Tesla, EVs, and the auto industry's response

[wws]

Someone could reproduce the Saturn model, spin off a new nameplate that was EV only and sell those at exclusive dealerships. Though in smaller towns they probably would still be grouped with some other brands of cars.

Historical note: Way back when, GM used Saturn dealers to sell (ok, lease) the EV-1.

 

[renim]

from a different thread, but worth placing here

nb li ion cells are defined by their 4 main components, which are dominated by China, then Japan with Korea rounding out the remainder.
Rest of World is essentially irrelevant. the stakeholders in the auto industry in Europe and USA can see this, and its a problem.

core stakeholders
(company management, owners and employees)

next tier stakeholders
(intermediate customers, government, suppliers)

outer stakeholders
(end user customers, unions, other locals)

8 out of 9 of these stakeholders do not benefits from increasing vehicle content belonging to China (and to a lessor extent Japan)

 

[renim]

Its also worth noting that both Tesla and Nissan are very much fully within the Japan supply shown above. Yet even combined they are small compared to the 800lb gorilla in the room.

 

[Phillip L]

from a different thread, but worth placing here

nb li ion cells are defined by their 4 main components, which are dominated by China, then Japan with Korea rounding out the remainder.
Rest of World is essentially irrelevant. the stakeholders in the auto industry in Europe and USA can see this, and its a problem.

core stakeholders
(company management, owners and employees)

next tier stakeholders
(intermediate customers, government, suppliers)

outer stakeholders
(end user customers, unions, other locals)

8 out of 9 of these stakeholders do not benefits from increasing vehicle content belonging to China (and to a lessor extent Japan)

When it says “control” does that mean they produce these component materials or just that they use them?

 

[renim]

When it says “control” does that mean they produce these component materials or just that they use them?

I don't know, but the context seems to consider the Japanese/Korean cell factories in China as not in Chinese control, so it primarily means Chinese owned, China located firms production.
I do know that it is about production, specifically amount of product shipped. (not value)

 

[Phillip L]

I guess what I am really wondering is if it says electrolyte solution 75% market share, does that imply the material is mined and produced in China or does it mean it is assembled in China. With China producing such a large percentage of the ev’s in the world, are these numbers just a representation of those sales? According to a chart on Wikipedia of lithium world production, two thirds of world production in 2016 was produced by Australia and Chile. So I am assuming it is not so much “control” of this key component as much as meaning that is how much China consumed. This is giving a far different meaning to the table than what the heading implied.

 

[RobStark]

I guess what I am really wondering is if it says electrolyte solution 75% market share, does that imply the material is mined and produced in China or does it mean it is assembled in China. With China producing such a large percentage of the ev’s in the world, are these numbers just a representation of those sales? According to a chart on Wikipedia of lithium world production, two thirds of world production in 2016 was produced by Australia and Chile. So I am assuming it is not so much “control” of this key component as much as meaning that is how much China consumed. This is giving a far different meaning to the table than what the heading implied.

Australian lithium is largely refined in China.

 

[renim]

i think the intent of the article is from a Japanese perspective, and that it is in-regards to the 'ecosystem' surrounding li ion cells, but primarily focused at the level immediately prior to cell manufacture.
with the exception of graphite, ultimately China (and Japan and Korea) import these raw materials.

Does China control solar panels? No. Can anyone else make a profit? No (Except FSLR.)

or is it

Does China control solar panels? Yes, China prices the solar panels below where competitors can generally have a viable business.

 

[renim]

times r changin'
EV Sales: Global Top 10 January 2018

looking forward to q1 results

 

[renim]

hmmm,
1 city car
4 hatchs
2 sedan hatch
1 sedan
2 SUV

while this does not represent the global norm for vehicle heights, it does represent the global norm for vehicle size.

 

[Takumi]

Not really a response, but it helps one see the bigger picture.

At 1:06 - NADA reports that the average dealer lost $421 on every new vehicle it sold at retail & an average of $2 on every used car they sold. Loss made up by financing & servicing cars.

 

[Brando]

I guess you could do this until an EV was a hot seller that an ICE dealer wanted. Most States have laws saying OEMs can't favor one dealer over another of the same brand.You can't give one dealer the hot sellers and another dealer of the same brand a few miles away only the slow sellers. OEMs used to be very abusive and vindictive.

The way to get around this is to create a new EV brand. Then they could pick exclusive EV dealers. It is the OEMs(not franchise laws) that generally don't like several competing brands from different manufactures under one roof. They tolerate this in rural areas but general don't in densely populated areas.

How did GM get away with the Saturn Stores??
Seemed like the Tesla Model - sticker price only sales - no commission sales people, right?
Hope you can take time to scan below article.
How GM Destroyed Its Saturn Success

 

[Brando]

Australian lithium is largely refined in China.

Seems to me Australia has all the basic minerals for Lithium Ion batteries.

Aluminium - they use Lithium to make "aircraft Aluminium, which might still be the largest market for Li.
Lithium
Cobalt
Nickel

Mining in Australia - Wikipedia
https://d28rz98at9flks.cloudfront.net/100121/100121_AIMR 2016_V2.pdf

I think you once posted, China did the refining of Australian Lithium. So many details I don't understand.

Do you know why no Li-Ion battery plants in Australia? below is a start at the QUT Research
QUT creates Australia’s first lithium-ion battery
They only spend a few million - and GM sells Opel for $2 billion and doesn't spend a dime on batteries.

And you'd think the Al mills would be putting in solar rather than cut backs because of high electric rates.
Power struggle: Australian smelters grapple with electricity...
Of course GigaFactory going mostly solar.

 

[Brando]

Marc's most succinct review of Tesla founding - and comments of auto industry response.
June 2017

And perhaps best insight to the auto industry and response to EV and the international market in general.
- Bob Lutz - Icons and Idiots 2013 but seems true to this day.
I guess they must be changing - but seems painfully slow. Bob even admits his VIA hybrid trucks were delayed for 1.5 years when VIA had to change battery suppliers as 123 went bankrupt, he still can't see why an auto company would bother with a battery plant - Elon must really be stupid, per Bob.

remember the talking points about the Impala and review these stats.

Chevrolet Impala
Year
U.S. Sales

2002
198,918

2003
267,882

2004
290,259

2005
246,481

2006
289,868

2007
311,128

2008
265,840

2009
165,565

2010
172,078

2011
171,434

2012
169,351

2013
156,797

2014
140,280

2015
116,825

2016
97,006

2017
75,877

2017 Model S/X together out sold Impala - interesting and the downward trend of impala is obvious.
All very intuitive auto execs. Bob so right again.
side note: GM market share US 1962 50% down to 2016 17% - a real icon

It must be the US workers fault, surely not management nor Wall St. pressures.
side note: Germans have highest paid factory workers, healthcare, longer vacations and all Germans get paid if they can qualify to go to University.

 

[Phillip L]

How did GM get away with the Saturn Stores??
Seemed like the Tesla Model - sticker price only sales - no commission sales people, right?
Hope you can take time to scan below article.
How GM Destroyed Its Saturn Success

Here is a quote from the article: “People either admired the company and its cars or were skeptical, cynical and belittling of anything it did.” Now doesn’t that sound familiar? A new car company comes along and those threatened, either financially or psychologically with its success, become irrational haters of everything about the company.
I owned a Saturn SL2 and it was the most reliable car I ever had. Drove it for sixteen years. So, of course, GM had to destroy it.

 

[wdolson]

How did GM get away with the Saturn Stores??
Seemed like the Tesla Model - sticker price only sales - no commission sales people, right?
Hope you can take time to scan below article.
How GM Destroyed Its Saturn Success

Legally the only issue was direct sales to the public and Saturn stores were all franchises. But Tesla may have borrowed some ideas from the Saturn experiment.

GM is a very large company with a lot of very entrenched ideas. I once worked for Boeing and they're that was too. When I was there American corporations were on a quality improvement kick. Boeing started out hiring some outside consultants to tell them where they could improve quality. The consultants told them their #1 problem was too many managers, so they fired the consultants.

Then they tried to push QI onto everyone else in the company. The employees were on board with making improvements, but almost all were skeptical. It turned into a kabuki theater of meetings, classes, and processes that didn't result in much real change.

Upper management put months into creating a mission statement for the company. When revealed with a lot of fanfare, it was several sentences long, but when you parsed the flowery language it said: "we build airplanes".

In the various classes we went to they talked about what was going on in the car industry as that was the most similar industry. We heard the success stories like how Ford figured out how to tighten up tolerances and got better reliability. There was also a lot of looking at Japan. Management wanted to mimic the successes without actually making any deep changes, so they had a lot of difficulty reproducing the successes of other companies.

Our group especially struggled with the whole QI thing because it was focused on manufacturing and we were developing test systems for testing the electronics (avionics) that would eventually make it onto the aircraft. R&D is completely different from manufacturing. For anything we developed, a major production run might be 100 circuit boards. Most were one or two sets of hardware with maybe one spare for the maintenance group.

The Japanese had a top to bottom culture that encouraged everyone to find problems and make improvements. Japanese company attitudes were focused on "always make improvements, who's fault it is or who made the improvement doesn't matter". Established American companies have struggled with this mindset. Large traditional American companies are built on the 19th century mindset of the industrial barons who ruled like monarchs. Empowering the peasants is a difficult concept to wrap their minds around.

Silicon Valley culture is different. The hierarchies tend to be much, much flatter than traditional companies and everyone has a say in how things happen. On the development side Tesla tends to be much more flexible and adaptive than most mainstream car makers. However it sounds like their production culture is more like the old school American manufacturing system where beatings will continue until morale improves.

 

[Electroman]

Upper management put months into creating a mission statement for the company. When revealed with a lot of fanfare, it was several sentences long, but when you parsed the flowery language it said: "we build airplanes".

I love this !!

Been there, done that. Taken individually each words had a great meaning, but in a long windy sentence and paragraph, it was just a joke, no one took it seriously

 

[Brando]

Sorry, I have not read this entire thread (started Oct. 2015) so this may have been mentioned before and probably more than once. Tesla R&D expenses from 2010 - 2016 = 7 years and the TOTAL <$5 billion.

GM buys back $16 billion of GM stock.
GM sells Opel for about $2 billion - does it go into R&D? no - went to shareholder value, dividends.
Dividend History
GM R&D 2015-2016-2017 = $20 billion

This is R&D for 2015

VW $15.3 billion
Toyota $9.2 billion
Daimler $7.6 billion
GM $7.4 billion
Ford $6.9 billion
Honda $5.5 billion
BMW $5.5 billion
Nissan $4.6 billion
Denso $3.6 billion
FCA $3.4 billion

I just don't see the shift to electrification being reflected in R&D - OR they sure aren't getting results.

You can obviously do a more thorough research job for better/more details.
Too bad I didn't find this thread years ago.
Many, Many thoughtful ideas and detailed analysis. thank you all

 

[Brando]

For others like myself that have just recently stumbled on this tread;
One last "re-posting" I forgot who originally posted (and yes this fellow a terrible presenter, but analysis is fine.
Skipping the first 41 min. (as all Tesla fans well know those points) and this link will start at the 5 year cost of ownership comparison Toyota Corolla, BMW 3 series, Model 3.

PS- small correction GM bailout was $11.2 billion

 

[RobStark]

The Japanese had a top to bottom culture that encouraged everyone to find problems and make improvements. Japanese company attitudes were focused on "always make improvements, who's fault it is or who made the improvement doesn't matter". Established American companies have struggled with this mindset. Large traditional American companies are built on the 19th century mindset of the industrial barons who ruled like monarchs. Empowering the peasants is a difficult concept to wrap their minds around.

Japanese culture is so egalitarian it is practically Scandinavian.