Air Quality

Published on October 17th, 2015 | by Michael Barnard

302

VW Is A Symptom Of Widespread Automotive Disruption

October 17th, 2015 by  

The VW emissions scandal isn’t an outlier, but a symptom of the reality that internal combustion cars, whether gas or diesel, have reached the limits of effective compromises that will satisfy regulators and consumers. But most car companies won’t be able to adapt and many will diminish radically or fail entirely. Electric vehicles, on the other hand, are a classic disruptive innovation that has now emerged as the obvious replacement.

41lZYsjj6dL._SX331_BO1,204,203,200_Christensen and Raynor in their classic work The Innovator’s Dilemma identified the characteristics of industries about to be toppled by better disruptive innovations. In their update, The Innovator’s Solution, they identified how market leaders could survive the transition. But there’s little sign that the automotive industry is familiar with this dynamic, or if they are, they are in deep denial for the most part.

The challenge that the old manufacturers are having is that they have to cannibalize the profits of their existing lines by making completely new vehicles from the ground up to compete. So they mostly won’t. 

The future of cars is battery electric vehicles. That’s just a reality. There are a bunch of reasons for that but here are a few:

  1. Electricity from generation to wheel is a lot cheaper than any of the proposed intermediaries such as hydrogen fuel cell and air carbon capture + electrolysed hydrogen fake-gas or diesel. No one is interested in spending a lot more for transportation.
  2. The grid is decarbonizing, but you can’t buy carbon neutral gas or diesel. Regulators are pricing carbon.
  3. The VW scandal is just making public what a lot of people already knew: it isn’t possible to make gasoline or diesel engines significantly better in the compromise space between CO2 emissions, NOx and other pollutant emissions, mileage, performance, and engine longevity. That road, amazing as it has been, has reached its end.
  4. Electric cars just outperform everything else. I recently ran across a video of a 1968 Mustang fastback conversion to electric that give it 1.94 seconds to 60 mph and a top speed of 174. Teslas, obviously, are currently reaching 60 in 2.8 seconds with heavy, five- or even seven-passenger luxury sedans. The quickest two production cars in the world are gas-electric hybrids, because you can’t be fastest without electric motors these days. And the pitiful handful of fuel cell vehicles on the road are sluggish, because batteries are much more efficient at delivering electricity than fuel cells.

If you don’t believe me, how about the CEO of Aston Martin?

Palmer said it’s inevitable that the entire industry will shift over to electricity, if only because it’s the most plausible way to deliver the power drivers expect.

But to make a good electric car you have to start from the ground up and throw a bunch of stuff away:

  1. You have to throw away your frames. All of them. To build an effective, long-range, high-performing electric car, you have to start with something like the Tesla power slab at or below the level of the axles.
  2. You have to throw away all of your engine management software. All of the experience built up on eking amazing compromises out of an internal combustion engine is irrelevant when faced with an AC or DC motor.
  3. You have to throw away your internal combustion motor. No hybrid, serial hybrid, range extender BS. You have to throw it away. And start with the assumption that you are going to achieve range, fast charging, and performance by committing to electric motors and batteries.
  4. You have to throw away all of your mechanical steering and control systems. Everything is drive-by-wire. Anything else is a waste of space, weight, and time. All of those experienced engineers, all of those solutions that worked, gone. They all assume frames that you don’t have any more, and specific areas for mechanical linkages which are no longer there.
  5. You have to throw away all of your traction control systems. They are all designed around the ludicrously varying power output of an internal combustion engine, which changes literally every microsecond at every change of speed and driver input because those engines have such narrow power bands. Instead, you can rely on tremendously straightforward power to your wheels which is much more finely controllable. Your actual traction control results will be much better, but all of the hacks you built up will be useless.
  6. You have to throw away all of your emission controls experience and knowledge and technology and investments and branding. It’s completely unnecessary.
  7. You have to throw away your entire fuel storage and delivery system. The tank, the lines, the pumps, the injection systems, all of it. It’s all obsolete.
  8. You have to throw away your body panels. They all depend on the frame and the gas tank and the mechanical linkages taking up space that they don’t take up anymore.
  9. You have to throw away your seat mounting systems, and possibly your seats. They expect a lot of wasted space due to motor and transmission drive shaft hump and gas tank that just aren’t there anymore. They depend on a frame which doesn’t exist anymore.

Tesla discovered this the hard way by trying to base the original Roadster on the great little Lotus Elise. They admit, somewhat ruefully, that it would have been a lot easier and cheaper to start from scratch. And they had no existing technical debt, politics, or any other barriers to making the right decision.

If you do all of that, what are the implications for an automobile manufacturer?

  1. Virtually all reusability between existing models and the new models is gone. This is a complete disruption of the economics of the car industry.
  2. The most powerful divisions within car companies lose almost all power.
  3. Massive investment in new frames and panels is required.
  4. Massive investment is required in new control systems.
  5. Completely new supply chain partnerships have to be forged.
  6. All of the executives and engineers who have made your company great on the back of internal combustion engines have to accept that they are back to close to zero. A lot of the engineers won’t have any role in the new world, or any way short of significant re-education and starting from junior positions to stay employed.

So what’s going to happen to the car industry?

  1. Virtually all of the majors will continue to deny the reality of the situation and continue to bet on cars with traditional frames, limited batteries, limited electric range and performance and with internal combustion engines continuing to do the heavy lifting.
  2. New competitors such as Tesla and Apple will kick the traditional cars to the curb in every way. More will enter as it becomes obvious to corporations outside of the automotive industry that a massive disruption is killing the traditional car companies and that they are incapable of responding to it. So traditional electronic and electric motor companies will start wrapping cars around their expertise. Motorcycle companies such as Lightning and Zero will be approached to build cars instead of bikes.

Can we see this happening already? 

Yes, BMWs strategy is exactly as pointed out above. Their two existing cars, the i8 and the i3, are both inferior to the Tesla in most ways, both require gas engines to get more than a rather pitiful distance (and space for the engines and gas tanks and lines and pumps are all set aside in the i3, so it’s not like you can do anything useful like extend the battery pack). The frames pretend to being unique but they still expect a lot of traditional crap being there which is obsolete. And their strategy of electric motor components in their entire range by 2025 still has no explicit plans for real electric cars that could compete with Tesla, just more crappy electric cars with internal combustion engines for real driving.

And BMW is one of the more innovative and adaptable traditional motor companies.

VW, the company currently most incented to change its thinking, just announced that it’s going to invest less in diesel and put some money into electric cars, mostly more hybrids, which perpetuate the problem as outlined above.

So what will be the result?

Most of the current major car companies will fail because they can’t adapt to the disruption that electrification is bringing to their industry. They will refuse to cannibalize their other products. They will refuse to shift power and money to the electric divisions. They will refuse to engineer true electric cars because the economics don’t make sense until they don’t have any money to do it anyway.

If you’re having challenges believing this, I’d suggest you read (or re-read) Christensen and Raynor’s The Innovator’s Solution. This pattern has played out innumerable times over the past 100 years. Remember RCA? Philips? Control Data? Burroughs? Kodak? These are companies that wouldn’t adapt to disruption. A bunch of familiar car companies will likely be added to the 2030 edition of their book.


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About the Author

For the past several years Michael has been analyzing and publishing reports and articles on decarbonization technologies, business models and policies. His pieces on electrical generation transformation and electrification of transportation have been published in CleanTechnica, Newsweek, Slate, Forbes, Huffington Post, Quartz, RenewEconomy, RenewablesInternational and Gizmag, as well as included in textbooks. Third-party articles on his analyses and interviews with Mike have been published in dozens of news sites globally and have reached #1 on Reddit Science. Much of his work originates on Quora.com, where Mike has been a Top Writer annually since 2012. He also has published a climate-fiction novel, Guangzhou Future Tense.



  • Curt Coleman

    But it does, the motor cruising at 60mph uses a mere percentage energy in the battery relative of the generator catching the wind coming in the car nose and captured in a jet tub from nose… charging the battery right up sick your head ouT your window and feel the force

    • Bob_Wallace

      Curt, when you stick your head out the window you increase drag. You lower the aerodynamics of the car.

      That means that you use have to use more energy to move the car forward.
      Right now car companies are trying to get permission to eliminate side mirrors on cars and replace them with video cameras like the backup cameras that some cars use. Taking away the mirrors would make the cars more aerodynamic, reducing the energy it takes to move them.

      Sticking a turbine into the wind flow loweres the Cd, the drag coefficient.

  • Curt Coleman

    I am finishing up this month… There is a guy google on Google it up . fan powered electric from China. It works motor battery generator wind turbine blade. Regular batteries for weight. Always charged with those 60 mph winds coming down the nose catching the air.. Quite simple, mobile wind turbine…no plug no range..no worries. I hold the patent too. Chat it up Coleman Motor Company, we are at Stanford this week and VCs to give cocky pricy tesla a run. Keep close we will be announcing and hiring soon..

    • Bob_Wallace

      Kind of hard to understand your writing, Curt.

      If I’ve got this right you are attaching a wind turbine to the car and feeding the power back into the car batteries as it moves down the road?

      If that’s what you’re saying then, sorry, that will not work. It takes energy to move the turbine blades. Turbines are not 100% efficient. The turbine will lower the EV range rather than increase is.

      Give this a read –

      https://www.reddit.com/r/AskReddit/comments/38wy4u/why_cant_cars_capture_wind_energy_while_driving/

  • Curt Coleman

    Check out the mini wind turbine generator for the EV transmission housing at Coleman Motor Company, plug free, unlimited range cool! Full charge all day and no special batteries

    • Bob_Wallace

      Your post doesn’t make sense to me, Curt. You’re putting a mini turbine on and EV transmission housing?

      I’m not sure how that would work. Furthermore is sounds like you might be getting into perpetual motion machine territory.

  • Doug

    Best strategic assessment of Electric Vehicles in a long time. Spot on. I’d like to add to the conversation the potential opportunity for China and maybe India. They currently can’t compete in the ICE market because they are so far behind in ICE technology and pollution controls. EVs skip all that – companies such as BYD can step right in with low cost, high performance, zero emissions vehicles.

    • Yes, many commentators and specifically commenters on this material in the places its showing up are claiming low penetration of electrics in China because they are looking only at traditional brands, not at the enormous number of Chinese manufacturers or what the Chinese government is doing. There’s also a very substantial disconnect on the nature of driving expectations in China vs Europe and NA. Basically, there’s a Eurocentric / NA-centric perspective that leads to ignorance about the huge China market and what’s happening there.

  • Mike – much of what you allude to is covered in this short video. Modec was a UK start up that had much promise but not enough money – I was sales Director there. In and around all this – my personal bet was to electrify the Black Cab Fleet by equipping them with a battery swap solution – but that’s another story…

  • No, VW is symptomatic of the engineer/marketer/manager relationship common of every industry. Starting around day one of the industrial age. It can be effective and it can really suck. If the person at the head is a sociopath, a common trait of many entrepreneurs and managers, it may lead to mousy engineers and technical people to keep their mouths shut and simply follow orders. Go along to get along or “hey, I have a family to feed – so I’ll just do what I have to do.” The writer here is simply trying to promote the common “break things” meme of Silicon Valley. And do a Ted Talk(TM).

    Let’s use an apt example. An essential movie for all engineers and technology enthusiasts (and fanboys on blogs) to watch is called “Shoah.” It’s a nine hour documentary on the holocaust so it’s kind of a slog for the twitter generation. The movie didn’t focus on pictures of dead bodies, but on the villages around the camps as well as those participating in the killing machine.

    One of the scenarios in the movie focussed on the engineering behind the vans that transported people (called “load” in design speak) to the camps. These vans routed the exhaust not outside, but into the hold in the back. The documentarian basically just put the movie camera inside pointing towards the windshield. The visual was an industrial facility. Probably a coal power plant. As the van drove around the perimeter.

    The audio was simply reading word for word the engineering design specifications for the killing vans. No editing or additional discussion. It was probably the most intense and evil thing I’ve ever heard. Not because it was over the top with imagery and language. No, simply the banality of it all. Every technical person in every industry that requires design of something has technical specifications. To read engineering speak for these killing vans made the young engineers, who were simply glad to have a job, come off as completely deranged. However, they were just following orders. From a person who took over the country and liked to “disrupt” and “break things.” Or start an empire completely from scratch after burning down the old empire.

    Funny thing. The catox emissions fix on VW diesel was researched and developed, if I’m not mistaken, around 1989 to 1992. Mercedes bought the patent. VW didn’t want to put catox on its cheaper cars – mostly to not pay licensing fees to a competitor and make a few bucks. I believe a chunk of the research dollars came from the State of Colorado and US DoE. So as VW is forced to put controls on 2 million cars – the US should get some of that money back.

    • Bob_Wallace

      They were not simply following orders.

      They had been convinced that the people they were helping to kill needed to be killed. That is extremely common – demonizing one’s enemy. We do it all the time even in the US. We demonize each other now.

      • Like a healthy democracy, push back and skepticism are essential for good deployment of technology that benefits the majority and minimizes impact to livelihoods along the way. Be it from the engineers during early design or us here in the peanut gallery of a tech blog. The best question to ask should be asked first, “is all this even necessary.” Another good question to ask is, “the world is pretty screwed up right now with 7.2 billion people and much environmental damage. Many people are unemployed and underemployed. Many people are disillusioned and suffering. Should we really put so much emphasis on things that will make the matter worse before making it better, simply out of self interest of a few’s interest?”

        When billionaires (Jeff Bezos) purchase newspapers (Washington Post) and hire Obama’s former press secretary (Jay Carney) to quash criticism (New York Times), the gloves come off. Of course the rich and powerful who influence billions have feelings, too. However, one can buy thick skin on Amazon. Or is it Alibaba?

        • Bob_Wallace

          Job elimination via automation is a very broad issue, not limited to car/truck drivers. We’re going to have to figure out an answer that covers everyone.

          Necessary or unnecessary, it will happen. Technology will almost certainly continue to advance in every aspect of our lives.

          The question of how to fairly distribute goods as work shrinks is an immense question. We might need some sort of new social philosophy to emerge that would give us some guiding principles. We’re not going to start breaking the machines that take our jobs.

          • This is an excellent statement/question you made. I’ve been looking into this lately. The graph below is produced by George Mason U. It presents the growth of connected devices to the internet. We’re going to see an explosive growth over the next 10 years. Chiefly from the “internet of things.” The graph below doesn’t even include vehicle automation, given the industry’s infancy and limitations on projectability for a reviewed study. Guesses are usually not good form. We’ll see an increase of 3 to 4 in connected devices in just 4 to 5 years. Data centers already use about 2 percent of the world’s electricity. And the combined total including devices is estimated to be as high as 10 percent. We’re going to need a lot more solar panels to power the cloud going forward.

            http://mercatus.org/publication/projecting-growth-and-economic-impact-internet-things

            Brave new worlds.

          • Carl Raymond S

            Where there is disposable income, there will be jobs. The nature of the work simply changes. As the essential stuff becomes automated, the number of people working in non essential services increases: cosmetic surgeons, manicurists, poets, entertainers, film-makers, cartoonists, writers, bloggers, sportspersons, waiters, photographers, painters etc.

          • Bob_Wallace

            In you list are a number of jobs which can be performed as well or better and probably cheaper by machines. Perhaps machines not yet developed, but ones that are likely.

            Plus we get back to the 1% problem. If factories are owned by one or only a few people and they employ no one how does their earned income filter down. More of Ronnie’s pissing on us? Would we settle for that long term?

          • Besides cosmetic surgeons, will any of those people you cited actually getting paid? This sounds a bit trickledown-y. I really don’t care too much for myself – automation is key to chemical engineering. Refineries, metal mills and groundwater remediation systems have gone through automation. It’s just I worry about the other 300+ million people in the US who don’t have a background in I&C.

  • Kevin McKinney

    Interesting article and thread. I can’t help but wonder, what will the impact of fully autonomous cars be, should they come onto the market? Will mobility become more of a service you rent/subscribe to, rather than a product you spend most of your life in hock to recurrently buy? What will the total sales figures look like, and what will typical price points look like? Ie., how much ‘pie’ will there be for manufacturers to divvy up?

    It could be another huge wave of disruption–and pretty clearly, if we’re bringing Google and Apple into the conversation, as several commenters have done, then that’s what we’re implying, since autonomy is clearly Google’s focus, and would presumably be Apple’s, too.

    It’s interesting, too, that young folks don’t seem to feel the same way about driving as the last couple of generations did. There seems much less interest, on average, in that first driver’s license–anecdotally, anyway.

    • Bob_Wallace

      I see a huge interruption. Obviously many drivers will no longer drive for a living. The number of cars owned should fall by a huge number. Why own a car when, for less money, you can get picked up where and when you want and driven to where you want to go.

      If you don’t own but ‘pay for service’ then you would have a choice of a small commute car, a car for a long trip, a many-passenger van, a pickup truck or van (of various sizes) for hauling stuff. You could take a commute car to work but come home in a pickup with your new sofa in the back.

      Car manufacturing will shrink. Companies will cut back or drop out. Prices will be set by the market as now. Companies will only make and sell if they fell the profit they make is reasonable.

      Prices will likely depend on the service you want. Want to be picked weekdays at 7:35 AM and delivered to your workplace by 7:55? Arrange your schedule ahead of time and you’d probably get a discount over someone who wants to be picked on the spur of the moment. Willing to be flexible and get picked up anywhere between 9:30 and 10:15? Discount. If you are willing to carpool/share then you get another discount.

      Driving is not as much fun as it used to be and it’s far less necessary. When I was young cars were how you spent time with your friends. Now there are so many other options. So few now live in rural setting where it’s too far to walk, bike or skateboard to see your friends. We scraped for money to buy cars and keep them running.

      • Kevin McKinney

        That’s definitely a scenario I was thinking of. But I also recall that “Prediction is hard–especially about the future.”

        😉

        • Bob_Wallace

          But some predictions are easier than others.

          Shooting a watermelon with a 12 gauge shotgun will make a mess. You predict yes or no? ;o)

  • Carl Raymond S

    I hope you were all paying attention when Tesla entered the mapping game overnight with an over the air update. With a single software update, they are now gathering topographical data 100 times richer than any competitor. It’s no longer a fair fight. Tesla has the best cars, the only supercharger network, and now a free revenue stream. If only they had a huge factory pumping out the best batteries… oh, wait.

    • mike_dyke
      • Carl Raymond S

        Thanks – of course you were. Perhaps you can clarify something in your next article that has me puzzled. What is the accuracy of GPS? In the old days to get an accurate fix, in addition to three/four satellites, you needed a land based reference point of known location. The reference point (a lighthouse, say) would also have a gps device and calc its location from the satellites at the same moment in time. Since it knew where it was, it could calc a fudge factor, then apply that same fudge factor (inversely) to the moving object. It all happened wirelessly and instantly, so to the moving system (a ship, say), it appeared accurate to the centimetre.

        When the system was ‘demilitarised’, it became more accurate, but by how much? Is it sufficient to position a car midway between two invisible (snow, heavy fog, new tarmac) lane markers, or will the car wander over the lines? Or have Tesla worked out a way (or require a way) to get an accurate fix based on feedback from the camera? The mathematics for such a feat are far more complex than in paragraph one. Of course, as with all things computing, you only have to crack it once.

        A clever solution will require most of the processing to occur in the car before any transmission, otherwise bandwidth will be the killer. Any transmission has to be mostly numbers, not pixels.

        There are two different scenarios where the car’s longitude and latitude accuracy are critical. The first is when it collects the data and shares it. The second is for a car attempting to use the data to position itself.

        • Bob_Wallace

          “The first is when it collects the data and shares it. ”

          When one collects hundreds or thousands of sets of data for a particular stretch of road accuracy increases greatly. The outliers, the really screwed up date, gets minimized.

          “The second is for a car attempting to use the data to position itself.”

          What we (I at least) don’t know right now is the full extent of the data collected and shared. Is it only lat/long? Or does it include “three story building 50.23 meters away at 42.73 degrees left of center”, “overhead bridge 123.72 meters ahead” type stuff.

          This may be the way self-driving cars navigate with snow on the ground. Triangulate off taller objects. Scan ahead for snow depth.

          • Carl Raymond S

            ..now you’ve got me imagining an algorithm that factors in the growth rate of various species of tree. Hell, they would even know how much rainfall there had been based on the windscreen wiper data – factor that in too.

          • Bob_Wallace

            You’re right. Ambient temperature. Add a CO2 sensor. Add a solar sensor. Add a ‘something else’ sensor. Millions of research vehicles on the roads at any moment in time.

            Data, baby! Loves me some data….

        • mike_dyke

          Accuracies of GPS:-
          https://www.ordnancesurvey.co.uk/business-and-government/help-and-support/navigation-technology/gps-beginners-guide.html

          Effectively you can get down to less than a metre with current smart phone technology but other versions are available which can go down to millimeter accuracy!

          http://gpsworld.com/accuracy-in-the-palm-of-your-hand/

          What the Teslas use – I’ve got no idea, but knowing where the car is to that sort of accuracy should give you enough detail to stay in the lane if you can’t see the road (assuming enough Teslas have driven that route)

  • neroden

    *Cough*. This is *almost* all true, but I have to make a couple of points:

    — The Tesla retains rack and pinion steering. This is a *safety feature* in case of total electrical failure, allowing for continued steering control.
    — The Tesla retains hydraulic brakes. This is a *safety feature* in case of total electrical failure, allowing for continued braking.

    Those aren’t going away.

    The steering column and brakes are the two most “off-the-shelf automotive” parts of the Tesla Model S.

    • Mea culpa on the steering. But I don’t say anything about brakes.

  • RexxSee

    Established car makers are expecting a 20 years transition, don’t invest much in EVs, make them weak and short ranged on purpose to protect their ICE lucrative business.
    Is the petro-automobile cartel strong enough to resist the Tesla, Apple, BYD, Google etc.. assault?
    Will the momentum grow like wild fire as every owner of an EV will never want to go back to an ICE dinosaur?
    The offer from ICE car makers is ridiculous. They want it to stay very low. The offer must come from elsewhere to wake them up.

    • Bob_Wallace

      Established car manufacturers under-deliver at their peril.

      Tesla is rolling toward 500,000 units by 2020. If Tesla doesn’t stumble and an inadequate number of companies step up with competitive cars look for Tesla to quickly double production and then double again. Capital will be no constraint.

      And I suspect at least a half dozen other companies (Nissan, Renault, Volvo and some Chinese companies) will be grabbing market right along side of Tesla. The market will move to whomever delivers and past prominence will count for nothing.

      • newnodm

        500,00 is the reach goal. 350,000 would be doing great. Yet 500,000 is less than three days of worldwide car demand in 2020.
        Why is it never said that Tesla can’t compete today with, say, the Focus EV?

        • Bob_Wallace

          Ford does not have a long range EV.

          Ford has a limited range EV that is selling at about 1/13th Tesla’s level in the US.

          Ford has the capacity to produce far more of their EVs if they had demand. IIRC, Ford built their Focus lines so that one or all could be converted to EV production in just a few days if demand justified.

          Tesla has just doubled their production capability so if nothing changes in a few months Ford should be selling about 1/26th as many EVs as Tesla.

          Now, how did you come to the conclusion that Tesla can’t compete with the Focus EV when Tesla is selling 13x as many cars?

  • eveee

    Mike – Salty, but flavorful. Maybe a bit exaggerated because tires, brakes, windshield wipers, and cupholders remain the same. 🙂

    • Well, you’d have to point out where I said that tires, brakes etc go away for me to buy the exaggerated part. But I’ll definitely take the salty but flavourful. 😉

  • Ian

    Volkswagen spent 13.5 Billion on R&D in 2013. I don’t think they’re shy about adopting new technologies if they can make a buck. The point is well taken that successful EV designs will come from taking a fresh look at everything, but I think many of the incumbents are perfectly ready to do that. Tesla makes their cars in an old gasmobile factory- In other words, these incumbent companies have a lot of resources and expertise that can carry over into electrics. One thing they have is huge scale, albeit not in electrics, which is exactly what Musk is trying to get to bring down costs. Should they choose to risk it, one of the big incumbent companies could achieve that scale very quickly.

    • newnodm

      When I worked at GM I walked by the area most days where they wound large DC traction motors. This was in a small GM division with twice the employment Tesla has at Fremont.
      The ignorance of the size, breadth and expertise of major manufacturers is really quite amazing. VW is perfectly capable of making a great EV.

      • Ulenspiegel

        However, according to a VW manager I know they are not able to produce EV in large series that make money. Therefore, for me the race is still open, can Tesla get the high numbers first or a traditional producer a economic useful product?

        • Bob_Wallace

          I’m not sure what you’re asking.

          You’re saying that the person at VW said that they couldn’t sell enough volume at current prices to make money?

          That may be true. They may need cheaper batteries in order to make money on an EV selling around $30k or a bit more. Tesla and GM will probably have the batteries within the next two years. GM is talking $145/kWh.

          The race is wide open. Tesla is planning on getting to 500,000 cars in 2020. No one else has talked abut growing their EVs that fast. That’s half a million out of about 60 million new cars sold per year.

        • newnodm

          Tesla also isn’t able to make a large EV that makes money today.

          • Bob_Wallace

            I’m confused. I thought that when you made something and the sold it for more than it cost you to make it you were making money.

            What is it called when you make something and then sell it for more than 20% more than it cost to make? If it’s not making a profit what would you call it?

          • newnodm

            You are confusing gross profit with profit. You are also comparing a niche maker of a luxury good with the largest auto makers.

          • Bob_Wallace

            No, I am showing an understanding that Tesla manufacturers a large EV and makes a profit off that manufacturing.

            The “loss” Tesla Motors, the company, show in its financial report comes from spending on expansion. Not from manufacturing.

            I’m not confusing gross profit margin with overall profit. When people state that Tesla loses money manufacturing EVs they are confused.

            Now let’s compare Tesla sales with another “largest” luxury car manufacturer.

            Daimler

            2015 Q2 22.25%
            2015 Q1 21.99%
            2014 Q4 2 0.79%
            2014 Q3 22.64%

            That’s GPM. I’ll put Tesla’s at the bottom. Check it quarter for quarter.

            Now let’s consider profit margin for cars sold (excluding business expansion spending).

            “Daimler is spending about €6,000 a car on advertising and marketing compared to €1,500 at Ford Motor Co. and General Motors Co., he wrote.

            VW has the highest per-car spending on marketing and advertising—about 14% of total spending, or twice the amount that Ford spends, said Mr. Warburton.”

            http://www.wsj.com/articles/in-luxury-race-profits-get-dented-1426208841

            Tesla isn’t spending any of that. Tesla does not advertise, they’ve been clever enough to figure out how to get lots of free advertising.

            So what we have it Tesla making a very nice GPM and spending little to sell their cars (they do operate showrooms).

          • newnodm

            Until tesla is consistently profitable the COGS number on the income statement can’t be trusted. It is beneficial to them to claim a nice margin on the car. But they have latitude in what is expensed against the car. And what is expensed or depreciated.

          • Bob_Wallace

            If you’d like to climb inside the Tesla’s GPM and take a look at the nuts and bolts I’ll give you a good door in.

            As a intro , “Logical Thought” is a person who post Tesla attacks all around the web. He’s made numerous anti-Tesla comments here. LT is in the investment business and his motives are frequently questioned.

            http://seekingalpha.com/article/2790765-the-truth-about-teslas-gross-margin

          • newnodm

            As a TSLA shareholder I’m fine with the financials. But I understand that the only expense they are putting in COGS is what they feel they have to.

          • Bob_Wallace

            That’s fine.

            What, IYHO, are they leaving out that other car manufacturers are putting in?

            What, IYHO, makes Tesla’s GPM non-comparable to Daimler’s?

          • newnodm

            First I’ll need you to fund a team of CPAs experienced in manufacturing, and get permission to send them into Tesla and Mercedes. I may also need some former FBI agents with lie detectors. And ice cream.

            Is the FTC for EVs into Tesla’s gross profit calculation?

          • Bob_Wallace

            That sounds like someone tap dancing away rather than doing a little reading. ;o)

            Between the piece I linked and LT’s original piece things should be fairly clear. LT does his best to discount Tesla, the linked article criticises what LT wrote.

            All the laundry should be spread out for you to examine.

            “Is the FTC for EVs into Tesla’s gross profit calculation?”

            Is you Google Search busted, bro?

          • Bob_Wallace

            FTC – Federal Tax Credit.

            No. The FTC goes to the buyer, not to the manufacturer.

            Tesla’s leasing division probably uses the FTC for the cars they place in lease, I don’t know how they are structured. But the money would not be included in manufacturing costs.

            When you typed FTC I was thinkin ZEV. I’ve been trying to figure out whether the ZEVs are included in the GPM. If so, as one site claims, it would lower the GPM some but leave it positive and high for the industry.

          • newnodm

            Wow

          • Ulenspiegel

            That statement is debatable, I know people from car industry who believe that Tesla makes money with their current proiducts. However, they also state that Tesla does not have an product for the masses. Therefore, I am a little bit sceptical with the 500.000 units per year until 2020.

          • newnodm

            My point is that Tesla undoubtedly has costs that really belong in cost of good sold that flows to cost center that accumulate in other expense categories. I don’t doubt that Tesla has established a higher end car company that could be profitable on its own.
            Tesla simply can’t be, and shouldn’t be, super efficient at this point like Toyota.
            All public companies manipulate their financial statements to their own benefit. This is a doable practice as long as the P&L for the entity sums over multiplet periods to a reasonably accurate number.

          • Bob_Wallace

            You could read the links I provided to you and see if you are able to specify what those costs might be. As I recall there is some debate as to how much of the company R&D should be charged to ModS production. Some point out that a lot of the research spending is not ModS specific but work done on future models, the Gigafactory, Superchargers, etc.

            “Tesla simply can’t be, and shouldn’t be, super efficient at this point like Toyota.”

            No one is arguing that. Tesla has a higher GPM largely because it builds a luxury car which can be sold at a higher GPM. Rich people tolerate higher prices if it’s something they want.

            This is precisely Tesla’s strategy. Start with a product with a a high GPM and use those earnings to create the capital needed to build higher volume, lower GPM vehicles.

            The next model, the Mod3, is expected to sell for about $35k and should have a higher GPM than the Corella.

            The higher earnings per Mod3 will help Tesla grow to where it can make the next cheapest EV (200 miles for $25k?) which will have an even lower GPM.

            That has been Tesla’s strategy from day 1.

          • Ulenspiegel

            They make with premium cars a lot of money per car this with an lean structure. They invest in more production capacity. What is the issue?

            Not even their opponents do believe that Tesla makes a loss.

            We may debate that the expansion is too slow.

          • newnodm

            http://www.pluginamerica.org/surveys/batteries/model-s/vehicles.php

            Almost every Model S will have its drive unit replaced under warranty.

          • Bob_Wallace

            There’s nothing about drive train replacement on your linked page.

          • newnodm

            open the comments on the high mile cars

          • Bob_Wallace

            You mean open the log for every car on the list and look for issues?

            I found this online. It does look like Tesla has some problems to solve.

            http://www.latimes.com/business/autos/la-fi-hy-consumer-reports-tesla-models-20151020-story.html

          • newnodm

            Sample the high mileage cars and look for DU replacement. Most have had that work done.

          • Bob_Wallace

            See my earlier comment. There are a few dozen cars on that list. Tesla has sold tens of thousands. A voluntary survey isn’t reliable data.

            BTW, weren’t a lot of drive units replaced because at a certain speed they made a slight noise? IIRC Tesla pulled drive units, replaced them with a unit that had already been serviced. Then pulled those units apart and inserted a shim which eliminated the noise problem.

            I would imagine that once they figured out the problem future drives did not make that noise.

          • newnodm

            Right, you don’t like the survey because it shows multiple DU replacements for most high mileage cars. By your standard only Tesla can evaluate if they are building quality cars.

          • Bob_Wallace

            What do you not understand “Stuck pigs squeal”?

            I’m guessing you don’t have much background in data collection? One does not get reliable data from a handful of self-reports. The survey has 369 respondents, Tesla is closing on 100,000 sales?

            I said nothing about not liking the survey for what it reports. I’m trying to explain to you why that data provides no basis for saying anything. And if you’re paying attention I linked an article that says Consumer Reports states that Tesla needs to improve quality control.

          • Bob_Wallace

            We’re posting too fast. ;o)

            “BTW, weren’t a lot of drive units replaced because at a certain speed they made a slight noise? IIRC Tesla pulled drive units, replaced them with a unit that had already been serviced. Then pulled those units apart and inserted a shim which eliminated the noise problem.

            I would imagine that once they figured out the problem future drives did not make that noise.”

          • Bob_Wallace

            Production of the ModS and ModX should be in the 100,000 unit range next year now that a second assembly line has been opened.

            Starting in 2017 Tesla plans to be shipping a 200 mile range $35k EV, the Model 3. They need the Gigafactory operating to produce the volume of batteries they will need to produce 500,000 EVs a year.

            If they can easily sell 50,000 $70k to $140k EVs it seems a safe assumption that the market for ‘average priced’ EVs could be a lot higher.

            That means from 2017 to 2020 they will need to open about eight more assembly lines.

            Tesla also just opened a second assembly plant in The Netherlands. Apparently they are ready to build (at least assemble) cars closer to markets.

  • Ivor O’Connor

    The article mentions Tesla and Apple. However the Chinese have many billionaires developing Tesla clones. This industry is likely to be dominated by the Chinese within 20 years. Like they have dominated computer chips.

    • newnodm

      A better analogy for computer chips is autonomous driving. EV’s are fancy golf carts. Once batteries are cheap enough and light enough production will favor the lower cost manufacturers. But as big items they will likely be manufactured on all continents, as is the current car biz.

    • Dag Johansen

      Chinese dominate computer chips? You need to let Intel, AMD, Broadcom, Qualcomm, TI, Altera, Nvidia, and others know that.

      There are lots of fabs in China and Taiwan but they are not dominating the design.

      • newnodm

        I think you missed the sarcasm. Either that, or Ivor is going soft.

      • neroden

        Aren’t they? I think China does dominate the design of low-end chips. The Western companies have completely stopped making RAM, for example.

  • Alex Cocan

    Great article Mike!

  • Larry

    Good By Chrysler and probably GM

    • newnodm

      You don’t think the Bolt will be competitive? $30K, 200+ miles. Out next year, I think.
      The 2016 Volt is probably a better choice for many people, but the Bolt specs looks really good.

      • Michael G

        And GM’s Spark EV (limited sales) is very highly regarded among the few that own/lease them.

  • Christian Koncz

    Very nice summary. I remember reading an interview with a German auto executive about electric cars back in 2013 (I think he was at VW) saying that electric cars will never be able to get better range than about 200 km or 125 miles due to the limits of battery technology. Remember, this was in 2013, when Tesla Roadsters with double that range have been around for 5 years already and the model S was already in full production. He is an auto executive that didn’t even know a competitor has already achieved years ago what he said was impossible. This is how backward and hopeless current automakers are.

    • JamesWimberley

      Anybody who thinks this at VW today is headed for the door.

      • eveee

        The door with large metal vertical bars?

    • newnodm

      They are far from clueless. CEOs are responsible for good quarterly profits, and aren’t interested in making what most people don’t want today. Most majors will pivot successfully when necessary.
      Toyota in particular is not interested in ruining their excellent Prius business by anointing EV as the next thing.

      • Ivor O’Connor

        That’s the problem. CEOs responsible for quarterly profits and not the companies survival ten years from now.

        • newnodm

          You are think that propelling a vehicle with a battery and a motor is a big challenge for companies that build modern eight speed transmissions?
          Electrification is simplification for auto manufacturers. Electrification is replacing complex propulsion with a simple one or two speed system that can be purchased whole from an outside vendor, if desired.
          While there will be changes in market share, no one is going to be able to create a high margin business because there is little IP to differentiate products. AC motors driven by inverters is well understood.
          Musk would not have started the gigafactory if he thought his vehicles would have high margins. He doesn’t think he will have high margins because he knows what it takes to make a good EV.

          • eveee

            You are think that propelling a vehicle with a battery and a motor is a big challenge for companies that build modern eight speed transmissions?
            Yes.

            Electrification is simplification for auto manufacturers.

            No. its simplification for us looking at a simple diagram. Its complex for people that don’t have existing expertise in EVs no matter what other expertise they have.

            Electrification is replacing complex propulsion with a simple one or two speed system that can be purchased whole from an outside vendor, if desired.

            No. EV components cannot be purchased in volume from existing vendors. If that were true, the Bolt would not be limited to 30,000 the first year. Show me the EV motor vendors. Show me the battery pack vendors. They don’t exist. Supply chain. Supply chain.

            While there will be changes in market share,
            no one is going to be able to create a high margin business because there is little IP to differentiate products.
            No. You can’t duplicate low emissions and performance any other way.

            AC motors driven by inverters is well understood.
            Yes.

            Musk would not have started the gigafactory if he thought his vehicles would have high margins. He doesn’t think he will have high margins because he knows what it takes to make a good EV.

            No. He knows there is no supply chain and capital must be used to create GigaFactories and SuperCharger networks.
            Once done, he will hold a commanding lead. Thats his perspective, and its working nicely.

          • newnodm

            You are confusing the knowledge of hobbyists with the capabilities of major manufacturers.
            And how would you possibly know the secret plans of the many major battery manufacturers and their customers?

            Musk’s position in the battery market is unassailable, yet Tesla has literally never made a even single battery. Right.

          • neroden

            Pretty much every other EV maker outside China is buying from LG Chem, but LG Chem is undercapitalized and lacks the volume production necessary to scale up.

            Yeah, Musk’s position in the battery market is pretty unassailable — except for some of the Chinese companies. BYD makes their own batteries.

          • Bob_Wallace

            LG Chem is expanding. It is assumed that they have a 200,000+ battery pack capacity at their main plant. They have a 50,000 pack plant in Michigan. They’re building a 100,000 pack plant in China. And they’re in the planning stage for a 100,000 pack factory in Europe.

            That would take them to or above 450,000 pack capacity. That’s 90% of Tesla’s Gigafactory which isn’t scheduled for completion until 2020.

          • eveee

            No. I am not confusing hobbyists with car companies. I have a knowledge of both. There are real world examples of major car companies stumbling making EVS. GM, MB, Mitsubishi, Ford, others.

            Fords Focus EV conversion, the BMW mini conversion and converted ICE cars are quota cars that do not measure up as well as purpose built EVs. Designing and building an EV is not an easy task at conventional ICE cos

            .

            I don’t need to know secret plans. I know history. GM cannot supply more than 30,000 Volts due to supply chain. Batteries.

            Tesla has no such limitation.

            You are the one confused.

            Tesla GigaFactory is a joint operation. Batteries and battery packs will be built there.

            “The Gigafactory will produce cells, modules and packs for Tesla’s electric vehicles and for the stationary storage market.”

            http://www.teslamotors.com/blog/panasonic-and-tesla-sign-agreement-gigafactory

            GM has a Holland, MI facility shared with LG, that has been fairly idle until now. It can supply enough for Volts at the current rate, but not Volts and Bolts.

            “More than two years ago, Korean tech company LG Chem opened a battery plant in Holland, Michigan, with a deal to produce batteries for the Chevy Volt.”

            http://cleantechnica.com/2013/08/09/lg-chem-plant-to-make-american-batteries-for-chevy-volt/

            http://www.autoblog.com/2015/05/15/lg-chem-hiring-holland-plant-chevy-volt-batteries/

            http://gas2.org/2015/07/27/why-is-gm-only-planning-30000-chevy-bolts-per-year/

          • newnodm

            Multiple companies would have bid to supply GM batteries for Bolt. I have no idea why you believe the links you posted support the position that major auto manufacturers can’t plan to buy huge numbers of batteries if needed.

            GM probably doesn’t think they will sell a lot of Bolts. I don’t think they will either.

          • Bob_Wallace

            Tesla can’t build a lot more EVs at the moment. They can’t start manufacturing larger scale until the new Panasonic/Tesla factory is running.

            There aren’t multiple companies ready to supply GM or anyone else with cells on the scale that is needed to get above a few hundred thousand cars per year. Tesla’s going for ~100,000 next year.

            Tesla is on track to sell around 50,000 expensive EVs this year. You really think the market only wants 30,000 much more affordable 200+ mile range cars?

          • eveee

            Multiple companies didn’t bid to supply GM batteries for Bolt. Thats because they can’t supply them.

            And GM was unsatisfied with LGs batteries initially. They were not going to give it enough range or low enough cost. Now they sing a different tune, but we have know way of knowing if its true or not.

            But these comments from GM should be a clue and shine some light on why making EVs is a new challenge for GM unlike conventional ICE.

            “According to Financial Times, General Motors has “pretty much resolved” the technical challenges of producing its groundbreaking Bolt electric car,but Mark Reuess, GM’s head of product development, says that “commercial issues” remain to be resolved.

            Here’s Reuss’ comment on the technical issues:

            “We’ve pretty much resolved most of them. We know how to do it. We’re doing it and evaluating it.”

            Could his words be more vague? We guess that the most challenging technical issue would be fitting 200 miles worth ofbattery into such a compact car, but what are these unresolved commercial issues? Price? Marketing? We’re not sure and theFinancial Times article provides no indication as to what the commercial issues might be. However, there are some additional technical comments from Pam Fletcher, GM’s executive chief engineer for electrified vehicles:

            Ms Fletcher said GM had the “right proposition” for the battery. “We’re moving forward with that proposition,” she said.

            Ms Fletcher, meanwhile, stressed that the issues with designing the Bolt went beyond the challenges of producing a suitable battery and reducing the vehicle’s weight. Much of the work was going into reducing air drag on the vehicle.

            “Mass is important,” Ms Fletcher said. “Aerodynamics are an even bigger lever in vehicle efficiency.”

            http://insideevs.com/chevrolet-resolves-technical-issues-bolt-commercial-issues-remain/

            They can’t plan to buy huge numbers of batteries if needed because the factories to supply them don’t exist. Its that simple. Do the calculations. How many cells and how much factory do you need to make 500,000 EVs.

            Its not that GM doesn’t think they will sell a lot of Bolts. They can’t.

            But Tesla can sell a lot of Model 3s.

            You seem to think GM could make more Bolts if they felt like it. But there is no proof of that and plenty of proof the opposite.

            Where are these factories? Its not like they can make them from existing factory lines. The GigaFactory will supply as much battery capacity as all the rest of the world combined. Pure BEVs with 200 mile range consume massive amounts of cells, unlike anything before them.

            Existing battery companies cannot expand that rapidly without a lot more assurances from auto companies. None of the conventional auto makers, save Nissan, has given anyone, let alone battery companies, a strong showing of support for BEVs.

          • Bob_Wallace

            LG Chem is building more factories. 30k might be what they can supply in the first year of production. I wouldn’t make anything more out of the number until we see some statement about never exceeding 30k.

          • eveee

            Yes on the future plans, at least for GM. But LG has been making very bullish noises about EVs and batteries lately, saying it wants to be number one. It looks like GMs limitation is the Holland factory and it looks like LG has plans for the rest of its global factory capacity beyond Bolt. That could be a really exciting proposition.

            It looks from the numbers like LG can supply more than 30,000 Bolt packs from all its factories combined.

            But the crystal ball is a bit cloudy. We don’t have good enough information yet. Particularly how many Bolt battery packs can be made at each factory. I would love to see those figures.

          • Bob_Wallace

            “LG Chem intends to build a lithium-ion battery plant in Europe. Until now, the European market has been supplied by LG Chem’s Korean factory in Ochang, North Chungcheong Province (claimed production capacity at 200,000 “batteries“).

            LG Chem has a factory in the US in Holland, Michigan with capacity of up to 50,000 batteries and recently was increasing its workforce there.

            A third plant is under construction in China for more than 100,000 cars.”

            http://insideevs.com/lg-chem-build-battery-plant-europe/

            That’s 450,000 EVs.

            Denise Gray just took over as CEO for LG Chem Power, the division that produces batteries.

            “She is well remembered and respected in the industry as the Director of Global Battery Systems Engineering at General Motors, where her team successfully developed and launched the lithium-ion battery system used in the Chevrolet Volt, working closely with the LG Chem team.”

            http://insideevs.com/lg-chem-power-gets-new-ceo/

            One report I read stated that GM has had “hundreds” of its battery people in South Korea working with “hundreds” of LG battery people. This could be ‘how to run a battery factory’ training.

            I’m starting to take GM seriously. I think they were serious with Envia (sp?) but got burned and set back.

            Hummm….. A women CEO at GM. A woman CEO at LG Power. Perhaps the old gearheads with grease under their fingernails won’t be calling the shots.

          • eveee

            Maybe some women at the top bodes well. I noticed those new LG factories, too. The piece of the puzzle we need is how many Bolt packs per factory. The distinction I am questioning is whether the EV packs are Leaf sized, say 24 kwhr, or Bolt or Model S sized, 60kwhr and up. Either way, its a sizable amount.
            Things are getting curiouser and curiouser.

          • Bob_Wallace

            Panasonic, LG and BYD are going for major expansions. Very unlikely three large companies would make the same mistake of this scale. They must agree that it’s time to go big.

            I can see a bit of a pause to “make sure”. Perhaps they won’t start on another plant until 2018 or so when they can see if Mod3 and Bolts are selling. If they get reassured then start one or a few plants a year and we that part of the curve that just goes up and up.

          • eveee

            I am ready for it. Bring on an affordable EV with range. I want to get my hands on it. Come on designers, engineers. Do it!

          • eveee

            Would be nice if LG was responding to demand from Honda, Ford, Nissan, etc. all with requests for 200 mile batteries.

          • Bob_Wallace

            Are those companies requesting?

            I’ve not seen anything about a desire from those companies to field a 200 mile range EV in the near future.

          • eveee

            No. But I read Honda has EV plans. Didn’t realize that.
            http://www.autoblog.com/2015/01/13/honda-new-ev-phev-models-detroit-2015/
            I just think marketing wise, there is no way to introduce a short range EV by 2018 without it having at least 100 mile range and being much cheaper than 30k. That leaves the real possibility that with multiple entrants with 200 mile range, the minimum standard for EV range may increase.

          • Bob_Wallace

            By 2018 if you want to introduce a 100 mile range EV you better be selling it for under $25k. Without subsidies.

            My thinking is that Tesla will introduce their Mod3 at about $35k and then, when the federal subsidies are used up, will start cranking the price down. The price drop might not start until Tesla starts noticing demand softening.

      • Michael G

        Toyota is supremely cost conscious and as a result has the highest net revenue per car of any of the major car cos. They are improving their PHEV considerably this coming year and will continue to do this until battery prices drop to a level where BEVs make economic sense without subsidies.

        Toyota took multi-billion $ losses on hybrids for years until they finally started making a profit. The current head of Toyota is a direct descendant of the founder 100 years ago and expects Toyota to be around another 100 years. They will be there when it makes sense for them.

        • Bob_Wallace

          Net revenue refers to gross sales minus the cost of sales, including cost of goods sold.

          Tesla has a much higher gross profit margin than does Toyota. Your comment would hold only if Tesla is spending far more on sales than is Toyota. Tesla spends nothing on advertising nor maintaining dealerships. Tesla does have “showroom” expenses.

          • Michael G

            I was careful to say *major* car cos. Tesla is not a major manufacturer by sales.

          • newnodm

            I wonder if Bob knows that, in the world, about 170,000 cars are made each day.
            The author certainly doesn’t know this fact. There is literally no company capable of disrupting the auto industry. This isn’t software or consumer electronics. Second tier companies that supply auto companies may have 100,000 employees and hundreds of factories.
            If EVs “take off” they will be mostly built by existing manufacturers. There is no other possibility.

          • As you are now leaping to ad hominem attacks instead of intelligent ones, I suggest you read the last article I published on CleanTechnica. http://cleantechnica.com/2015/09/06/evs-cut-global-gasoline-use-2040/

            What I know and don’t know is clearly more than you have any conception of, so stick to facts.

            Frankly, you’ve stated what little point you have about two dozen times. You are by far the most persistent commenter on this article. Everyone reading the comments now knows what you think, and is likely tired of you saying it over and over and over.

            Trust me, we get it. You disagree and think that autonomous vehicles are the bomb. You don’t have to repeat yourself any more.

          • newnodm

            It simpler to simply not read my comments. You also don’t seem to know the meaning of “ad hominem attack”.

          • Ad hominem definition: (of an argument or reaction) directed against a person rather than the position they are maintaining.

            So in addition to being repetitive, you don’t understand what ad hominem means.

            I would strongly recommend you read the article I referenced above as well as spending at least some time with the Wikipedia entry on Innovator’s Dilemma. You aren’t making arguments from a position of understanding my point, but are merely reacting to some details. As such, you are adding little value at present.

          • Bob_Wallace

            Gentlemen, behave like gentlemen.

          • newnodm

            Dude, you can’t do google research from common websites and combine it with Tesla press releases and think it is some kind of scholarship.
            You didn’t say anything, and you demonstrate no understanding of the scale of auto manufacturing.

          • Bob_Wallace

            Thank you for your opinion. Now let’s move on.

          • Bob_Wallace

            Bob knows that but he generally uses 90 million, the number of cars and light trucks rather than 60 million cars for his back of envelope math.

            There is nothing in the article that tells one what the author might or might not know about the number of cars manufactured each year.

            Do you know how insulting your comment sounds?

            Now, I don’t agree with Mike. I think many of the major manufacturers will get in the game. But I also leave room for some to not and I won’t be surprised to see some lose significant market share.

            I’ve been around long enough to see large companies follow bad leadership into the dumper.

            “If EVs “take off” they will be mostly built by existing manufacturers. There is no other possibility.”

            Of course there’s another possibility. It’s possible the existing manufacturers will sit around doing too little and more “Teslas” will spring up. I’d put it the probability low, but not zero which is what you are claiming.

          • Bob_Wallace

            Correct, you did. Sorry.

  • Like all industries that have been disrupted the incumbents don’t realise until it’s too late. It will be tech companies that develop these new platforms – they are really smart devices on wheels. Google, Tesla, Apple and a few more as they realise the opportunity. End of oil as we know it by 2030 when several iterations of the technology make it compelling in price and performance. Remember the ‘brick’ mobile phone that cost in today’s dollars $10,000 in 1985 and had 30mins talk time?

    • Bob_Wallace

      “Like all industries that have been disrupted the incumbents don’t realise until it’s too late.”

      We like to talk about how Kodak failed to understand the coming change and failed, but Kodak was pretty much standing alone. Look at who makes digital cameras today and you’ll see many of the companies that made film cameras 20 years ago. Canon, Nikon, Olympus, Leica – all big names that did understand and moved on to the new technology.

  • Ronald Brakels

    Autonomous driving may devastate auto manufacturing, starting in perhaps just 5 years. Reducing the cost of using taxis means more people will simply do without a car, or families will do without a second car. More people using taxis means there will be more of them on the roads and so wait times will reduce, resulting in more people using taxis and not buying cars.

    Teenagers will no longer buy cars as soon as they are legally able. (They already buy less.) And this will lower the cocst of second hand cars for crusty old people who have already developed a car owning habit.

    Self driving taxis will be electric and so their motors will last for decades and require very little maintenance. And they won’t smash into things, giving them a very long life expectancy. Only the batteries may need to be replaced, though battery lifespans will increase over time.

    It doesn’t matter if some countries hold off on allowing self-driving cars. The countries that allow them will cause reduced demand for new vehicles and once early adoptors have shown they work, other countries will follow suit.

    Private vehicles won’t disappear. Many people like having their own vehicle and people like having a private space that they feel is their own. However, private vehicle sales could still fall to a fraction of what they are now and since they will be electric and self driving (or at least self-accident avoiding) they will last for a very long time, reducing the need for new cars.

    So while I’m not glad that people are losing their jobs, I am kind of glad Australia is getting out of the car manufacturing business now and not waiting for the bloodbath that may come. You want to know my suggestion for a future career? Garage renovator. Turn that unused space into an entertainment area, granny flat, etc. It’ll be big, trust me. Just try not to feel too bad when the robot garage renovators put you out of a job.

    • Ivor O’Connor

      America is a land of hysteria and fear. The first accident will be on all the news channels. The drumbeat of fear will reach such a crescendo it will become popular to poke fun at the stupidity of owning a death machine.

      • Coley

        Can’t see this autonomous driving business catching on for some time, you have at least a couple of generations who will be deeply uncomfortable with the idea.
        EVs turning the auto industry upside down within a relatively short time? eminently possible, completely autonomous driving? Not for m, ta 😉

        • newnodm

          I imagine they said that about those newfangled elevators. Young people in urban areas will have no problem using Google car.
          Autonomous cars are not going to arrive in the model S. It will arrive with low speed urban taxis and spread.

          • neroden

            Elevators were repeatedly banned before the Otis Safety Elevator was designed.

            Autonomous cars will be banned roughly the same way. They’re simply not foolproof enough to overcome people’s dislike of being killed by robots — for some reason, people dislike being killed by robots *more* than they dislike being killed by *humans*. Bizarre, perhaps, but very well documented.

          • newnodm

            Google will provide remote human monitors for the cars at first. The guys in the cars today will go and sit in an office and look at video from the car operating as Taxis.
            Google has planned for this. This is the reason the car looks childish. It is one of the reasons they talk about the car enabling the crippled and elderly. The car is really about world domination, but that kind of talk is not the way to start.

          • Karl the brewer

            +1

            None of this is aimed at us ‘old codgers’ (apologies to the young readers). This is for the twitter generation and the ones who come after them. And they won’t bat an eyelid…

          • Bob_Wallace

            ————————————————————————-
            Senior looking for self-driving car.

            Reaching the age where I can see my mobility limited a few years ahead as the body continues to break down. Want to live at home until the end, if possible. Don’t want to have to depend on others or taxis to drive me where I need to go.

            And right now I’d like a short-term relationship with a car that can do the really boring highway and city stop-and-go stuff.

            Interested? Send me a telegraph at …….
            ————————————————————————-

          • Karl the brewer

            Point taken 🙂

            Perhaps what i should have said is that in 50 years time my kids will be hopefully looking back and wondering why it didn’t happen more quickly.

        • Bob_Wallace

          How long did it take for people to get comfortable with cruise control?

          Cruise control and automatic transmissions were the first two autonomous driving features.

          • Coley

            I’m comfortable with both, but I can take back control of the car in an instant, the idea of an autonomous car over which I have no control is the idea I’m not comfortable with.

          • Bob_Wallace

            The autonomous cars coming on the market now are only semi-autonomous. They can operate the car in certain circumstances but the driver must drive in some. The driver can take back control in an instant by touching the wheel.

            My guess is that the capability of the car to drive itself will gradually improve to the point at which it becomes full self driving.

            I have no idea how long that will take.

            Google is going a different direction with fully autonomous cars. They may find a role as driverless taxis in urban areas where mapping can be very precise. Even while there’s no steering wheel the riders do have a big red “Stop!” button to hit if things don’t look right.

      • eveee

        Autonomous accidents have come and gone already. So far they are all human error.

        Autonomous Car Eats Human Driver – News at 11.

        • Ivor O’Connor

          Yes, but those are sterile laboratory conditions. When we have vehicles that are driven by real people in real conditions with sketchy maintenance on roads that are questionable results may differ from what Google is accustomed to…

          • JamesWimberley

            The point is that these cars are not driven by real people.

          • Bob_Wallace

            I don’t know. One of the Google testers was manually driving the test car in the parking lot and crashed into something. One of the Tesla testers was manually driving and hit the back of a Google test car.

            Sounds like real people to me…. ;o)

          • Ivor O’Connor

            🙂

          • Steven F

            “Yes, but those are sterile laboratory conditions.”

            No, those were accidents with testing on open road in normal city traffic. Lab testing has been largely over for some time.

          • Ivor O’Connor

            city traffic is sterile.

          • Bob_Wallace

            Google’s cars have driven over 1.7 million miles on regular roads with no accidents during autonomous driving.

          • Ivor O’Connor

            Yes but that’s not saying much. How does it drive on muddy roads, covered in mud, with sketchy maintenance? Driving 1.7 million miles in sterile laboratory conditions where the car is always washed and the sensors always inspected kind of makes me want to laugh.

          • Bob_Wallace

            Tesla’s system does not operate on mud covered roads or under extreme sun glare or any other condition that makes it difficult for the sensor to detect targets. It beeps and hands control back to the driver.

            The computer is going to do its own sensor checking. If it doesn’t get the signal it expects it will go into failsafe mode. If the driver doesn’t take over the car turns on the hazard lights, slows, moves to the side of the road, parks.

          • Ivor O’Connor

            Thanks. Didn’t know that. Seems obvious now that you’ve said it.

          • neroden

            In heavy snow, will the car even be able to find the side of the road?

            On the roads around here, it’s not even safe to pull over to the side of the road — no shoulder. The lack of shoulder isn’t obvious when it’s snowing, either….

            Frankly I think we are decades from functional autonomous driving outside pristine manicured environments. (The Google cars have ONLY been tested in pristine manicured SoCal environments.)

          • Bob_Wallace

            I think we’re years from fully autonomous cars in all conditions. A decade is a very long time in the Information Age.

            What we are talking about here is cars that will be able to do autonomous driving in many, even most, conditions. I haven’t seen anyone talk about all conditions.

            Are you just looking for ways to be critical? I had just stated “Tesla’s system does not operate on mud covered roads or under extreme sun glare or any other condition that makes it difficult for the sensor to detect targets”

          • Anonymous Coward

            The Google cars have been extensively tested in the cities around Google headquarters in Northern California. Trust me, Mountain View’s streets are not pristine or manicured. Snow is seldom (seen it briefly once in 20+ years here) an issue, however.

          • eveee

            That would be fun. What would an autonomous vehicle do as it slid helplessly down an embankment in the snow? Would this make the funniest home videos list?

          • neroden

            Whatever. Those are basically sterile lab environments. Heck, the whole of SoCal is basically a sterile lab environment for driving. If autonomous cars won’t work in the winter snow, I don’t think much of them.

          • eveee

            Have you ever driven in Mountain View rush hour traffic?

          • Bob_Wallace

            Thinking that in addition to GPS that autonomous cars can triangulate off buildings, poles and other objects that stick up out of the snow.

          • eveee

            Hmmm. I don’t think so. From what I read and understand, Google has been operating their cars in Mountain View on public roads for years. I will dig up my earlier comment and citations. There are about 10 accidents so far. The latest between a Tesla and a Google car. But I must admit, the maintenance is probably good. And you are right that we can expect worse results and probably some strange things when widespread adoption allows people to misuse and abuse the autonomous feature.
            (like mis wiring an aftermarket sound system that screws up the autonomous feature)

          • Ivor O’Connor

            Thanks evee but don’t bother. It’s not really a concern of mine and Bob has already removed my primary concern. That of what happens when the sensors go bad because of neglect or road conditions. Basically it takes you out of autonomous mode in a safe manner. Things will probably be improved and such over the next few decades to the point HS kids won’t even be able to have quickies when they are suppose to be monitoring the cars driving…

          • eveee

            Yes. I agree. Its the malfunction of these systems in real world situations that worries me, not their normal operation. And adapting to human behavior and human machine interaction are fraught with complexity.

          • Anonymous Coward

            Given the inattentive and negligent drivers that I see on a daily basis, I’m not worried about the machines. They will be wildly more reliable than the humans.

          • eveee

            Yes. But one malfunctioning autonomous vehicle could have the kind of impact runaway cars have. Lets hope it works out well.

          • Bob_Wallace

            If the auto-steering wasn’t working the collision avoidance system should keep the car from crashing into anything.

            I’m not sure I’d buy into the idea of an autonomous driving car going berserk, in the ancient Norse sense.

          • Bob_Wallace

            berserk (adj.)
            1844, from berserk (n.) “Norse warrior,” by 1835, an alternative form of berserker (1822), a word which was introduced by Sir Walter Scott, from Old Norse berserkr (n.) “raging warrior of superhuman strength;” probably from *ber- “bear” + serkr “shirt,” thus literally “a warrior clothed in bearskin.” Thus not from Old Norse berr “bare, naked.”

            Thorkelin, in the essay on the Berserkir, appended to his edition of the Krisini Saga, tells that an old name of the Berserk frenzy was hamremmi, i.e., strength acquired from another strange body, because it was anciently believed that the persons who were liable to this frenzy were mysteriously endowed, during its accesses, with a strange body of unearthly strength.

            If, however, the Berserk was called on by his own name, he lost his mysterious form, and his ordinary strength alone remained. [“Notes and Queries,” Dec. 28, 1850]

            The adjectival use probably is from such phrases as berserk frenzy, or as a title (Arngrim the Berserk).

          • Bob_Wallace

            Ah, we are gifted with the “safe word”.

            Just program the car to stop and park itself if someone calls out “Tesla!”

          • eveee

            First we had the Apple car. Now we have the Norse berserk one. LOL.

            Yes. I agree. There are ways to make fail safe systems. I just hope the engineers don’t stumble along the way. Stuff happens. Even with ordinary cars.

          • Bob_Wallace

            12 accidents.

            All human caused. A human drove the Tesla car into the back of the Google car.

        • Ulenspiegel

          Sorry, I take a bus for commuting on many days and, therefore, I find the assumption that you can replace a driver with software at least debatable. The sofware does not help the handicapped people entering or leaving the bus, does not tell the car driver that he can not park there…..

          • eveee

            Don’t get me wrong. I am not wholly convinced of “driverless” cars, by any means. But as an aid to drivers, they could be indispensable in reducing collisions.

          • Ulenspiegel

            But this would be an addition of some sensors and software, the economic impact would be marginal as long as there is need of a driver.

          • eveee

            Maybe if we counted the impact of reduced traffic accidents it would be a net economic benefit. If it works.

      • Ronald Brakels

        Don’t worry, as you can see in the follow cartoon, the problem is being fixed:

        http://www.smbc-comics.com/index.php?id=3895

        • Ivor O’Connor

          Funny cartoon. But if you are a regular swimmer doing seven plus miles a week at dusk or dawn you might think differently. Start thinking about all the sharks you see. How you want to stay away from kelp beds. The colors of your wetsuit if you are wearing one. To avoid murky water. And is seeing a shark the same as seeing an accident? Half the attacks you never see coming and half of those attacked die. So you have a 25% chance of not seeing the attack that kills you. As you crawl your way through the water looking at a distant point you know you’ll eventually get to if you aren’t mistaken as a vagrant seal.

    • Steven F

      What worries me is that autonomous diving may be adopted faster than we are ready for. for example a manufacture puts out a small software update. the next day a lot of serious accidents occur. These would cause a massive legal mess Many of our current laws while not have been updated to account for autonomous cars.

      This would tie up the courts and could send the car manufacture into bankruptcy creating more legal issues. It could dwarf the VW diesel scandal, the Toyota accelerator issue or any other recall you can think of.

      I pray that doesn’t happen. but if it does, then Yes, Autonomous driving may devastate auto manufacturing.

      • Bob_Wallace

        That’s a possibility but is it much of a probability?

        Clearly everyone in the company knows that a boneheaded error like that could sink the company. Almost certainly the company’s liability carrier has been involved since early on, insurance companies are careful critters. And state DMVs are going to have to buy in, as will legislatures who will need to write the regs.

        Autonomous driving is being introduced in steps. 1) Automatic transmission. 2) Cruise control. 3) Lane-keeping. 4) Self parallel parking. 5) Collision avoidance. Some sort of sequence like that. Drivers won’t be pulled from behind the wheel until we’ve used those features for millions of miles with drivers in the seat.

        BTW, we’re already seeing autonomous slow speed vehicles. Can’t recall exactly where at the moment.

        • neroden

          Well, Tesla’s run by some pretty boneheaded people who have already made major legal errors which already have the risk of sinking the company.

          And I say that as a major fan of Tesla’s cars.

          • Bob_Wallace

            Such as?

      • Ronald Brakels

        That’s certainly possible, but it’s in the same category of terrible stuff as exploding Pintos and exploding Firestone tyres. (And was that exploding Pinto thing even a problem? According to my TV, all American cars explode all the time.) Some manufacturers may go bankrupt but that just leaves more room for those whose self-driving cars don’t have deadly software glitches. It may slow down the adoption of self-driving cars, but won’t stop it. And then there are countries that are strong on public health and they will crunch the numbers and conclude that even with occasional fatal glitches, self-driving cars are far safer than human driven ones and will incentivise or even require their use. And insurance companies will also crunch the numbers and give an incentive for self-driving cars in their area.

        • neroden

          “Some manufacturers may go bankrupt but that just leaves more room for
          those whose self-driving cars don’t have deadly software glitches.”

          Now that’s an accurate assessment.

        • eveee

          Great idea for a future self driving car.

          Our super self driving car doesn’t have any annoying deadly software glitches like Brand X.

          And no exploding like brand Y.

          We are committed to non exploding cars that don’t have deadly software glitches that cause your car to turn on you.

  • Steven F

    “You have to throw away all of your mechanical steering and control systems. Everything is drive-by-wire.”

    This statement is clearly wrong. there are no drive by wire cars on the road. The testla model S is not a drive by wire car. The key reason there are no drive by wire cars on the road is that if a fuse blows while on the road the driver would have no way to keep it on the road.

    All steering systems on the road are rack and pinion designs with either a hydrolic or electric power assist. That way if the power or hydraulics fails the steering system will still work. At slow speeds you will need to put some mussel into it but you can still control the car. At freeway speeds Very little effort is needed to steer the car. In fact on many cars power steering is turned off at freeway speeds to help improve mileage. One simple way to test for power assist is to turn the wheel when the car is park and ice or electric motor off.

    There is a post on the Tesla forum about this:

    http://www.teslamotorsclub.com/archive/index.php/t-13978.html

    You have to throw away all of your traction control systems.

    Again not true. The only thing traction control system does is to stop wheel slip. There are two ways to do this, reduce engine power or to apply the breaks to a wheel that is slipping. for electric cars it is easy to reduce power to the wheels. for an ICE it is a little more difficult because of the transmission. However there are times when only one wheels is slipping. On the Tesla there is one motor for the front wheels and one for the back. If one wheel slips the differential sends all power to the slipping wheel and no to the other. To solve this the breaks are applied to the slipping wheel causing the differential to send power to the wheel that is not slipping.

    Now if you have one electric motor for each wheel you wouldn’t need to use the breaks since you could easily kill power to that one slipping wheel. I don’t believe anyone has made such a car commercially. however some companies have experimented with such systems.

    • JamesWimberley

      Michelin had an in-wheel electric motor system ten years ago. We may see this first in luxury vehicles like the Audi Quattro. The James Bond possibilities for four independently driven wheels are quite fun.

    • Steven F

      “You have to throw away your seat mounting systems, and possibly your seats. They expect a lot of wasted space due to motor and transmission drive shaft hump and gas tank that just aren’t there anymore.”

      Another error. Front wheel drive cars don’t have a central drive shaft. So they already have seats designed for cars without a central drive shaft. Or that manufacturers could put drivers arm rest storage space and cup holders. where the hump was.

      “You have to throw away all of your emission controls experience and knowledge and technology and investments and branding. It’s completely unnecessary”.

      this is an exaggeration. For at least the next couple of decades there will still be demand for gasoline cars Believe it or not there are some people that do occasionally need the long distance driving range gas offers. Especially in remote place where there are very few charging stations. Also some construction equipment will be needed in remote areas (wind farm construction, transmission line construction, backup power systems, logging) and will still use fuels. The emission controls knowledge will still be used in these cases. Same with engine control software.

      Overall I think the author strongly exaggerates his claims. Yes Tesla found starting from scrap on the Model S was easier. That wasn’t because they were simply throwing stuff away. Much of the difficulty Tesla had with the roadster was finding ways to get the battery, motor, charging, and control systems to fit into the body they decided to use. In my own experience this can at times be extremely difficult.

      When Tesla went to design the model S that avoided those issue with a clean sheet design. However it also left them with new issues such as how to protect the battery which is now exposed to road debris (Tesla had to recall cars due to a few fires caused by road debris). Designing all new dash, designing sensors for future computer autonomous driving. and making sure enough space was available for future upgrades such as 4 wheel drive, battery swap, and high speed charging.

      These things also were not easy but with the roadster behind them they had a bit more experience, and money to hire more engineers. Which made it seam easier.

    • Mea culpa on the steering. I’ve asked CT to edit that statement out as it is unsupported. Thank you for being one of the people to bring this to my attention.

  • carol argo

    Lol! Diesel truck in usa met the same issue vw is meeting today ,that was about a decade ago. They accepted their fate and came out with better product . That meet all demand .is it perfect? Nha .it was the worst idea ever but back then it was the best idea they had. If you have the energy avail to go electric . Do it because so far its the only viable long term solution.

  • TedKidd

    Holy cow! Nailed it!

    Timeframe estimates?…

    • It’s a bit of a mugs game to guess, but I did an analysis a couple of months ago of two scenarios of EV penetration to assess petroleum demand impacts. I suspect that a lot of the new EVs that are sold if those projections are at all accurate will be from brands that we don’t associate with cars today.

      http://cleantechnica.com/2015/09/06/evs-cut-global-gasoline-use-2040/

    • Mike Dill

      Tony Seba http://tonyseba.com/blog/ thinks that we can be almost 100% electric with autonomous vehicles by 2030. I expect that the developed countries will be selling 95% BEV by 2025.

      • Michael G

        Over 250M cars in US. 15M new cars per year. If every car sold starting today were BEV it would take 17 years to replace all the ICEs. BEVs aren’t even 1% of the market right now.

        If 95% of cars sold are BEVs in 2025, then add at least 17 years and you are looking at 2042. Big “if” there.

        • Mike Dill

          There were still places selling kerosene for lights back when I was a kid and 90% of everything in the house was electric. I agree that it will take decades before the ICE car becomes a museum piece. It took me about 5 years to replace all the lights in my house with LEDs, and I still own a plasma TV because it still works (although it heats up the house).
          People who drive a lot buy new cars. Electric cars have much lower maintenance costs.
          As other people here have mentioned, when the purchase price of a new BEV is lower than the ICE, the change will be extremely fast.

        • eveee

          I somewhat agree with your view in that EV sales growth has been disappointing. In this, its just like any new tech. It has not hit parity yet. When it does, change will be rapid.

          But I think the prognostication of EV growth is missing some things.

          1. The market is not only replacement.
          2. Private transportation growth and transport modes are changing.

          Many other things like government regs and emissions costs can affect the result. Just think what the effects of diesel gate will be.

          Beyond that, I cannot hazard a guess, except that as battery costs fall, the tipping point is near.

        • Bob_Wallace

          The 17 year turnover is likely to be shortened. People are likely to want used EVs in order save operating costs. They will likely pay a modest premium which will create higher resale values for EVs. New car turnover may accelerate. Unwanted ICEVs will be sent to the crusher with less years and miles on them than what happens now.

          Plus EVs may last far longer. That will destroy the market for 15+ year old ICEVs.

          And then there will be the rising problem of where to find a gas station.

          • Jenny Sommer

            I see you are reluctant to talk about a timeframe.
            When do you expect EVs hitting 10%/50%/90% of car sales and vehicles on the road?

          • Bob_Wallace

            10% sales would be 6 million. Tesla expects to be at a half million by 2020 and they have a tendency to predict a bit short of delivery. But call it 2020. Perhaps GM, Nissan and the foot draggers could make 1 million.

            Maybe at that point it becomes to most manufacturers that they need to go electric. Perhaps people will have become concerned enough that governments will be leaning on companies. 10%, 6 million by 2025?

            I would guess that by then EVs will be cheaper than ICEVs and range anxiety will be largely forgotten. If so, a very rapid buildout after that.

            I hope we are close to 100% by 2035. I think that’s doable. If we are selling nothing but EVs by then we should have no CO2 from cars by 2050.

            I’m having a hard time making predictions. I was hoping VW was going to be a big driver but they screwed up. Volvo’s changing, but they’re a small time. Who knows if Ford is going to do anything? Toyota seems lost in space.

            Cheap batteries. If Panasonic and LG Chem deliver on $130 and $145/kWh cells that might shake up manufacturers and they’ll put out a serious EV before 2020.

            Too many unknowns. I can see possibilities but I can’t see if car CEOs are taking climate change seriously.

  • Steve N

    I really want Tesla to be successful. But I am much more concerned about our world. Go big auto! Figure it out and make millions – please. They have the ability and currently they also have the cash.

    • Autonomous vehicles will disrupt the auto industry in a much bigger way than the EV disruption. The challenge when all this stuff kicks in is what to do with the workforce – EVs, Autonomous Vehicles, Artificial Intelligence and robots – a lot of people are going to be out of work.

      • Mike Dill

        The workforce is a huge problem. There is a limit for the number of service employees in an economy, and a limit to what they can be paid. Japan is already there. Even China is finding that robots are less expensive than people.

        The other side of the problem is how to pay the underemployed and retired. My valet and driver will have less and less work. Eventually my groundskeeper and housekeeper can be replaced as well. I would probably keep the cook. I do not have an easy answer for those people.

        • eveee

          This is a succinct take on the subject,

          “It is not the case, he writes, that people have to keep working to produce the consumer goods for which the rich world hungers. Outrageously, meaningless employment—in what he calls “bullshit jobs”—is concentrated in “professional, managerial, clerical, sales, and service workers”:

          In other words, productive jobs have, just as predicted, been largely automated away (even if you count industrial workers globally, including the toiling masses in India and China, such workers are still not nearly so large a percentage of the world population as they used to be).

          But rather than allowing a massive reduction of working hours to free the world’s population to pursue their own projects, pleasures, visions, and ideas, we have seen the ballooning not even so much of the “service” sector as of the administrative sector…”

          http://www.economist.com/blogs/freeexchange/2013/08/labour-markets-0

          I sense you might be interested in reading
          Steven Hill’s book, Raw Deal: How the “Uber Economy” and Runaway Capitalism Are Screwing American Workers,

          http://billmoyers.com/2015/07/27/the-future-of-work-in-the-uber-economy/

          Upton Sinclair might be a good read, too.

          • Mike Dill

            Unfortunately a lot of these administrative people are part of th government now…..

    • eveee

      The counter examples? VW and diesel. Cheat your way to technical superiority. Greenwashing plus lying. They even planned the XL1, a science future high mpg vehicle based on diesel.

      https://en.wikipedia.org/wiki/Volkswagen_1-litre_car

      https://upload.wikimedia.org/wikipedia/commons/thumb/9/97/Volkswagen_XL_driver_side.JPG/1024px-Volkswagen_XL_driver_side.JPG

      How is that working for them now.

      Then there is Toyota. The Mirai fuel cell vehicle is slow, inefficient, and expensive. They had a deal with Tesla. And they produced the RAV-4 EV. They used some of it for hybrids. But most of it they let go.

      Initial pricing has been set at $58,325

      http://media.caranddriver.com/images/media/51/2016-toyota-mirai-inline4-photo-650480-s-original.jpg

      And GM did it with the EV-1. Now they are trying to build a Bolt EV and catch up with Tesla. And failed miserably against the Tesla Model S with the Cadillac ELR hybrid.

      http://www.thetruthaboutcars.com/2015/09/cadillac-elr-flop-flopped-even-harder-floppy-august/

      GM has only the Volt to compete against other hybrids. The rest of their product line has nothing to offer advanced energy wise.

      Meanwhile, Tesla has taken the luxury market by storm.

      http://finance.yahoo.com/news/only-luxury-battery-vehicle-large-170017874.html

      “BMW, VW’s Audi and Porsche , and Mercedes have invested huge sums to produce plug-in hybrid electric vehicles, but one German expert believes this is a big mistake, and Tesla Motors TSLA +2.43%’ all electric approach is already eating into their high-end sales.

      According to Professor Ferdinand Dudenhoeffer, director of the Center for Automotive Research (CAR) at the University of Duisburg-Essen, not only have the big three Germans wasted money on the blind-alley of plug-in hybrids, they are losing sales in the most profitable end of the luxury market to Tesla. Rich people who have formerly bought the flag-ship Mercedes S-Class, BMW 7 Series and Audi A8 are turning to the Tesla Model S.”

      http://www.forbes.com/sites/neilwinton/2015/08/21/tesla-eats-into-bmw-mercedes-audi-high-margin-sales-as-germans-miscue/

  • Alharbi

    Its not wise to underestimate the creativity and the survival instinct of large car companies. We keep remembering Kodak as a classic example of failure (to adapt that is), and tend to forget how IBM, for instance, survived the trap of mainframe computers.

    • Keanwood

      I agree. It would be foolish to just assume that all the major auto companies will miss out on EVs and die. They have lots of factories. And they have the money to start building dozens of “gigafactories” tomorrow if the wanted. An EV is different than an ICE but its still a block of ‘something’ on wheels. Yes they will lose billions in research that suddenly does not matter anymore but they will start investing heavily in new tech.

    • newnodm

      The many authors who have mythologized Kodak forget that they made some of the first widely used commercial digital cameras. Kodak “got” the change that was coming. The skills of a Rochester chemical company wasn’t able to compete with the Japanese semiconductor industry.

      EVs are relatively simple compared to combustion engine and drivetrain. EVs are also closer to the skill sets of big automakers than the author imagines. Some of the hybrids currently sold are considerably more technically sophisticated than EVs. The Volt is a good example.

      Anyway, the risk and opportunity ahead is autonomous transportation, not the electrification of the drive train.

      Toyota knows how to build a competitive EV. They also know how to build as many as the market wants.

      • Bob_Wallace

        Kodak was the 40,000 pound gorilla in the room. Kodak invented digital photography, made the first digital SLRs which were highly regarded at the time. Kodak made the first CCD sensors. Kodak still makes sensors.

        Kodak understood photography. They had capital. They had an enormous brand name. Kodak could have done exactly what Canon, Nikon, Olympus and others did – hire the engineers they needed to push forward with digital. Kodak could have done exactly what many other companies did, farm out their designs and have other companies make digital cameras with the Kodak brand on the front.

        There were no semiconductor companies in the early days of digital photography. The only semi-company in the game in the early years was HP and they didn’t do anything impressive. Sony and Casio got in early but they weren’t semi-companies.

        The early players were camera and film companies. And, remember, Kodak built it’s first camera in 1888.

        I followed digital camera development very closely. After Kodak’s first digital offerings it became obvious that Kodak wasn’t putting the energy in digital development equal to other manufacturers.

        The Kodak “myth”? There’s no myth. Kodak had the lead and they failed to follow up. They put their efforts into their traditional business and photography passed them by.

        • yep Kodak invented the digital camera. They just couldn’t get the business model right for an evolving online world.

          • Bob_Wallace

            No. Kodak quit aggressively developing digital cameras.

            Go back and read camera history. Companies other than Kodak brought the new improvements. Kodak failed to put in the research and development effort.

        • JamesWimberley

          Kodak = Toyota.

          • Michael G

            You make one really intelligent observation up top and then this. Toyota = Nikon, Canon, and Minolta. Shell oil = Kodak.

          • JamesWimberley

            One out of two is pretty good going.

        • newnodm

          You aren’t actually disagreeing with me. Your error is that big companies can just hire engineers and remain dominant. If that were true, the world would be dominated by a single corporation.
          Big changes “reshuffle the deck” and only a tiny percentage of competitors succeed. The Japanese camera companies, acting in collusion, were unstoppable.
          Unstoppable until Apple and the smartphone camera, that is. Is your position that Canon “blew it” by not being dominate in smartphones today?
          There is no reason to expect Kodak remain dominate. That is the myth.

          • Bob_Wallace

            Nikon and Canon ruled the SLR market with film.

            Nikon and Canon rule the dSLR market now. Along with upstart Sony.

            The camera companies ceded the lower end to cell phones. Having a different technology incorporate part of your market is something different than continuing to make the same old thing when the market is moving to a different version of that thing.

            I have no idea for what percentage survive a technological shift, but I’ve no doubt that if GM or Toyota or VW decides to be dominate in the world of EVs they would be able to make the transition. It’s a matter of having the right management attitude.

            “There is no reason to expect Kodak remain dominate. That is the myth.”

            You’re making a new myth. No one has said Jack about “expecting Kodak to remain dominate”.

            Fact is, Kodak was in the lead. Kodak set the ball on the ground and walked off the field, leaving it to other companies to take over.

        • Ivor O’Connor

          I loved my Kodak digital camera. I think I could only get 13 or 17 pictures with a set of batteries. So I had to have lots of batteries. And two chargers so I could get all of them charged before the next morning…

          Sure beat film which was so costly.

          • I bought a Kodak CX7530 digital camera a week ago for $1 at the Thrift store, just for the battery pack but the camera with 5.0 Meg pixels is fully functional with lousy red reproduction and flat looking landscapes though.
            In the ’70s, I told an Electronic Music Ensemble in Toronto that soon they would be able to record digitally at real time instead of on tape and they laughed and said that would never happen.
            The Ensemble is still together, recording digitally for a number of years now.

          • eveee

            Yes, but they probably think digital recording is ordinary now and don’t remember that they thought you were a wild dreamer. 🙂

      • JamesWimberley

        Google seem to be a long way ahead of everybody else on self-driving cars. They are also even less of a manufacturing company than Apple. (They bought Motorola aqs a showcase for Android.) They will produce a few expensive cars to show it can be done, then I would guess license the software to real carmakers. “Google inside” will come at a a high price.

        • newnodm

          Google won’t sell cars for years, if ever. They will license cars to “taxi” providers, and do the system services. This is why, in their current development phase, they have given cars to partners.
          The car itself is not a big deal. Google could do the low speed urban taxi with golf cart batteries and a basic motor.
          The interest in Tesla may be deceiving us as to what to the big change that may be coming. Electric propulsion alone is not as disruptive as most people believe.
          Apple is likely aimed at Google, not Tesla. The trillion dollar opportunity is autonomous transportation, not ludicrous mode (sorry Zach).

          • Bob_Wallace

            You’re ignoring Tesla’s operating strategy.

      • neroden

        Toyota doesn’t *want* to build a competitive EV. Because management crazy.

        That’s basically what’s going on here. Any of the old-line automakers *could* build good electric cars — they just don’t *want* to. It’s exactly parallel to Kodak, which practically *invented* the digital camera but then was unwilling to actually run with it.

        • Bob_Wallace

          “Toyota doesn’t *want* to build a competitive EV. Because management crazy.”

          Do you have any particular knowledge concerning Toyota’s management? I know nothing past they are Japanese (I think) and seem to be making strange decisions. Any insight? Bunch of old guys that have become more interested in their golf game? Got something?

  • Bob_Wallace

    “But to make a good electric car you have to start from the ground up and throw a bunch of stuff away: 1 through 9”

    Good list. Most of that stuff will almost certainly go. But the ‘biggies’ will still have their large plants, their assembly robots, their plaint shops, their administrative systems and a bunch of other stuff. Tesla is having to build all that stuff from scratch.

    A frame is a frame is a frame. The frame designers and tool specialists will be able to start building skateboard frames as rapidly as they now start producing a frame for a new size ICE vehicle.

    The supply lines will be in place. The EVs will use windshields, door latches, radios, and seat upholstery sourced from the same group of vendors.

    Doors will attach in the same was as ICEV doors. Carpets will install the same way. Cars will ship out to dealers in the same way.

    • Bob_Wallace

      Good article Mike. You nailed things down in a very clear package.

    • Jenny Sommer

      Suppliers are also gearing up for the electric car future. Magna is a good example. They even develope electric drive trains. This expertise can be bought.
      Just talked to an BMW engineer some weeks ago who is actually developing car communication hardware. They will be able to push updates like Tesla in their future cars.
      It is a mistake to assume that the big car manufacturers won’t adapt. They are already doing so.
      Why would they stop selling their product right now when they sell more then ever an no real competition is around?

      • Ulenspiegel

        Even if some of the traditional car manufacturer will not survive it, some of their suppliers like Magna and Bosch – BTW Magan is able to produce much more cars today than Tesla very likely at better quality – may be the new guys on the block.

        • eveee

          Yes. Parts suppliers could do better than auto manufacturers in an EV revolution.

          Magna able to make much more cars than Tesla? Right now, I don’t think so. Magna doesn’t make cars, but it sells auto components to car manufacturers and is quite large.

          However, its battery manufacturing operation was only 264 employees when it was sold to Samsung. I doubt that its ability to supply batteries would satisfy Teslas need.

          IMO, Delco Remy would be a better source of parts like electric motors, and LG a better source for batteries.

          http://www.fleeteurope.com/news/magna-sells-ev-battery-business-samsung

          • Ulenspiegel

            Sorry, evee you are wrong. I live in Graz and here Magna builds a lot of cars, a few years ago it were 200.000 per year, now “only” 100.000, they make more money with R&D. Some of the cars are high end.

            When there was the option that Magna may buy Opel around 5 years ago, VW managers were wetting their pants because they would not only lose a important supplier but would get an opponent with proven ability to produce cars.

          • eveee

            Yes. I said Magna was very large and it is. It has a lot of capacities. But manufacturing cars is not one of them. With its size and money it could buy out a small car company or buy a factory and do it, yes.
            But ultimately, even right now, is it ready to supply enough batteries or motors to make even 100,000 200 mile range EVs?

            Nope. Supply chain.

            Nobody is. Thats why LG Chem had to expand and Tesla had to build a GigaFactory. GigaFactory is equal to all the rest of the worlds battery supply at the time it was planned.

            Nobody could could build that many 200 mile range EVs in 2013. They are still working on building up supply chain to do it in the next two years as we speak.

            Thats why I say this is about commitment.

          • Ulenspiegel

            It was about the ability of “suppliers” to mass produce cars, Magna has a proven record, it builds more (and better cars) than Tesla.

            This means for me that an alliance of suppliers could be an factor in future.

          • eveee

            Yes. Magna has the ability to manufacture cars. But they are in line with all the other producers waiting for batteries supplied by LG Chem. Or someone else. The volume is not there yet.

    • Martin

      Did not Tesla point out that is is more difficult to make the/have the ability to make all the dies and related part to design/make the car/truck/van in the first place?
      All that stuff the big ones have some practice with.
      And do people thing they will just go quietly without trying?

      • Bob_Wallace

        I think there’s a lot of frustration because things are not moving faster. I think a lot of us want change quicker.

        I’ve said this before, but I’ll repeat. Were I running one of the large car companies I would not be in the EV business at a serious level at this time. I”d have some token EVs on the streets so that my EV division was getting some real world experience. I’d have finalized plans on hand that would allow tooling up for a serious EV entry and I’d keep those plans under constant updating. I’d have the vendors and suppliers identified and I would already have some sort of contracts negotiated. I’d know how I was going to deal with rapid charging.

        And I’d be watching battery prices. Battery price would be my trigger.

        Under $150/kWh is likely a triggering event. I’d watch how the Bolt and Mod3 do for a few months to see if they stumble and especially to ensure the batteries were working well. (I’d already have batteries in the shop and would have already done enough charge cycles to know where failure begins to be an issue.

        I’d probably have picked my battery supplier and made sure they were getting ready to supply me with enough batteries.

        At one level it doesn’t matter who sells the most EVs until EVs start eating into ICEV sales. When ICEV sales look like they might drop I’d fire up the EV lines and the EV ads.

        (Were I one of the luxury brands I might think we’re there now. below)

        • sault

          The danger in this approach is being late to the market with an inferior product. In addition, expecting suppliers to become competitive with the Tesla / Panasonic relationship is a bit of a stretch, especially when Tesla is building the infrastructure like the gigafactory and charging infrastructure that will give them a unique advantage. Not to mention that market leaders like Tesla, Nissan, etc. will be a moving target with better ranges / prices being announced every few years. Licensing technology or poaching talent from market leaders can help a company catch up somewhat, but it will be very hard for the companies waiting on the sidelines to jump right in.

          Look at how long Apple had the smartphone market to itself. They can still get away with charging much more for a functionally similar product and it took years for their competitors to come out with a viable challenger.

          The best way for incumbent car manufacturers to get into the EV game would be to spin off an all-electric brand. Maybe something like Scion in relation to Toyota. The company can be kept nimble and spared the baggage of the ICE legacy dragging it down while also having the huge parent company backing it with logistics, non-EV specific supply chain and cheap financing.

          • Bob_Wallace

            When the bear is chasing you, you don’t have to be faster than the bear. You just have to be able to outrun one other person.

          • Ivor O’Connor

            Or if you are a politician just clobber one of the faster runners.

          • Bob_Wallace

            I saw a great ad for a 25 caliber pistol. Guy selling it started out by saying that it saved him from a bear.

            Obviously, killing a bear with a small caliber pistol would take a lucky shot to the eye and into the brain. Following a picture of the pistol and selling info was the rest of the story.

            “Handy little gun. Light to pack and fits into one’s pocket.”

            “Packs enough punch that I was able to shoot my partner in the kneecap and slow him down enough for me to get away.”

          • Ivor O’Connor

            lol.

          • Tim

            Everyone needs to outrun a tidal wave

          • eveee

            Late to the market with an inferior product? I can think of an example.
            Cadillac ELR.

            You might be right about the spin off brand. That would give them the autonomy they need to ditch ICE old think.

            Then they would have to watch out for being killed by the parent, like Saturn.

        • Martin

          Well it is all about management.
          Like the story of the company who wanted to switch products:
          They told their staff to design and retool and then one year later reported back to management that their new product sold for 20 % less than the other guys and also was 20 % better.
          But is that just a fable?
          Or real life Tesla, with a bit longer time frame. 🙂

        • Michael G

          Wow! For once I am in complete and total agreement with you! Did I slip into an alternate universe? How is Mars colony doing?

        • eveee

          IMO.
          By the time traditional car companies wake up, it will be too late. The time for them to go on a crash EV program was years ago. VW was back pedaling until just recently, Gung ho on diesel. And Toyota is stupidly backing FCEV. There will be losers and losses along the way. Thats how transition goes.
          (the spell checker doesn’t like Gung, all lowercase)

          • Bob_Wallace

            How fast can Tesla scale up to 2 million cars per year? Going for 500,000 by 2020. Between today’s ~90,000 and 2,000,000 is the window for other companies to get their act in gear.

            Tesla hits 2 million and they are two doublings from being number one. Toyota is over 9 million and that’s about 10% of the market.

            There’s no one but Tesla and Nissan/Renault in the game at a serious level yet. There’s a huge amount of time for others to get in. And they get in with enormous advantages. They have capital, experience, much of the manufacturing capacity and capability, brand names, …. Plus they can take advantage of the research and development done by Tesla and Nissan/Renault. All they need to do is to purchase one of each and tear it down.

          • eveee

            Do they have the will and vision for revolutionary change? Maybe. Some. But there are and will be laggards that will fail. I don’t expect Tesla to be alone in the market. Once people get the idea and it becomes more successful, everyone will want in.

        • Jenny Sommer

          The next Phaeton will be an EV.
          Probably more expensive than the Model S.
          When you look at the total numbers Tesla is still small in that segment and rather appealing to different buyers.
          The S-Class sells over 100k, 7series 47k and the A8 40k.
          There are also theJaguar XJ, Lexus LS, Maserati Quattroporte und Lincoln Continental.

          The S-class is somewhat different to the models S selling for up to over 200k€ with different expectations to built quality.
          People love their Model S but it isn’t really that appealing to others.
          I’d take the Tesla though even with less space, inferior interior and tolerances.

      • eveee

        Yes. Any car company has to deal with dies unless they go to 3D printing or carbon fiber. Carbon fiber has molds.

        Tesla got a windfall with a complete factory and stamping machines. The can expand capacity for a long time before they use it up. They mostly added robots. The Model S uses more die machines because aluminum must be stamped in stages to avoid tearing. Steel will produce more autos from the same machine.

        The ICE companies will not go quietly, but they have ignored the revolution to their peril. So some will perish. Its like a flood. You can’t get your life preserver after the flood. You need it ready before.

    • eveee

      Yes, sort of. All that is true. Thing is, EVs have some unique opportunities to change some of the way the supply chain and dealership network (or not) is done. For instance, without the large maintenance needs, EVs reduce that profit center for dealerships. As Musk says, standard ICE dealerships have a conflict of interest selling EVs.
      But I almost positive, the cupholders are the same.

  • Bob_Wallace

    “Virtually all of the majors will continue to deny the reality of the situation and continue to bet on cars with traditional frames, limited batteries, limited electric range and performance and with internal combustion engines continuing to do the heavy lifting.”

    I don’t think it will be “virtually all”. Some will be late to the game and lose market share and a few might crash and burn, but I suspect all the car companies are watching what is happening very closely. The collapse of Kodak is very recent, a lesson still fresh.

    I would be surprised if any of the majors doesn’t already have Tesla-like skateboards in their computers and designers playing around with bodies to go on top. I suspect all, or almost all, are now working with drive by wire simply because they see at least limited self-driving coming, even for their ICEVs.

    In the US I can imagine Chrysler going away. Chrysler has long been the sick sister among the Big Three. I can imagine Tesla taking Chrysler’s position in the trinity.

    I think things will play out roughly along this line. 2016 Tesla introduces the Mod3 and, perhaps, late in the year GM starts selling the Bolt. 2017 Tesla starts selling the Mod3. That will mean that both Panasonic and LG Chem are manufacturing batteries on very large scale and the price of cells has dropped below $150/kW.

    If sales for the Bolt and Mod3 are healthy then I expect most car manufacturers will show their mid $35k, 200+ range EV, specially built from the ground up, over the next 12 months and start manufacturing within two years.

    • TedKidd

      We can hope it unfolds that way…

      • newnodm

        The early mover is almost always crushed. This was true in the car business. Ford wasn’t first.
        Tesla has major risk from both autonomous car and current auto manufacturers.

        • Bob_Wallace

          There were people making EVs before Tesla.

          First, second or fifth does not predict success or failure.

  • Bob_Wallace

    “The challenge that the old manufacturers are having is that they have to cannibalize the profits of their existing lines by making completely new vehicles from the ground up to compete. So they mostly won’t. ”

    I don’t buy this. Car manufacturers create brand new styles (mini-vans, SUVs, crossovers) frequently. They toss out lines they were making and bring in something new. They watch what other companies are selling and jump in if they see potential.

    • TedKidd

      It may be fear rather than reality. When fear is strong enough, it becomes reality.

    • Ross

      It is more than skin deep style change of course. As the article points out they do have to throw out almost all of their existing designs to do an EV properly. So almost inevitably they end up producing compromised design vehicles.

      • kvleeuwen

        The Leaf and Zoe cars are examples of EVs by existing carmakers designed from the ground up. Every car is a compromise, for Renault/Nissan it was an affordable car at the cost of long range where the Tesla compromise is a long range car at the cost of a LOT of money. Both have their place.

        • markogts

          Just to be picky, Zoe is based on the Clio.

          • kvleeuwen

            You are correct, they share the platform and a lot of parts. The platform was designed with flexibility and the large battery in mind, so the Zoe has more trunk space than the Clio 🙂

          • Bob_Wallace

            The Volt may be the best example of a ground up design aside from the Tesla S.

          • neroden

            The Leaf is generally considered a ground-up design as well, although in some ways a pretty bad ground-up design.

  • Mark Duffett

    This is a compelling case, though I’d be more convinced if the author had more directly relevant credentials to make all those assertions.

    • Bob_Wallace

      You can’t enjoy a great meal because the chef didn’t study in France?

      • newnodm

        It is more like enjoying a cooking show with a non-cook host.

        • Bob_Wallace

          Well, give us a rewrite and show us what a quality job is in your opinion.

      • Mark Duffett

        That’s a pretty poor analogy, but if I was to attempt to stretch it, it would be to say that the quality of the meal should be judged on its nutrition, not just its taste. Accordingly, I’d like to see the ingredients and where they came from. In other words, returning to the literal: I’m prepared to take bald statements from a relevant expert at face value, but from anyone else it’s good for them to be backed up with links/references.

        • eveee

          Other than the book cited, how does one back up a prediction with references? Know of any studies of EVs taking over the automotive market?

          Here is an article about an older study, from National Academy of Sciences. IMO, its wrong, based on a view of battery development and cost predating the PowerWall announcement.

          They look for huge improvements in ICE vehicle efficiency and alternate fuels in addition to BEVs.

          http://www8.nationalacademies.org/onpinews/newsitem.aspx?RecordID=18264

          IMO, the alternative fuels and PHEVs will get nowhere.

          The Volt will cost about the same as Bolt or a Model 3.

          EV sales will cannabalize PHEV sales. FCEVs are a non starter DOA.

          Why? Battery costs and development have exceeded expectations. We are nearing the $100/kwhr mark much faster than experts imagined possible as recently as 2013.

          http://www.businessspectator.com.au/sites/default/files/11_169.jpg

          Meanwhile, one of the featured alternatives in the NAS study, the VW XL1, was supposed to use a diesel to improve gas mileage. We can see where thats going now.

          http://cleantechnica.com/2015/06/12/tesla-hitting-the-battery-accelerator/

          • Mark Duffett

            There are lots of assertions in the article that aren’t predictions, for example pretty much everything under “But to make a good electric car you have to start from the ground up and throw a bunch of stuff”. Sure some of these points stand to reason, but several do not, and indeed some of these have already been disputed elsewhere in these comments.

          • eveee

            Lets do like you said and be specific. I will start with the quote,

            “But to make a good electric car you have to start from the ground up and throw a bunch of stuff”

            As an existence proof, Tesla Model S and Nissan Leaf, vs Tesla Roadster, Ford Focus EV, and the host of other ICE conversions show purpose built EVs are winners.

            Thats from a sales perspective, but I am not sure what you had in mind.

            Can you give some examples of those that “do not”?

          • Mark Duffett

            OK.

            “You have to throw away your frames. All of them. To build an
            effective, long-range, high-performing electric car, you have to start
            with something like the Tesla power slab at or below the level of the
            axles.”

            Do you? It sounds plausible, but not obvious, at least to me. How does the author know?

            The same comment is applicable to at least part of each of the following assertions:

            “You have to throw away all of your engine management software. All
            of the experience built up on eking amazing compromises out of an
            internal combustion engine is irrelevant when faced with an AC or DC
            motor.”

            “You have to throw away all of your mechanical steering and control
            systems. Everything is drive-by-wire. Anything else is a waste of space,
            weight, and time. All of those experienced engineers, all of those
            solutions that worked, gone. They all assume frames that you don’t have
            any more, and specific areas for mechanical linkages which are no longer
            there.”

            “You have to throw away your body panels. They all depend on the
            frame and the gas tank and the mechanical linkages taking up space that
            they don’t take up anymore.”

            “You have to throw away your seat mounting systems, and possibly your
            seats. They expect (sic) a lot of wasted space due to motor and transmission
            drive shaft hump and gas tank that just aren’t there anymore. They
            depend on a frame which doesn’t exist anymore.”

          • Bob_Wallace

            No, some company could attempt to make a go of it by stuffing EV stuff into their ICEV bodies. They could make it work. But they’d probably get run over by the companies that start with a clean build and produce a competitive EV.

            Now, were you to read what Mike is saying without looking for an uncrossed ‘t’ or an undotted ‘i’ you might have a much better understanding how the car industry is probably going to change.

            If you know much about the development of cars you will know that some companies tried to build cars like the horse drawn carriages they had been building. The industry moved on to bodies designed as cars.

          • eveee

            One at a time. The frame. Yes. Its a packaging efficiency issue. Where do the motors, battery pack and controller go? You see what GM did on the Volt. GM is invested in a T frame pack idea. IMO, it stinks. But it does dictate frame design for them. They must have a hump in the middle to do that.

            Nissan has a sort of under seat idea. That also dictates frame design. Tesla uses a skateboard approach. That gives it a frunk. No need for ICE motor mounts between the rails. And its rear wheel drive. Or both. All those things dictate that a purpose built frame is needed for best overall results.
            The places an ICE car needs to have space are not the same as an EV. And it depends on the EV tech. You could not even swap frames between different EVs because of it. But you could drop a Ford motor into a Chevy. Its been done.

    • Bingo

      There’s a video somewhere of one of the founders of Tesla making the same case. That traditional car companies outsourced everything but the engine, and that’s what the management structure is currently built around.

      • neroden

        Yep. The major automotive companies all started out as engine manufacturers. (There were separate “coachbuilders” — look it up if you don’t know the term.) Some of the auto manufacturers insourced body production in the 1950s – 1970s, but most of them outsourced it again in the 1980s – 2000s. It puts them at a huge disadvantage — they act like *engine* makers rather than acting like *car* makers.

    • eveee

      So would I. I like to give references and analyze in detail.

    • 1/ Global Innovation SME with a major tech company — which shall remain nameless — for a few years. Brought applied innovation to multiple clients globally in terms of processes and delivered computer system innovations.

      2/ Have been analyzing decarbonization of transportation as a key wedge in the fight against climate change for a while now:
      http://cleantechnica.com/2015/09/06/evs-cut-global-gasoline-use-2040/
      http://cleantechnica.com/2015/08/07/electric-motorcycles-disruptive-teslas-cars/
      http://cleantechnica.com/2014/08/11/electric-buses-overall-best-co2-health-price-hydrogen-worst/
      https://www.quora.com/Mike-Barnard/answers/Electric-Vehicles

      3/ Used to be a product manager for a Silicon Valley firm.

      4/ Designed consumer robotics, software products and furniture.

      5/ Been a car guy for longer than any of that.

      Does that help?

      • Mark Duffett

        Sorry, only just saw this. Yes, that extra background information does increase my confidence in the credibility of this article somewhat, though I’m not sure what a ‘car guy’ is.

      • Michael G

        It helps in understanding where you come from. It doesn’t help your credibility in the slightest because you apparently know nothing about cars. Most of your statements in the article reveal a Tesla fanboi who either doesn’t know what’s out there or selectively forgets any EV that isn’t a Tesla.

        I laughed when I read your item about EV acceleration. Tell that to a Spark EV owner.

        Also take a look at the top 10 selling vehicles in the US. 3 trucks, 4 cars, 3 SUVs. None of them known for acceleration. No one cares about torque outside of a few overgrown adolescents who think everything should be a Tesla.

        You simply ignore the many BEVs and PHEVs that don’t fit your preconception of what an EV is.

        You completely ignore the fact that the vast majority of BEVs and PHEVs are coming from established car cos.

        • Bob_Wallace

          Michael, stop the name-calling.

          • Michael G

            You’re right. I deleted the names.

  • JamesWimberley

    VW has a pure BEV, GM is launching one, and Renault-Nissan have several. The internal and external pressures will raise the importance of the BEV design teams. Will these companies change fast enough? I’m not sure, but it’s too early to write off their chances. Tesla is still a mid-luxury carmaker. Apple hasn’t sold a single car yet and knows very little about mass-production metal-bashing. BYD is not yet up to developed-country standards.

    • Matt

      It is not hard to believe that some will not make the change to pure EVs. But also not hard to believe that some will. As well as some living on but at a much reduced size.

    • Shane 2

      Yeah. Apple is a long way behind VW in bringing a BEV to market. They have enough cash to buy their way into cars. Why they would bother getting into a low margin product like cars is beyond me.

      • newnodm

        It is unlikely that Apple intends to compete with Tesla in a low margin business. They are more likely aimed at Google.

    • Coley

      Apple just goes out and buys Chrysler with some loose change and bingo they have an automotive base;)

      • Larry

        Yes. And then they need to start house cleaning . Throw out the existing management team and come up with a complete redesign of their vehicles based on the Tesla model.

        • Bob_Wallace

          That’s probably true. Any gearheads at the top of management may need to go. Make sure there are people dedicated to turn out the best possible EV all the way down the decision ladder.

      • eveee

        Take a look at what Tesla did. They got a cheap factory (with metal stamping machines ) minus the car company. Thats how you do it.

        If EVs start putting gas mobiles out of business, more ICE factories will empty. Thats how its done. Metal stamping will remain part of the business until someone figures out the new methods work.

      • Bob_Wallace

        That’s what BYD did. Very major battery manufacturer becomes a car manufacturer overnight. (But they started with a lower quality company than Chrysler.)

    • Michael G

      Thanks for pointing out the obvious. “Disruption” gets tossed around way too much. The coming transition is more akin to steam locomotives being replaced by diesel. A lot alike, but different power train. The cos. that couldn’t transition weren’t the engine building cos., but those selling coal to the train cos. Gee, I wonder if oil cos. have enough money to buy a car co.? Or two or three?

      Most of what this guy says is nonsense. Auto cos. come out with totally new lines all the time, requiring a complete redesign from the ground up.

      He’s just another Tesla fanboi who thinks anyone not making a Tesla clone is doomed. The Volt is a great transition car, and GM also makes the Spark EV which owners absolutely love (at $139/mo lease and $2500 from the great state of CA its basically free). Reviewers rave about Fiat’s EV, they just don’t make enough of them. Ford makes Energi PHEVs, and Focus Electric. E-Golf – the list goes on, and on.

      • eveee

        Not sure what you mean by,

        “Auto cos. come out with totally new lines all the time, requiring a complete redesign from the ground up.”

        Thats debatable. GM reuses many parts, even when they say “complete redesign from the ground up.”

        But GM has existing sources for all the ICE parts, and an existing supply chain. Telsa has create a supply chain from the ground up to build its packs, specially design an alteration the cells to conform to its requirements, design build and test motors and other specialized EV only parts are required.

        When GM designed the Volt, the cost were higher simply because those parts shared with an EV were all higher cost and lower volume than their traditional parts. And many part could not be re used or repurposed.

        Purpose built EVs have proved successful. ICE conversions have failed.

        Your comments reveal the flaw in the argument,

        “The Volt is a great transition car, and GM also makes the Spark EV which owners absolutely love (at $139/mo lease and $2500 from the great state of CA its basically free). Reviewers rave about Fiat’s EV, they just don’t make enough of them. Ford makes Energi PHEVs, and Focus Electric. E-Golf – the list goes on, and on.”

        None of those cars are produced in enough volume. None of them has a GigaFactory. And all will fail to gain market share because of it. Just wish they made more indeed. They can’t. Thats because they chose a dip your toe in the water, tepid approach.

        And none of them can recharge with the speed of a SuperCharger.

        These flaws are correctable. Nissan is working on those and has a battery factory.

        But nobody else has put as much effort into solving the problems of battery volume and fast charging as much as Tesla. If they did, they would compete. Its not so much technical, as having a willingness to take the venture and do it. Thats what it take to succeed in a new business, IMO.

        And flops like the Cadillac ELR are proof that cojones are necessary. Skipping steps won’t work.

        • Michael G

          No co. is making a profit selling EVs. Not Tesla, not Nissan, not GM, not BMW – no one. They aren’t produced in any volume because there is no way to make money on them until the costs of batteries go down enough. These are all billion dollar experiments.

          “In 2014, [Tesla] lost $294 million on $3.2 billion in revenue.
          Some $217 million of that revenue came from the sale to its competitors of zero-emission-vehicle, or ZEV, credits and other pollution allowances.”

          http://www.bloomberg.com/news/articles/2015-03-04/as-tesla-gears-up-for-suv-investors-ask-where-the-profits-are

          • Bob_Wallace

            Micheal. You should know that you have posted an untruth.

            By now you must have been exposed to Tesla’s gross profit margin profit record. I’ll post it again for you. If you do not know what gross profit margin means look it up.

            Please spend a little time and learn how a company can make money manufacturing a product but might show a loss on paper due to business expansion costs.

            Bloomberg is talking about Tesla’s bottom line. You used that to claim “No co. is making a profit selling EVs. Not Tesla,”

            That is factually incorrect, Michael.

          • Michael G

            Profit is profit. Loss is loss. The bottom line is the bottom line. Every co. has development costs.

          • Bob_Wallace

            Michael, once again you’ve dug yourself into a hole.

            Now the rest of us will watch to see whether you’ve yet figured out whether putting down the shovel is or is not the wise choice.

          • RexxSee

            False, they do make a profit. An EV is simpler than an ICE, less parts, simpler to assemble, less manpower, less subcontracting for parts, companies do not disclose battery prices. All we have is speculation and disinformation. BATTERY IS THE ONLY PART THAT CAN BE USED TO JUSTIFY HIGH PRICES TO NOT SELL EVS. Nissan never invested 5 billions in the Leaf. It’ a modified Versa with ordinary lithium cells. The Volt is a modified Cruze.
            The only serious player, Tesla, is making 23% on each Model S but reinvest all profits in his growth.

            OTOH any car not produced in sufficient numbers will not make a good profit.
            The chicken and egg situation wanted by the ICE car makers.
            They all know how to sell cars. And they know that short ranged too high priced and not available cars will not sell.

          • Bob_Wallace

            I recognize that dealing with Michael can sometimes make one want to scream, but how about stifling the desire?
            (No all-caps please.)

          • RexxSee

            In the good old time, capitals were used to put emphasis on the sentence.
            With the Internet, It became screaming… I’m sure your ears didn’t hurt after reading me. 🙂
            I WAS NOT SCREAMING! Only highlighting my point… Maybe I’m too old…

            Humm, too bad we don’t have use of yellow highlighting option in html.

          • Bob_Wallace

            You can use strong and /strong inside .

            That’s a decent way to emphasize without engaging in what is generally considered impolite shouting.

            You older than me, sonny? ;o)

          • RexxSee

            I remember looking at the first Spoutnik sitting on my mother’s knees…
            😉

          • Bob_Wallace

            I wasn’t quite old enough to be your father. Couple more years and you could have been calling me Pops.

          • Calamity_Jean

            There’s also italics and underline. Go here for these and other codes: https://help.disqus.com/customer/portal/articles/466253-what-html-tags-are-allowed-within-comments-

          • Michael G

            Tesla says they will have a car in an affordable range in a few years. Their definition of affordable is under $40K after tax breaks (subsidies). That is not my definition of affordable. Mine is Corolla or Civic class around $18K. If Tesla can’t make an affordable EV now why do you suppose any other car co. can?

          • Bob_Wallace

            No, Michael. Tesla’s target price is $35k. That would make it $27,500 after the federal subsidy. A few thousand lower with some state subsidies.

            What you find affordable is close to half the average price of a new car in the US. $32,086.

            (Michael, I’m almost certain you know Tesla’s target price. Are you having a really bad day?)

          • RexxSee

            Car companies spend billions a year to P.R. companies to disinform on every media platform, including comment spaces on green sites, especially green sites.

          • Bob_Wallace

            You saying Tesla is doing this with hidden funds?

            Are you suggesting that Michael is getting paid to post his stuff?

            I can’t figure out what you’re trying to say.

          • Michael G

            You are correct. Tesla’s target price is $35K before incentives which could bring it down to $25K, depending on the state and whether president Trump continues the incentives.

            I did not know that since I almost never read about Tesla, any more than I keep up with Porsche. Out of my price range.

            I read a lot about the ones I might be able to afford like the Volt and Bolt. So it appears GM and Tesla will meet in the middle.

            Articles like this should have something to indicate it is a Tesla love piece so the rest of us can avoid it.

          • RexxSee

            Tesla is 12 years old, all others are at least 75 years old with all the facilities, cash and engineering power necessary to massively produce cheap cars.

            Tesla does not have the means to afford making a massive production with the important economy of scale to reduce costs enough for a 20k $ car, not yet..This will be beyond 2020.

            For example GM has 99 factories, Nissan, 37, Ford 67… Tesla, only one.
            GM has 202,000 employees, Tesla 13,000.

            BTW 35,000$, Tesla said 35,000 dollars, not “under $40k”. It will be affordable for a much broader population.

          • Bob_Wallace

            *** Nitpic Alert***

            Tesla has three, no four factories. They just opened a second assembly plant in The Netherlands. They also have a factory that does something in Lathrop (east of SF).

            And they bought a factory that manufactures manufacturing machinery a few months back. That’s five.

            BTW, agree something around $25k after 2020. If the Mod3 comes out in 2017 Tesla will be expanding at pretty much warp speed to bring more assembly lines going and completing more battery factories.

            Scale and further capacity increases should get batteries to or below $100/kWh and make a very nice 200 mile EV sellable for $25k.

          • eveee

            Profits are a slippery subject. Just what does profit mean to Tesla making cars, and energy storage systems, and building a brand new battery factory?

            Don’t you think Tesla could make a profit if he didn’t want to save the world and instead kept the cash didn’t invest so much and so fast to expand?

            And since when does an emerging company, much less a new auto company, make profit early in its life?

            Judged by revenue and gross margin, its doing very well.

            http://evobsession.com/wp-content/uploads/2015/02/Tesla-revenue-growth.png

            “The margins on the Tesla Model S are some of the best across the entire auto industry. The Model S is unequivocally profitable. It’s not even up for debate.”

            “Tesla isn’t losing money on each car sold, plain and simple. The reality is that Tesla, despite its early success, is still very much in start-up mode. It’s making huge and bold bets that electric cars will be the wave of the future..”

            “Following the Model X, Tesla’s ultimate plan is to release a mainstream electric car in the form of the Model 3. Indeed, much of the ‘cash burn’ the Reuters article mentions are investments Tesla is making in itself to facilitate growth and expanded operational activities down the line.”

            http://bgr.com/2015/08/11/tesla-model-s-profits-4000/

          • eveee

            Tesla makes money on cars, but it is investing in a GigaFactory and factory expansions for Model X and Model 3.

            “The margins on the Tesla Model S are some of the best across the entire auto industry. The Model S is unequivocally profitable. It’s not even up for debate.”

            “Making the Model S is profitable. Rapidly expanding into a major car manufacturer while making the Model S is not.”

            http://bgr.com/2015/08/11/tesla-model-s-profits-4000/

            It isn’t even in Musks plan to make money until 2020 so I don’t know why there is any surprise about it. There is a difference between not planning to make money and being unable to make money. If Tesla wanted to coast with Model S and just turn profits, they could do it. But that is not the plan.

            “DETROIT— Tesla Motors Inc. Chief Executive Elon Musk told an auto industry gathering here on Tuesday that his luxury electric-car company won’t be profitable on a basis that includes executive compensation and charges until 2020.”

            http://www.wsj.com/articles/tesla-china-sales-declined-significantly-ceo-says-1421186754

    • Doug

      With their extensive manufacturing experience, BYD is only dozen good engineers and designers away from a killer EV. Apple has the talent, but has a bigger hill to climb.

  • Don Denesiuk

    Word.

    • Mike Dill

      As in MS Word? One of the programs that basically obsoleted the typewriter? My example is IBM which almost did not build the PC, and then could not figure out how to make it profitably.

      • Ronald Brakels

        “Word” is American for “True dat”.

        • Keanwood

          If he didn’t get “Word” why would he get “True dat”? lol

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