-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
The demise of the OEMs
- Thread starter Buckminster
- Start date
adiggs
Well-Known Member
Yeah - what he said. This is what I see coming to the ICE auto industry and fast. I hadn't really considered the supply chain considerations. All of the supply chain benefits of 10+ years ago that the ICE industry had and Tesla did not have, are about to reverse. Ugh - that'll really hurt. But at least GM is returning billions to shareholders via buybacks and increased dividends!
I predict that what we'll see is a series of right sizing and pivots to the most profitable vehicles over the coming year. There will be some way to spin "we're losing the economies of scale that are essential to operate our business" into "we're doing something smart for our shareholders".
It will create a disruption in the supply of new cars for people to buy as the valley of death becomes increasingly obvious (EV ramp doesn't replace the ICE collapse for many years). During the valley of death we'll see the average age of the fleet of cars on the road grow as used cars are kept in service longer. My guess is that we'll see several years of flat to higher used car prices, and then those will collapse as the production of new EVs gets closer to filling in the shortfall in the valley of death.
I predict that what we'll see is a series of right sizing and pivots to the most profitable vehicles over the coming year. There will be some way to spin "we're losing the economies of scale that are essential to operate our business" into "we're doing something smart for our shareholders".
It will create a disruption in the supply of new cars for people to buy as the valley of death becomes increasingly obvious (EV ramp doesn't replace the ICE collapse for many years). During the valley of death we'll see the average age of the fleet of cars on the road grow as used cars are kept in service longer. My guess is that we'll see several years of flat to higher used car prices, and then those will collapse as the production of new EVs gets closer to filling in the shortfall in the valley of death.
Doggydogworld
Active Member
It was only a few years ago Seba said ICE sales would drop to zero in 2025 because 200 mile BEVs would be $12k.
He's just a worse version of the ARK lady -- take an obvious trend, put together some misleading charts then make some "Wow" predictions that you hope people forget before the sell-by date arrives. Rinse, lather, repeat and eventually you'll be "right". Fans say he's just a little off on the timing, but the timing is the whole thing. And he's off by miles, not minutes. If BEVs dominate in 2025 Toyota is dead, if it takes until 2035 they're golden.
He's just a worse version of the ARK lady -- take an obvious trend, put together some misleading charts then make some "Wow" predictions that you hope people forget before the sell-by date arrives. Rinse, lather, repeat and eventually you'll be "right". Fans say he's just a little off on the timing, but the timing is the whole thing. And he's off by miles, not minutes. If BEVs dominate in 2025 Toyota is dead, if it takes until 2035 they're golden.
Toyota to Remain Top in Global Vehicle Sales in 2023
Tokyo, Jan. 9 (Jiji Press)--Toyota Motor Corp. is believed to have secured the top spot in global vehicle sale…
www.nippon.com
German automaker Volkswagen Group said Tuesday that its global vehicle sales rose 12 pct from the previous year to about 9.24 million units.
The Japanese automaker sold over 10.22 million vehicles globally in the first 11 months of 2023 alone."
@Doggydogworld
oh my heavens, Tony Seba isn't 100% correct about all his predictions and timelines.
whatever shall we do?
How about revise estimates, re-evaluate, consider whom has done the most work in the field? (Seba et al) and accept he makes a few mistakes
I'll take Seba et al over "________"
Some of us have been following Seba for a very long time, and RMI, and lots of others in the RE fields and appreciate his CV and bona fides thatt he and his group know what they are talking about
Where were you 5 - 10 - 20 years back?
Knightshade
Well-Known Member
I can't speak for the other user, but 5 years ago I was right here pointing out Sebas predicted dates were unrealistic (as were some of his earlier references to the speed of horse->car transition in that big youtube link everyone kept pointing out to say ALL EVS BY 2025) and getting hammered with disagrees for a take that turned out 100% accurate.
'Every New Vehicle Will Be Electric' by 2025, Disruption Expert Says
A Silicon Valley entrepreneur and author has explained how electric vehicles will disrupt and change transportation across the world. But first, Tony Seba — who is an instructor in disruption and clean energy at Stanford University’s Continuing Studies Program, explained to an audience at the...
www.renewableenergyworld.com
Tony Seba in 2018 said:
He then cites Dysons 2.5B investment in EVs as an example of disrupting the industry. Remind me how that investment turned out?
IIRC he later moved his goalposts to 2030 (also entirely unrealistic- esp. given he's talking ALL vehicles not just cars, in ALL countries).... not sure where said goalposts are these days- perhaps he's finally stopped giving hard dates that aren't happening, I dunno.
Now if you want to follow Seba as "Guy who sees disruptive trends early in the trend"- Sure-- he's your guy... But it's kinda late in the EV thing for that to be relevant? That same 5 years ago it was obvious to (nearly) EVERYONE here that EVENTUALLY all vehicles would be EVs. It was obvious to a much smaller # it wouldn't be 2025. Or 2030.
If you want to follow Seba as "Guy who accurately predicts the timeline of those trends- especially for investment purposes (which some were doing here those 5 years ago)"which is the main way he'd have any relevance in this thread at this point- then you might want to reconsider him being your guy.
Knightshade
Well-Known Member
Did you actually read the whole thread? It's a good dive into ZFs situation... but NONE of the conclusions are "they're in trouble due to the EV transition"
On the contrary EVs are their largest source of revenue, and fastest growing...
High debt and a problematic ownership structure are the issues, not "people aren't buying ICE vehicles"
Your link said:
Also Alex V is reporting all the jobs they're cutting in Germany will be replaced with jobs in lower-wage countries- so it's not even a shrinking of the company just a reallocation of labor costs.
Last edited:
to repeat see msg above or read snip belowI can't speak for the other user, but 5 years ago I was right here pointing out Sebas predicted dates were unrealistic (as were some of his earlier references to the speed of horse->car transition in that big youtube link everyone kept pointing out to say ALL EVS BY 2025) and getting hammered with disagrees for a take that turned out 100% accurate.
'Every New Vehicle Will Be Electric' by 2025, Disruption Expert Says
A Silicon Valley entrepreneur and author has explained how electric vehicles will disrupt and change transportation across the world. But first, Tony Seba — who is an instructor in disruption and clean energy at Stanford University’s Continuing Studies Program, explained to an audience at the...
He then cites Dysons 2.5B investment in EVs as an example of disrupting the industry. Remind me how that investment turned out?
IIRC he later moved his goalposts to 2030 (also entirely unrealistic- esp. given he's talking ALL vehicles not just cars, in ALL countries).... not sure where said goalposts are these days- perhaps he's finally stopped giving hard dates that aren't happening, I dunno.
Now if you want to follow Seba as "Guy who sees disruptive trends early in the trend"- Sure-- he's your guy... But it's kinda late in the EV thing for that to be relevant? That same 5 years ago it was obvious to (nearly) EVERYONE here that EVENTUALLY all vehicles would be EVs. It was obvious to a much smaller # it wouldn't be 2025. Or 2030.
If you want to follow Seba as "Guy who accurately predicts the timeline of those trends- especially for investment purposes (which some were doing here those 5 years ago)"which is the main way he'd have any relevance in this thread at this point- then you might want to reconsider him being your guy.
----------snip-----------
oh my heavens, Tony Seba isn't 100% correct about all his predictions and timelines.
whatever shall we do?
----------snip-----------
first EV i drove was 49 years ago, an underpowered El Car, change takes a bit of time, then a Sebring CitiCar
speaking of "unrealistic goals", may I refer you to _landing_ spaceships...... say, 10 -15 years ago........... or Neura link yet to be...........
(if the dates were "unrealistic" how were you helping make them "realistic"? I have been participating in EV clubs for decades myself that were "putting out the word, even if just a bit, we are all advocates in our own ways, some more than others )
FielderJones
Member
Stellantis CEO: "Bloodbath” coming if EV makers follow Tesla and Musk in “race to the bottom”
Stellantis CEO Carlos Tavares has warned that an EV "bloodbath" is coming if automakers follow Tesla and Elon Musk in a "race to the bottom."
www.teslarati.com
As per Tavares during an event in Amsterdam on Friday, he is trying to avoid chasing Elon Musk as he drives Tesla’s prices lower and lower. “If you go and cut pricing disregarding the reality of your costs, you will have a bloodbath. I am trying to avoid a race to the bottom,” the Stellantis CEO said.
adiggs
Well-Known Member
The high cost providers, getting their lunch eaten by low cost providers, always have this to say. THey're right - as long as the bloodbath they're talking about is their own.Stellantis CEO: "Bloodbath” coming if EV makers follow Tesla and Musk in “race to the bottom”
Stellantis CEO Carlos Tavares has warned that an EV "bloodbath" is coming if automakers follow Tesla and Elon Musk in a "race to the bottom."
As per Tavares during an event in Amsterdam on Friday, he is trying to avoid chasing Elon Musk as he drives Tesla’s prices lower and lower. “If you go and cut pricing disregarding the reality of your costs, you will have a bloodbath. I am trying to avoid a race to the bottom,” the Stellantis CEO said.
adiggs
Well-Known Member
I don't believe that PHEVs will save them in the longer run, but I think there is a narrow sliver of a window they might be able to wiggle through, that leans heavily on PHEV to get them there. I don't really think it'll work - PHEVs by their nature have to be more expensive to make. Two engines and drive trains, and 2 ways of fueling the vehicle, pretty much guarantees that. More difficult design tradeoffs because more stuff.
BUT maybe.
Meanwhile, what I don't see people talking about - GM is carrying $120B in long term debt (debt with maturity > 1 year). In 2023 they issued $47B in new debt, partially to pay off $40B worth of that debt ($40B roll into a replacement loan). Looks to me like they have a roughly 3 year term and need to roll 1/3rd of that $120B each year just to tread water. But they actually issued more like $48B. They didn't put it this way - they talked about capital investment, but if you're borrowing more than you're paying off, while doing stock buyback and dividend increases, then in my book you are borrowing money in order to pay it back out as dividends and/or give it out to shareholders via buyback.
The point being - $40B every year is a big nut to make. GM can't afford for more than a whiff of trouble in their business to have the debt market closed to them. The good news for all the financiers - GM has $29B in cash on hand, so they can almost handle their own refinancing needs for a year.
My point - GM can't afford anything bad happening. Like say Cybertruck being produced in volume. I'm pretty sure that its the truck market that is keeping both GM and Ford afloat at this point (most profitable vehicles, in highest volumes). They won't need those markets cut in half for the people that lend them money to start questioning if the interest rate is high enough, and then whether lending them money at any interest rate is a good idea. Short durations though help with that risk.
Ford's numbers by the way are similar.
Knightshade
Well-Known Member
Which is more expensive right now- a tiny ICE engine, or a large battery pack?
I suspect it's still the battery pack.
Isn't most of their debt financing on vehicles, secured by the vehicles?
and again isn't most of that secured debt regarding vehicle financing?
This for example:
Is Ford Motor $140 Billion Debt A Cause For Concern? | Fundamental Data And Statistics For Stocks
Explore the statistics of Ford Automotive and Ford Credit debt, which include the total debt, net debt, cash, debt to equity ratio, capital structure, payments due, credit ratings, etc.
stockdividendscreener.com
Which means Ford has less debt than they have cash on hand if you back out the vehicle-backed financing debt.
"Tokyo, Jan. 9 (Jiji Press)--Toyota Motor Corp. is believed to have secured the top spot in global vehicle sales for the fourth straight year in 2023.Toyota to Remain Top in Global Vehicle Sales in 2023
Tokyo, Jan. 9 (Jiji Press)--Toyota Motor Corp. is believed to have secured the top spot in global vehicle sale…
German automaker Volkswagen Group said Tuesday that its global vehicle sales rose 12 pct from the previous year to about 9.24 million units.
The Japanese automaker sold over 10.22 million vehicles globally in the first 11 months of 2023 alone."
Toyota Motor Europe posts all-time sales record in 2023
Toyota achieves 2nd place as best-selling passenger car brand in Europe for a third year runningToyota Professional sales expand by +18% to 140,000 with electrified options on all modelsLexus sales increase +46% as it becomes one of the fastest growing premium brandsExpansion of TME’s multi-path...
adiggs
Well-Known Member
Is General Motors $120 Billion Debt A Cause For Concern? | Fundamental Data And Statistics For Stocks
GM's debt level and debt breakdown analysis. Find out the debt from the Automotive and GM Financial. Discover GM's net debt, debt vs revenue, credit rating, etc.
stockdividendscreener.com
I can agree with "most". It's more like 45 out of 120 (75 unsecured), but its a pretty big whack for sure. The link is to an article that goes through the debt and liabilities in quite a bit of detail for those interested.
The debt coming due is also longer dated than I thought - 2023 was a particularly big lump year with 1/3rd of the total, or 1/2 of the unsecured, being refinanced in 2023.
GM debt is also investment grade. That's not something I've worried about (how the ratings companies rate GM's debt). What I see with financing is not the minutiae of individual bond refinances, or even any meaningful challenges for refinancing debt for the next few years. Its the relatively rare event when the lenders collectively decide "no more". Everything is fine and hunky dory until it isn't. Lehman Brothers was fine, until they weren't.
Silicon Valley Bank was fine .. until they weren't. https://www.npr.org/2023/03/15/1163269781/silicon-valley-bank-svb-collapse-history
My own interpretation, and the relevance - SVB had a critical flaw, one that was celebrated as a core competitive advantage. Until that core competitive advantage turned into a massive bank run, and then they weren't.
I see a sufficiently similar dynamic with GM (core competency and profitability from trucks in the US market, celebrated as a competitive advantage) that will be fine, until it isn't.
From your other commentary, I am convinced that we see the trends and dynamics that are influencing the future very differently.