Knightshade
Well-Known Member
Given VW said they're cutting production due to lack of buyers, imagine how hard they'd have to cut if they DID have an adequate supply of chips!
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The demise of the OEMs
- Thread starter Buckminster
- Start date
Given VW said they're cutting production due to lack of buyers, imagine how hard they'd have to cut if they DID have an adequate supply of chips!
Doggydogworld
Active Member
These Tweets don't show up for me, a non-member. The links show up momentarily if I reload the page, but clicking on them takes me to Twitter login screen. Some of your earlier embedded Tweets show up, but most don't even though I could see them fine before today. (EDIT: after posting my reply the links in your most recent comment do show up, but still don't embed and only take me to the login screen. Previous page is still a mix of blank spots, links that show up but take me to login screen and some Tweets that embed just fine).
"If it ain't broke, break it"
--- Elon Musk, probably
adiggs
Well-Known Member
I want the auto OEMs to thrive broadly. I have, sadly, been watching the OEMs imploding for a decade as EVs have been coming for them. Powerpoint engineers and compliance car manufacturers - they've had 10+ years to observe this freight train, and they are still today struggling to catch up with Tesla circa 2013.
While I want them to thrive, I don't see them behaving like companies that need to thrive in this new industry. From reading the Innovator's Dilemma, I don't even need to view them as incompetent to see just how badly the deck is stacked against them. A crucial component of the deck stacking is that the economic incentives for those companies to be a long term success don't align for the people that run the companies -- CEOs are better rewarded for a good looking quarterly earnings report than they are for the investments and culture change necessary to build a new (EV) car company from scratch.
That's a nasty combination - the company products are in an unstoppable tail spin, and the people responsible for leading the business day to day get fired if they push on the existential crisis too hard.
History keeps repeating
the disruptor was not the legacy supplier
no ice box companies supplied refrigators
Ice boxes were made by carpenters, like furniture
Refrigerators were made by what are now called HVAC techs
seems legacy has an extremely hard time with change acceptance and embrace to move toward the change
Flip phone -> nokia -> blackberry -> iPhone/Android, what’s next?
the disruptor was not the legacy supplier
no ice box companies supplied refrigators
Ice boxes were made by carpenters, like furniture
Refrigerators were made by what are now called HVAC techs
seems legacy has an extremely hard time with change acceptance and embrace to move toward the change
Flip phone -> nokia -> blackberry -> iPhone/Android, what’s next?
Dikkie Dik
If gets hard, use hammer
Some albeit anecdotal evidence that a shift in perception of Tesla is happening in Germany.
It confirms my theory that it was a briljant move to build the first European Gigafactory in the heart of the European car industry, Germany.
‘If you can make it there, you can make it anywhere’.
It confirms my theory that it was a briljant move to build the first European Gigafactory in the heart of the European car industry, Germany.
‘If you can make it there, you can make it anywhere’.
adiggs
Well-Known Member
Ouch. 27% drop in orders (sales presumably) in the first half.
I figure this is what the front end of the Osborne duck curve looks like. Total units start falling, with ICE units dropping really fast (like, say, -27% in the front half of the year).
Meanwhile the new thing that is coming on doesn't yet have the volume to make up all that 27%, so new purchasers are delaying their purchase by months or years, buying used, and otherwise waiting for their own move to the new technology.
On the back end of the duck curve, the old technology units continue to fall, but total units starts climbing again as the new technology finally has total production capacity that is high enough to turn total units around, and moving back towards the original units.
Sounds like what I would expect to hear at the entrance to the valley of death for auto OEMs.
So weird to predict this all so perfectly years in advance and then see it carried out as a slow train wreck. Innovators dilemma and shareholders is a dangerous combo.
petit_bateau
Active Member
Anecdote warning: A family member very recently bought a VW ICE mini-SUV in the UK. I'm not sure exactly which model as I was too busy to check. What did interest me about their purchase was that they made a decision to buy new as the dealer had just sold the only other one they had, and after the one that remained they were not expecting any more in for several months. The relative uses the dealer for other things and I don't think they are that susceptible to pressure sales, i.e. this is likely truth from the dealer.
This is of course at the precise same time that VW / VAG are reducing shifts at their European BEV manufacturing lines due to inability to sell anything; and basically giving up on everything in China (both BEV and ICE) due to inability to sell anything there. Plus VAG flailing around buying shares in Chinese auto OEMs and getting acces to their (older) Chinese models as part of the deal.
The relative generally flip flops between Ford and VW, but did not find the Ford options sufficiently interesting on this occasion.
My conclusion : both Ford and VAG are in a bad place.
Puts these links (thank you all) in the previous posts in this thread perspective.
This is of course at the precise same time that VW / VAG are reducing shifts at their European BEV manufacturing lines due to inability to sell anything; and basically giving up on everything in China (both BEV and ICE) due to inability to sell anything there. Plus VAG flailing around buying shares in Chinese auto OEMs and getting acces to their (older) Chinese models as part of the deal.
The relative generally flip flops between Ford and VW, but did not find the Ford options sufficiently interesting on this occasion.
My conclusion : both Ford and VAG are in a bad place.
Puts these links (thank you all) in the previous posts in this thread perspective.
adiggs
Well-Known Member
Anybody else think that the chip shortages might have been a real thing at one point, but now the ICE OEMs are using ongoing chip shortages as cover for demand falling? I'm increasingly of the belief that "chip shortages" is a more palatable form of "people don't want to buy our vehicles".
Not like
1990s/2000s flip phone to blackberry to smartphone Move
More like
1890s horse to auto
A profound change on the mind of drivers
(not us open minded folks)
My two brothers are progressives, green, outdoorsman, environmental, gardens, ya da ya, no move to EV or Solar
only one is asking about EVs
I think they are posers
If you are truly green, sustainable, care about the environment
Then you want to move fast
Terrible, these slow folks
1990s/2000s flip phone to blackberry to smartphone Move
More like
1890s horse to auto
A profound change on the mind of drivers
(not us open minded folks)
My two brothers are progressives, green, outdoorsman, environmental, gardens, ya da ya, no move to EV or Solar
only one is asking about EVs
I think they are posers
If you are truly green, sustainable, care about the environment
Then you want to move fast
Terrible, these slow folks
adiggs
Well-Known Member
I'm sure that the ICE OEMs hope US EIA is right about their projects:
The problem with Hopium is that this particular Hopium is looking for EV market share to grow to ~20% and then stay at that level for 2 decades. Because the average new car price is $53k EV and $48k ICE. And because we need public charging infrastructure. Not discussed at all is how big the market can grow given that people with garages will charge at home - just sort of hanging and implied there is that the charging infrastructure will work the same as gas stations, and these new EV things don't have enough gas stations. Heck - so many holes that I can see in the logic its not worth going through them all.
Posting this here because this sounds to me like the sort of industry projections that, taken seriously, will lead ICE OEMs to continue investing in ICE technology for the rest of the 20s at least. Stranded investment the moment the check is written - investment $$ that could have gone to their EV technology that is so woeful at this point.
The problem with Hopium is that this particular Hopium is looking for EV market share to grow to ~20% and then stay at that level for 2 decades. Because the average new car price is $53k EV and $48k ICE. And because we need public charging infrastructure. Not discussed at all is how big the market can grow given that people with garages will charge at home - just sort of hanging and implied there is that the charging infrastructure will work the same as gas stations, and these new EV things don't have enough gas stations. Heck - so many holes that I can see in the logic its not worth going through them all.
Posting this here because this sounds to me like the sort of industry projections that, taken seriously, will lead ICE OEMs to continue investing in ICE technology for the rest of the 20s at least. Stranded investment the moment the check is written - investment $$ that could have gone to their EV technology that is so woeful at this point.
Whatever the reason their EV product are well behind where they should be.
Returning to chips, Tesla was able to rewrite software and pivot to using different chips.
ICE OEMs largely could not do that because the parts and the chips came from many tier1, teir2, tirer3 suppliers.
When chip makers didn't have firm orders they stopped making some older lower margin chips.
If ICE OEMs who originally cancelled orders knock on the door and want the same chips for the same price, that might be a low priority job for chip makers who may have more profitable orders to process during a general chip shortage. Compounding that is the fact that during the shortage all inventory everywhere would have been used up.
Now those chips are probably being made, but the ICE OEMs don't have a strong negotiating position, and the price has probably increased. In many areas the cost of making ICE cars has probably increased while Tesla has been able to reduce the cost of making EVs.
For a while there was general shortage of cars and prices could be increased, but now with demand softening, something has to give. If car makers can't reduce prices they risk having lower demand and lower sales.
It is a perfect storm with the following factors;-
- Generally behind in EV design and R&D
- Not enough useful in house software expertise.
- Multiple tier1, teir2, tirer3 suppliers hard to coordinate and hard to move away from.
- Dealerships - including the fact that dealerships made money on servicing.
- Unions - most of which have a general tendency to resist change.
- Lower margins with parts, servicing and finance often compensating for lower net margins.
- High overheads, including advertising, which is finding it increasing hard to deliver a coherent and meaningful message.
- Probably some level of management bloat, low productivity, or a poor corporate culture.
- Debt levels not in great shape and typically getting worse.
- Macro environment - higher finance costs, etc cars are harder to sell.
- Foot in many camps - often committed to some mix of ICE, EV and hydrogen - indecisive and lacking a clear strategy.
- Increasing competition from Tesla and the Chinese.