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Forbes: When Will The Motor Industry Self-Destruct?

Forbes: When Will The Motor Industry Self-Destruct?

Forbes: "When Will The Motor Industry Self-Destruct?"

http://www.forbes.com/sites/enriquedans/2017/01/06/this-motor-industry-w...

Executive Summary

What will it take for Legacy Auto to wake up and smell the fresh air? Newcomers like Google and Tesla have not convinced legacy ICE-makers to "self-destruct" and re-invent themselves into companies that do _not_ produce products that make smoke.

From the article:

"...Although [Ford] has cancelled its investment in a conventional plant in Mexico after being trolled and harassed by Donald Trump and instead will inject $700 million in a factory in Michigan dedicated to electrified vehicles, most of those electric vehicles are in fact hybrids. Please note the difference: _electrified_, not _electric_. And we all know, that whatever the automobile industry says, its commitment to hybrids is just an irresponsible and unethical way of prolonging the life of the internal combustion engine."

SamO | January 7, 2017

Ford and GM are trapped in a terrible dream. Reactive, behind the true innovator.

Maybe VW can survive since they can mothball their diesel investments.

But traditional Auto is likely to have too much capital trapped in non-producing investments. When they attempt to transition, it will be half assed. Bolt, Leaf and the rest are objects of derision rather than desire, as a result of trying to protect their ICE investment.

Goodbye dinosaurs. Your time ruling the earth is over. Time for mammals.

akgolf | January 7, 2017

And Eagles knows all about fake!

Frank99 | January 7, 2017

>>>When the dynamic changes (which will be via government regulation)
Half a Billion dollars in reservations, without government regulations. With, in fact, direct government resistance (See Michigan, Missouri, etc).
Build an affordable, desirable EV, and the world will be yours. Tesla gets it, Nissan gets it, Toyota (at least the Prius team) gets it, GM doesn't.

Frank99 | January 7, 2017

>>> When EV demand is there, Ford and Chevy are ready to respond.
$180 Million in reservations within 24 hours of allowing them, for a car that wouldn't be delivered for two years.

Sounds like Demand to me, perhaps Ford and Chevy should consider building desirable EVs.

akgolf | January 7, 2017

And a fraction that GM gets to build their gas guzzlers. I think they just killed another puppy.

akgolf | January 7, 2017

LOL!

Tiebreaker | January 7, 2017

E, you are like eating your own vomit... regurgitated false news. How about that GM was bailed out zero to billions.. no government handout? My money went there! Ford took $5.6 billion of the same government loan, (12 times what Tesla got and repayed), no government handout?

up north | January 7, 2017

Legacy auto company's produce engines Tessa makes motors, and the oil company's globally get close to 2 trillion dollars in subsidies from from tax payers world wide yearly.

Frank99 | January 7, 2017

Well, the federal EV tax credits are available for vehicles from any manufacturer, should they decide to sell an attractive, desirable EV. And of course ICE manufacturers get huge ZEV credits for selling vehicles like the Volt and Bolt, which are only worth about half as much to Tesla as they are to GM.

And you know the story of that $465 million dollar loan in 2010 as well as I do. That would be the Advanced Technology Vehicles Manufacturing Loan Program. Other notable recipients: Ford $5900 Million to upgrade it's ICE engine plants, Nissan $1400 Million to help build it's LEAF plant, $192 Milllion to Fiskar automotive. That would be the loan that Tesla paid off in 2013.

And you conveniently ignore those other subsidies, like the $37000 million in direct US subsidies to fossil fuel: http://priceofoil dot org/fossil-fuel-subsidies/
In fact, I'm almost sure that there is NO significant size company in America who isn't receiving comparable (or more) US subsidies, when we consider the kinds of subsidies you're using against Tesla. That isn't meant to praise the subsidies, simply to express that "this is the way it is".

I'm sure that Tesla would be ecstatic to have their subsidies yanked - in parallel with GM, Ford, FCAS, Nissan, Toyota, Exxon all getting theirs yanked simultaneously. I'd include in that list of subsidies the dollars and lives we spend keeping oil flowing in the middle East.

I don't think we need more social meddling by the government, deciding who wins and who loses by who gets subsidized by how much.

tstolz | January 7, 2017

Honestly Eagles .. how can you look yourself in the mirror? You just repeat the same lies over and over.

Flagged.

tstolz | January 7, 2017

GM and the other OEMs that are trying to change slowly by continuing to invest in ICE-age technologies do so at their own peril. They are clearly headed for their Kodak moment ... I just hope we don't bail them out of bankruptcy yet again!

Word is getting out;
- Teslas compete at the same price as ICE age cars
- EVs are nicer to drive
- EVs cost 1/3 to 1/4 as much to fuel
- EVs cost much less to maintain
- EVs are more powerful
- EVs are easier to refuel 95% of the time
- EVs are quiet, clean, and allow us to breath
- Consumer demand is strong (400,000 + orders for M3 sight unseen, no advertizing, biggest product launch in history)

Once hundreds of thousands of Tesla M3s join the pack, more people will experience EVs, more people will realize what they are missing, and the ICE-age will be over. My prediction is no one will actually want an ICE by 2023.

The writing is on the wall .. I think I'll go buy some more Tesla stock :)

J. L. Brown | January 7, 2017

Just wanted to go on record agreeing with Frank99. And, while I am at it I might as well drop this little tidbit before all the ZEV-cars-are-even-dirtier-than-ICE-cars lies start to come out: http://www.ucsusa.org/clean-vehicles/electric-vehicles/life-cycle-ev-emi...

Please note the linked article isn't the meat of the comment -- that would be the two-year-long study they reference and link to.

tstolz | January 7, 2017

Yup .. definitely need more stock :)

Always skate to where the puck is going .. not to where it's at.

noleaf4me | January 8, 2017

tstolz -- I hope you are right.....my bet is closer to 2025 where it no longer makes any sense to drive an ICE -- but sooner will definitely be better!!

tstolz | January 8, 2017

No one will want an ICE by 2024 but there won't be enough EVs to go around since manufacturing won't be sufficient. People will do what they are doing now ... waiting in line and delaying their purchase. Personally, I'm already waiting for a truck and either a M3 (I'm early in line) or the next roadster. Fingers crossed it won't be long!

The OEMs are in for a shock IMHO. They have good sales now, but people will flip to EV in a heartbeat. They are that good!

Frank99 | January 8, 2017

I agree with you tstolz, but I think the manufacturing limitations are going to be the result of lack of battery manufacturing capacity more than lack of vehicle manufacturing capacity. As GM showed with the Bolt, you can do a quick design/build cycle with an EV. But if you can't buy batteries, you're in a world of hurt.

Anyone know how many multiples of current world battery production are going to be needed to supply an all-EV future?

Let's say 100 million cars / year worldwide, each with a 60 KWH battery pack - that's 6 x 10^12 WH (t Terawatt-hours. Tesla says the planned capacity of the Gigafactory is 35 GWH - so the world is gonna need about 170 Gigafactories to provide batteries just for cars. A rough estimate is that, right now, the world has 2 GF's worth of capacity. (Note that Tesla's site says 35 GWH, while Wikipedia claims 150 GWH for final capacity).

That's a lot of GF's that need to get built, and that only supports EV's.

Red Sage ca us | January 8, 2017

Frank99: I believe that Nissan was originally listed as having borrowed $2,900,000,000 (six times as much as Tesla). Unlike Ford, they may have been paying down the balance. That's why they are shown at $1,400,000,000 outstanding, currently. Hence, also why the original $25,000,000,000 of funding for the program still has around $15,000,000,000 left to offer.

Frank99 | January 8, 2017

I think Nissan may have requested authority for up to $2.9 Billion, but only actually took out $1.4B worth of loans. The data I saw said both Nissan and Ford had started repayments on the loans.
The program, though having $25B authorized, has only ever approved $8.4B, so they still have a lot available.
I really wish that this had been an EV-only program - as it is Ford, at least, is using for ICE improvements...

JeffreyR | January 8, 2017

@Frank99 Elon's estimate was 100 Gigafactories are needed. The GF-01 capacity has increased since the initial estimate so that is the likely cause of the different numbers. Also, the 100 GF number does not take into account improvements in efficiency and chemistry that will take place over time. In other words the "100" is for copies of GF-01, not the total number of factories actually built which will have greater capacity merely by building better batteries. Also, by the time EVs have taken over production the total number of cars may be less as lots of folks will ride-share instead of own, and so fewer cars will be necessary.

But your main point holds, BEVs need batteries, lots and lots of cheap batteries. Good thing high-tech economies also need batteries as well as renewable energy. So R&D into battery tech will only increase over time. Imagine a day where the "battery man" drops off a six-pack of batteries in the morning like milk bottles of old. You pick them up, and replace your old versions in your cars. Because the power in them is so dense it's easier to have them charged for you instead of having an industrial charger at the house. May be sci-fi now, but it would be cool!

bmalloy0 | January 8, 2017

@Frank: I believe Elon has said that only around 100 Gigafactory-scale facilities would be needed for the entire world's battery needs [at current levels], not 170 for just vehicles. How accurate that is I do not know, but that's what the man himself said.

Frank99 | January 8, 2017

Assuming an increase in power density, and that EV batteries start getting recycled into the grid scale programs, I can see that estimate.
GF01 was sized to support 500,000 vehicles, which is about 1/200th the number of vehicles built per year. Unless power density goes up by a factor of two, or number of vehicles drops by 50% (or some combination), 100 GF's isn't gonna meet the needs.
Regardless, for the near future, the uptake of EV's is going to be limited by worldwide battery manufacturing capacity. I think Tesla is in the best position for the next two or three years with assured production capacity, and once the start cranking up the full might of the "machine that builds the machine", they're gonna move from the weirdos in CA to a top-ten vehicle manufacturer worldwide.

topher | January 8, 2017

"I believe Elon has said that only around 100 Gigafactory-scale facilities would be needed for the entire world's battery needs [at current levels], not 170 for just vehicles. How accurate that is I do not know, but that's what the man himself said."

I think we can safely assume that it is an engineering order of magnitude estimate.

Thank you kindly.

akgolf | January 8, 2017

Kodak used to dominate their market, but they failed to adapt.

If GM is waiting for more help, they may be left behind.

Frank99 | January 8, 2017

I thought a beautiful, desirable car with a great long distance travelling solution was behind the half-billion dollars in reservations for the Model 3? Didn't think the government had much to do with it...

SamO | January 8, 2017

I sometime wonder how Tesla manages to outsell the halo vehicles from the real automakers:

Mercedes S550
BMW 7-Series
Audi 6&8 Series
Porsche Panamera
Cadillac

Must be lack of demand for electric vehicles, huh?

tstolz | January 8, 2017

Yup, the 'skunkworks' going on re EVs is just an illusion .., pay no attention ... nothing happening here. Lol

bmwgs | January 8, 2017

@EaglesPortland
Isn't there a Tesla-hater forum for you to play on?

akgolf | January 8, 2017

We're not anti-EV, we're antil troll as in EaglesPDX, Mr TrumpEagles!

SamO | January 8, 2017

How many models does Cadillac sell to get those WW total sales.

Thanks for trying dim bulb.

Red Sage ca us | January 9, 2017

SamO: Yup! And how many of those are passenger cars? That is, not SUVs? Plus, 'worldwide' is nice, but how are Cadillac's passenger cars doing here at home in the United States of America? Surely those 900+ 'independent franchised dealerships' for Cadillac are able to demonstrate their dominance over a soon-to-be 14-year-old company that doesn't enjoy the 'benefit' of their service in the 26 or so States where they are allowed to hang a shingle?

tstolz | January 9, 2017

Funny how compelling EVs don't need government support as they compete on price. I certainly didn't get any support here in Alberta ... lots of Tesla's here! Why?

- Same price as ICE (Tesla's at least)
- 1/3 the cost to refuel
- no maintenance and less to repair
- they last much longer
- they outperform ICE
- they allow us to breath

Just accept it Eagles the shift to EVs is happening. You are just experiencing the stages of grief (denial, anger, and bargaining are the first three) ... soon you will move on to depression and acceptance. Fortunately, EVs are so much better than ICE .. this change is awesome!

andy.connor.e | January 9, 2017

They will corrode into the ground as people start realizing how much more practical electric vehicles are. If they think the Petro-Dollar will last forever, they are mistaken. Its on track to be eliminated. The problem with electricity, is that you cannot control it in the way you can control oil. You cant invade countries for solar. You cant occupy wind farms. Its readily available to harness in your backyard, which is also why so many policies are being passed to stop you from going off grid.

But sooner or later, all car companies will have to switch to the new technologies. If they do not want to, then they will perish. Electric cars will soon become as affordable as economy gasoline cars, and factoring the maintenance savings over a 10 year period, there will be no incentive to get a gasoline car anymore.

SamO | January 9, 2017

+1 @Red Sage,

Thanks for clarifying for the mentally challenged.

How many S class did Mercedes sell in 2016? 15k.

And Tesla? 26,000ish?

Lol.

Sure. And the Astroturfer keeps repeating that EVs/Tesla can't compete directly with ICE.

I just can't wait for my two Model 3s.

I'm sure potential owners feel them same about the Bolt.

#lulz #drivefree

Haggy | January 9, 2017

"Kodak used to dominate their market, but they failed to adapt."

What Kodak should have done was come up with a digital camera that used film as a backup in case you ran out of room in memory.

andy.connor.e | January 9, 2017

Kodak was a company that did not advance its technology, and it will in turn fail because it cannot keep up.

topher | January 9, 2017

Actually Kodak made one of the first digital cameras. It flopped, because the technology didn't quite support what people wanted at a price they were willing to pay. This made Kodak a bit gunshy, and the passed on the digital fad when it did become viable.

Thank you kindly.

SamO | January 9, 2017

@Topher,

Kodak parallels GM and the EV1. Oops.

bj | January 10, 2017

Using the logic of the [IGNORED], there was a point in time when smartphone sales represented only 0.0067% of all phones sold. And a point in time when flatscreen TV sales represented only 0.0067% of all TVs sold. And a point in time when paid digital music downloads represented only 0.0067% of all music sold.

Therefore this proves that smartphones, flatscreen TVs and paid digital music downloads will not be commercially successful, because 99.9% of the buying public showed their preference for something else.

tstolz | January 10, 2017

2016 EV sales = 750,000
2016 Global car sales = 75,000,000
= 1%

EV growth ranged 30% to over 100% depending on country with China leading

i think you may be using old numbers E. ... EVs sales are growing so rapidly I know it's hard to keep up!

tstolz | January 10, 2017

Interesting to consider as well how people who buy EVs don't go back to ICE.

With average household car ownership at a bit over 2 cars per household it means once one EV is sold to someone, a second is only a matter of time.

We are a 3 car household ... we couldn't bear to buy another ICE-age car ... they just don't compete! The transition to EVs really picks up in 2018 when volume of decent EVs hits the market.

akgolf | January 10, 2017

Sounds like someone just can't see things changing without government making a huge commitment. Sounds like someone is going to miss the EV boat.

As far as EVs costing 50% more to own, Tesla's about to turn that around with the Model 3.

SamO | January 10, 2017

"There's nothing an EV can do that an ICE cannot do so the look, feel and function are identical yet the EV's cost 50% more to own."

+ There's nothing a flip phone can do that a smart phone cannot do.
+ There's nothing a digital camera can do that a film camera cannot do.
+ There's nothing a car can do that a horse cannot do.

Sounds frighteningly and stupidly familiar?

BTW . . . It is wrong to say that Tesla EVs cost more than comparable ICE cars. That's a fabrication and a lie. Tesla Model S is cheaper than every single comparable car:

Tesla Model S starts at $67,000
Mercedes S550 starts at $96,600
Audi A8 starts at $82,500
BMW 740i starts at $81,500
(As a joke) Cadillac ELR $65,000

Tesla is better, cheaper to acquire, cheaper to run, cheaper to maintain. It has better technology, driver interface, quieter, smoother, faster and has higher satisfaction than the others.

But please continue. You were saying?

dsvick | January 10, 2017

@Eagles - " 500,000 out of 75,000,000 cars sold, 0.0067%"

I understand math is hard, but this has been pointed out to you already... 500,000 of 75 million is .67% not .0067%, fudging your numbers to make your point only makes you look dishonest - especially when it's already been pointed out to you.

SamO | January 10, 2017

Or incredibly innumerate.

There are three kinds of people: those who are numerate and those who aren't. ;-)

bj | January 10, 2017

@SamO - I thought there were 10 types of people in the world, those who understand binary and those who don't :)

bmwgs | January 10, 2017

Does the gibberish ever end?

Frank99 | January 11, 2017

Not entirely - People are demanding AN EV, and the manufacturer is ramping production at a nearly inconceivable rate.
Tesla Annual Revenue from 2011 - 2015: $200M, $400M, $2000M, $3200M, $4000M
Genuine PIOOMA estimates for 2016-2018: $7000M $11000M, $25000M
(Assuming 100K Model 3 @ $40K + S/X revenue, then 400K Model 3 @ 40K + S/X).

CAGR through 2015 = 173%.

What's the revenue growth of Ford and GM look like again?

tstolz | January 11, 2017

At 50% year to year growth it looks like this:

2016 - 750,000 = 1% of current market
2017 - 1,125,000
2020 - 3,796,875
2025 - 28,832,520 = 38% of market size @ 75M

Considering the skunkworks going on in this area, actual growth could dramatically exceed this of course. China saw over 100% growth last year!

tstolz | January 11, 2017

Explain how a Tesla M3 at $35,000 is somehow $30,000 more expensive than a $35,000 BMW?

I'll go get a coffee.

tstolz | January 11, 2017

"New research from Bosch showed 62 percent of U.S. new car buyers believe they will own at least one full-electric vehicle in their household within 10 years or less. Of those who anticipate having a full-electric vehicle in their household at any point in their lifetime, 71 percent believe all of their household vehicles will be full-electric vehicles within 15 years."

https://electrek.co/2017/01/11/bosch-electrification-drive-units/

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