ICE cars at an acceptable price.
Gas stations will add charging, convert to mini market, or close, tune up guys will transition to servicing electric vehicles,
Congested urban areas will ban ICE vehicles from entering the city center.
Sticking with the film analogy, there is very little market for used film cameras, except for an exceptional few.
When the autonomous vehicle arrives, driverless Uber service will eliminate the need for over 1/2 of the personal vehicles.
Why pay for a garage and your own vehicle, when a few taps on your phone will have a vehicle show up at your location, and take you to your destination for very little money?
Problem with keeping an ICE parked for occasional use is that it can be a real pain in the rear. The 12 V dies. The gas can go bad. Let it sit too long, lots of things just pool and causes problems (think of the pistons with your initial crank and the fact all the engine oil is sitting in the pan, NOT coating your pistons and cylinders). And you still have to start it up and get it inspected at least once a year.
I had at one point 4 ICE cars. Kept having to change the batteries etc... yes, I know you can disconnect or trickle charge, but this was one reason why we ditched the ICE (not keeping it as a back-up even though it was paid off). Too many bad experiences with ICE cars just "sitting" around, minding their own business...
Now the beauty of the Tesla is we just leave it plugged in. It takes care of itself when we leave for an extended period of time. IMHO if you need a low, occasional use vehicle you're better off getting another Tesla. Which is what we're thinking of doing (once we get a house with more garage space...).
Agree, from a societal stand-point this will likely be an issue. A carbon tax would be a good way of driving the market, but ain't gonna happen this administration. Still not sure how to reconcile, but the worst way would be to keep propping up ICE makers and the petroleum industry.
Olle
Active Member
To answer the OPs question. Aside from numerical analysis which is important, you could also look at corporate culture. Already in 2012 when Model S came out, everybody could see that Tesla had the winning concept and all others needed to follow. The only reason they have not yet done so is internal culture. Too much pride in middle management devoting their lives to ICE engines. ICE is the pinnacle of auto manufacturing, as a matter of fact, most other parts are outsourced.
Find the automakers with most resistance to change, those will be the ones to short. Toyota, Fiat, GM, Ford and BMW come to mind.
Personally I believe that the heavy trucking industry will transition faster to electric than the passenger car industry, since trucking is based more on profit, less on emotions, compared to personal cars. There is a lot of old culture in truck manufacturing. Therefore I think that when Tesla Semi comes out, it might be a good idea to short the biggest oldest truck manufacturers, Volvo VOLV-B.ST : Summary for Volvo, AB ser. B - Yahoo Finance for example.
Find the automakers with most resistance to change, those will be the ones to short. Toyota, Fiat, GM, Ford and BMW come to mind.
Personally I believe that the heavy trucking industry will transition faster to electric than the passenger car industry, since trucking is based more on profit, less on emotions, compared to personal cars. There is a lot of old culture in truck manufacturing. Therefore I think that when Tesla Semi comes out, it might be a good idea to short the biggest oldest truck manufacturers, Volvo VOLV-B.ST : Summary for Volvo, AB ser. B - Yahoo Finance for example.
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