Can Other Auto Manufacturers Recreate Tesla’s EV Success?

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Originally published on EV Obsession.

While executives at most of the major auto manufacturers around the world have been burying their heads in the sand for the last decade or so with regard to electric vehicles, the recent unveiling of the Tesla Model 3 has seemingly forced many to begin dealing with reality.

Many have responded to the industry shakeup by stating that they’ll be able to release their own electric offerings within only a few years that will allow them to regain lost marketshare. Is this actually true though? Is it really that simple of a thing recreate Tesla’s pioneering approach? To discover its “secret sauce”?

The folks over at TeslaMondo recently made a post on that matter that made me laugh out loud, so I figure it’s worth posting some excerpts here. Enjoy:

April 2016, FCA CEO Sergio Marchionne: “If he can show me that it can be done, I will do it as well, copy him, add Italian style to it and put it on the market within 12 months.” This came at a shareholder meeting. Just last week, Daimler shareholders forced CEO Darth Dieter Zetsche to put on his apron and try to cook up a Tesla too. It’s coming in a couple of years. Those German ovens . . .

Like Bob Lutz, Marchionne has a troubled relationship with EVs. Just two years ago he told the world to avoid his compliance car, the electric Fiat 500. That’s a pretty strong vote of no confidence in EVs, yes? But now, two years later, he has the wherewithal to build a Model III clone in the next 12 months? No he doesn’t. He has neither the balls nor the technology.

Hah. Strong words. But you do have to wonder, some people just really can’t deal with a change in the rules of the game, can they?

With Tesla playing something of an iconoclastic role in the auto industry currently, you’d think that the established companies would be responding more vigorously. But then people, or groups of people, generally don’t respond until it’s too late, do they? Instead, they’re just waiting for it all to come down on them, while going about their business acting like nothing will ever change. (Anthropogenic climate change comes to mind.)

Reprinted with permission.

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James Ayre

James Ayre's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy.

James Ayre has 4830 posts and counting. See all posts by James Ayre

124 thoughts on “Can Other Auto Manufacturers Recreate Tesla’s EV Success?

  • The pressure will eventually get to be too much for most of the major car makers and they’ll take the GM way out, just telling LG Chem to make them a car, just to get something out there. Marchionne’s quote sums up the last 50 years of automotive industry, only innovate when someone else does, and then why actually innovate when you can copy.
    The sad thing is when you imagine the world without Tesla’s paradigm shifting influence.

    • Add to that, claim to be innovative while failing to do so for years. To auto execs, adding bluetooth or iPhone compatibility and intermittent wipers is innovation.
      The industry is one of the most conservative in the world. Look at the hew and cry over center mounted instruments. Big deal. The list of innovators that struck out is long. The industry learned that their ads had spawned a populace yearning for same old cars with lots of shiny on them. Image not substance.

  • Can they? Yes. Will they? Not seeming much evidence yet…

    IBM stopped making typewriters before PC sales could replace their revenue. (And later stopped making PCs) Can FIAT and the others stop making internal combustion engines before EVs can replace ICE revenue, or will they ride the ICE revenue stream into oblivion like Kodak did with film?

    • I suspect they will be more like Canon and Nikon rather than like Kodak.

      They’ll start out building a few EVs but continue to concentrate on the ICE portion of their business. Most of their research money and effort will go into improving their fuel engines and drivetrains.

      As they see the market shifting they put more effort and money into improving their EV/PHEVs offerings and less into advancing their ICEVs.

      Then at the end they’ll quit making substantial changes to their ICEs and drivetrain. They’ll just manufacture what the dwindling market will purchase using the same old designs.

      Twenty years from now car manufacturers will be EV manufactures and some of them will produce a few ICEVs as a sideline. IMHO.

      A few years into the film to digital transition Nikon quit improving their film SLRs. And then a couple years later they manufactured enough to fill up some warehouse shelf space to cover future demand and stopped production.

      • They’re very much dependent on that highly benign transition being the one that plays out.

        • Indeed. That’s the key, isn’t it?

          Tesla has other things in mind….

        • Tesla cannot grow fast enough to take over the entire global vehicle manufacturing business. They are shooting for reaching about 0.5% by 2020.

          Doubling output every five years would take Tesla to 2% by 2030.

          Car companies have time to transition.

          • But throw in Apple, Google, Faraday Future, Atieva….

            And I would say Tesla has some good opportunity to increase its production goals (and get financing help) following the #s of Model 3 reservations.

          • Half of the startups will fail. The other half won’t grow as fast as Tesla because, well, Tesla. Any company trying to do more than one thing (Apple, Google) is probably not going to throw the full weight of the company behind a new car division. Tesla came to a game with a crew of people with only one goal and no other balls to juggle.

            I don’t think any of those companies has yet built a car. They’re going to have some of the same sorts of learning problems Tesla encountered (under engineered drive trains, initial ideas not working, suppliers not delivering in a timely manner, ….).

            My guess is that if Tesla produces the car we expect with the Mod 3 and the Gigafactory performs as anticipated Tesla would be able to borrow enough money to go massive if they wanted to.

            It becomes an issue of how fast can a company grow and still maintain quality.

          • “Tesla because, well, Tesla” should read, “Tesla because, well, Elon”… 🙂

          • Throw in BYD and the other existing Chinese electric car companies. BYD’s on track to produce as large a quantity of electric car batteries as Tesla, and there are other domestic Chinese manufacturers we never hear anything about.

            ICE car companies do have time to transition. But what they’ve lost is the *brand value*. The first-mover electric car companies like Tesla are now the prestige marques, and the late car companies will be struggling in the market and trying to compete on price rather than brand name. I wouldn’t invest

            in an ICE car company because of this.

          • Perhaps India or China will decide to produce batteries and EV’s in quantity and export…sounds like every major consumer electronics that was invented by 1st world country and then production eventually taken over by 2nd/3rd world.

          • Look for China to enter the global EV market. But at first they have a very large and growing domestic market to supply.

            Other companies would be well advised to stake out their territory prior to China showing up.

          • I wouldn’t be surprised if China starts producing vehicles in the near future that will surprise us as much as when the Japanese got their act together, then the South Koreans managed the same feat. High quality, reliable, good tech vehicles.

  • Cherry-picking. The legacy automakers are on a spectrum on their commitment to evs, with GM and Nissan-Renault at one end, with real products manufactured at scale, then BMW with a nice niche car, then VW and Ford who claim to have big things in the works, and Fiat-Chrysler and Peugeot-Citroen bringing up the rear with purely token efforts. They are all shifting ev-wards, at varying speeds. I suspect the Tesla 3 launch has shaken things up a bit more, and the ev-now factions in the executive suites are getting stronger.

    • You forgot Toyota and Honda staunchly burying their heads in the sand with hydrogen.

      • Well, you gotta have something for the hydrogen-want enthusiasts to droll over, no 🙂

        • Sod hydrogen, I demand a thorium powered hoverboard, or better still a fusion powered gyrocopter, both technologies are on the cusp of a world shattering breakthrough, but they have been sitting on the ‘cusp’ for most of my life, unlike EVs, and wind/tidal/ hydro/ solar power which are in the here and now.

  • “Those German ovens . . .”

    Please tell me that isn’t a Holocaust joke.

    • I’m German, have seen the Buchenwald concentrations camps and the ovens.. and have read that line and didn’t see a Holocaust reference/joke in there at all until I did read your reply.

    • It is a Holocaust joke. I’m not German or Roma or Jewish and I didn’t find it funny.

    • I think it was simply a follow up to “put on his apron and try to cook up a Tesla” using a ‘magic’ oven to create a Tesla competitor that fast. I’m sure they wouldn’t have made the reference if they’d thought of it. Sometimes an oven is just an oven.

  • The comparison is between a free thinking and unimpeded pioneer with a successful track record and a shell-shocked and beleaguered post-crisis industry licking its wounds and trying to survive in a strange new world. We’re more likely to see competition coming from the likes of Google and Amazon.

    • Or Apple?

      • Apple don’t manufacture anything, it’s all outsourced – the iPhone processors from Samsung, the case from Foxconn. Musk gave a press conference on grease injection – stuff you learn by doing. It would be a nearly impossible cultural change. Same with Google and Amazon.

    • Yes, but it’s true of any industry. Conventional companies are paralyzed by bureaucracy and almost completely incapable of obsoleting their own products. Kodak invented the digital camera and then cast it aside because it would have disrupted their entire business. Others didn’t have the same reservations or concerns, and they ultimately went bankrupt because of it.

      The clear and radical thinking needs to start at the top and be ingrained into the corporate culture. It’s one of the things Google works hard to maintain. A small handful of large companies are able to do this. Most aren’t. I agree — big auto is among the worst in this regard.

      • Very well summarized. This is the story many people don’t quite get.

        Also, it is extremely difficult to write off a huge amount of sunk costs related to the current tech while investing in newly needed infrastructure. One other reason companies new to the industry do better in the midst of a rapid change in tech.

        • I don’t think car companies will make the Kodak mistake for two reasons.

          First, they make car bodies as well as drivetrains. Changing drivetrains is not like leaving behind your film business and moving to manufacturing cameras.

          Second, pretty much everyone knows what happened to Kodak. Kodak’s history is constantly being shoved in their faces. I expect there is a constant questioning of “How do we avoid becoming a Kodak moment?”.

          I’ll add a third. Early digital cameras simply did not produce the quality images one could get with film. It was a few years before dSLRs equaled the ability of film to make large prints. Tesla has already surpassed ICEVs in terms of acceleration, quality of ride, and cost of operation. ICEVs are left with only a minor, part time advantage of higher range.

          Car companies know right now that their products are largely inferior to EVs. They don’t need to wait to see what will develop.

          • Car companies should know right now that their products are largely inferior to EVs.

            But never underestimate the power of self-delusion.

            Car companies should know right now that fuel cell products are largely inferior to ICEs, but that isn’t stopping several from going forward with them.

            Let’s hope that rational thinking prevails sooner rather than later.

          • I don’t agree that ICE vehicles are inferior to EV’s, at best they are ‘becoming’ inferior or may be inferior in the coming years. Even compared to a Model S there are upsides to the $100,000+ ICE competition.

            EV’s are doing well, but let’s not blind ourselves to the world outside fan website like CleanTechnica. The general population still doesn’t care one bit about EV’s.I find it hard to find people interested in even discussing EV’s.

          • “I find it hard to find people interested in even discussing EV’s”.

            I don’t. When I open the falcon wing doors of my Model X someone almost always starts asking about it. The questions quickly move to range, where to charge, speed, etc.

          • I’ve never seen a Tesla vehicle.

          • There are literally thousands of Tesla S cars on the road around me here near Oslo Norway. I see dozens on the road everywhere I go every time I drive in southern Norway.

          • Hence the importance of those doors…

            Aside from the accessibility benefits.

          • lol interesting way to try and refute my point. When I flap my arms like a falcon it has a much different effect.

            This is one upside to Tesla using such a gimmick, it will attract attention,hopefully not one day for constant malfunctions/repairs on such a unique setup.

            Do many of the people who approach you to ask about the falcon wing doors already know the Model X is an EV or do you have to tell them that? I am repeating my point but the vast majority of people I meet know next to nothing about EV’s and certainly show no interest in owning one.

          • My guess, based on the surveys we’ve seen, is that most people wouldn’t know it’s an EV beforehand.

          • You are, unfortunately, on the money, but things are changing, I have recently had conversations with friends who have used a leaf taxi, and they wouldn’t shut up about it, expotentiality I believe is the key?
            Yes, I’ve spelt it wrong -;)

          • The usual first question is “What kind of car is that?”, often followed by “Where is it made?”. Then we get to the EV questions. My license plate “NO XAUST” helps in that regard.

          • Well, I think that’s a point for lack of awareness, not lack of superiority.

            Basically all of the major car magazines ranked the Model S as the best and have put the X in a league of its own. And these guys are all about the internal workings of the ICE.

            Get someone in the car and let them experience it a bit, and things are clear… even if the interior style is not what some people prefer.

            But yeah, awareness/experience is lacking, and most people aren’t early adopters… by definition. 😀

          • There are absolutely no upsides to the garbage ICE cars sold for $100,000. They have some gimcrack (which I could get as aftermarket mods on a Model S if I wanted), they have stupid top speeds (which nobody is legally allowed to use anywhere but a track so they’re stupid), and they are worse in every way than an Tesla.

            Sorry, those are just facts. Some people disagree, but they’re wrong, and they’ll figure out that they’re wrong eventually.

            It’s true that the general public just isn’t paying attention. That will change as people drive EVs owned by their friends.

          • A lot of you here are getting carried away with your obsessions for EV’s. Occasionally I try to inject some reality to temper expectation and its met with zealot type responses. Although I enjoy reading all the news and I to am cheering for EV’s perhaps it is time for me to move on. No real news is coming for several years still so I might as well wait for my Model 3 in silence. The ignorance ignoring current issues with EV’s is getting a bit much for me.

            You yourself pointed out an upside to ICE vehicles, top speed but because that doesn’t apply to you it is stupid and other people are wrong… The other issue still existing, even for Tesla’s, is range. Yeah yeah supercharger blah blah I get it, in fact I am now convinced that isn’t much an issue (Thank you) but lots of people still have serious issue with that. Worse every other EV has serious range issues and no Supercharger network to lean on. Next serious issue, availability!!!! This is the biggest challenge present, what’s your response to that one, yeah I get it, one day that will be better to. So EV zealots have answers to dissuade from today’s issues with EV’s but that doesn’t make them go away…I could go on with issues around politics, charging capabilities at home, etc but why bother, I know you have answers for those issues as well that should magically solve themselves.

            To be clear, this rant isn’t necessarily directed straight at you Neroden, but your comment did prompt it =P

          • Car companies *have already made the Kodak mistake*. You did watch “Who Killed the Electric Car”, didn’t you? Both GM and Toyota *have already made* the mistake Kodak made. It’s just a question of whether they’ll course-correct or not.

          • The crushing of the EV1 will haunt GM and tarnish their brand for decades to come. I will be telling that story to my grandkids.
            They did it in the pre-internet era. At the time, they must have felt the story wouldn’t get much ‘air’.

      • IBM managed to make the transition twice (mainframes to PCs and PCs to *software maintenance contracts*). You’re right, most companies have a corporate culture which makes them incapable of surviving these technological transition points.

        • Good point about IBM. They’ve been incredibly adept, despite their somewhat lampooned “shirt and tie” engineering culture.

          In that vein, Guy Kawasaki (ex-Apple) has a great talk found on YouTube about “Curve Jumping”, and how hard it is for companies to to leapfrog themselves.

    • Or the Chinese, this is an economy that doesn’t fart about.

  • There are a few companies that are genuinely coming around. Nissan. BMW. GM sort of, but they are hedging with PHEV. Thats where I see the problems. Companies that think they can just inch along. Hopefully, thats what the Model 3 is for. A great big carrot and stick saying get moving.

  • If Tesla can prove the Model 3 is profitable, there’ll be a mad dash toward electric vehicles. The Fiat/Chrysler CEO has already admitted as much.

    • Also, that link/story is about the same thing as the one above, so am treating it as spam and removing.

      • Ah! Totally missed that.

    • Waiting for the Tesla Model 3 to prove itself profitable is leaving it too late, especially if the likes of Apple also have an EV by then.

      • Far too late. If I were on the board of Fiat, I’d be looking to fire this guy.

        • Our they could merge with Tesla. They have a lot of plants.

          • I wonder if it would make sense for Tesla to merge or acquire another car manufacturer.

            They wouldn’t want the designs, the R&D stuff. The brand name wouldn’t add to their éclat. They’d probably get a bunch of out of date robots and handwork stations. They’d have to deal with the dealer mess. They’d have to fire all the piston heads and close down the ICE stuff.

            Buy empty buildings or build to spec. Bring in modern tooling. Keep making Teslas, not Tesla-lites.

          • They’d also get a bunch of pension liability

          • Asset are worth money. Maserati, Jeep, Ram trucks, Dodge, Alfa Romeo all make money. The new Dodge Mini-Van is a PHEV.
            They have brought back the Fiat Spider.

          • An interesting idea. I think it would be more likely for Tesla/Panasonic to sell components to other manufacturer’s to put in their EV’s.

          • They do.

          • A good merger would be with landrover/jaguar, the Germans wouldn’t even tolerate the idea of some upstart American company taking a large chunk of their company.

          • A fiat Tesla? Err, no thank you-:)

        • There were people like that at VW. I think a few are gone now. 🙂

      • Aye, thons a dark horse worth watching.

  • Traditional car manufacturers are beginning to react to a changing world. They’re seeing dropping battery prices and interest in EVs, especially Teslas, and beginning to realize that they stand to lose market share if they don’t build desirable EVs.

    Tesla, on the other hand, is not reacting but causing. Tesla is driving down the cost of batteries, creating highly desirable cars, and avoiding issues that other car manufacturers accept as part of the business. Tesla has eliminated dealerships with their unpleasant sales practices. They’ve adopted a policy of fix stuff as soon as it’s discovered, do not wait to be forced to fix it. They’ve continued to improve their cars even after they are sold. And they’ve build a rapid charging system.

    The traditional companies will almost certainly produce nice long range EV over the next few years. But they will always be behind Tesla if they don’t fix the rest of their problems.

  • They’ve failed to prepare for the commercial Internet, I mean the EV revolution. A minority of them might have the gumption to do a course correction, Bill Gates style “Internet Memo” (1995) putting all hands on deck to catch up with where the industry is going. A minority of the minority might be successful enough to survive.

  • One thing that is easier for Tesla than for its ICEV competitors is to not instantly obsolete an existing product range from which it makes its money.
    How would the big brands tell their customers “Look, compared to this new EV we brought now the rest you could potentially buy from us is crap!” ? How should they manage such a transition when ideally there should be none but an instant flip of the whole range?

    • Just manage the flip. Offer both but don’t do a lot of comparison. Let the market do the moving. Over time cut back on number of ICEV models and increase EV offerings. Fade the ICE out.

      Their big problem is likely to be their dealers. I don’t think most dealers are going to want to give up the service/repair/parts business that comes along with ICEVs.

      • Sure the ICEV manufacturers will try to smooth out the transition the way you describe ( do they have any alternative?). I’m just wondering how it will play out for them. It might not work.
        For what I hear from ordinary (non EV geek) people around me, EV adoption might become a wildfire once enough attractive models are on the market. Word of mouth makes magic and pure EV competitors will not be kind in their ads.

        ICE incumbents might have to write off a lot of their assets faster than they suspect.

        As for the dealers they will only make their manufacturer’s life more difficult as the change comes, unintentionally helping the brands that bypassed the concept of dealers.

        In my view, the bigger the brand and range the more difficult the change will be for them. Luxury cars is already a serious market share problem for the BMW, Lexus, et all.

        Follow the battery cost curve, apply it to car pricing and you see the problem spreading down to the more affordable models. How long will that take?

        Once a market is blossoming, the R&D and its results explodes in innovation, accelerating the trend to wider adoption, thanks to lower cost.

        We live in interesting times.

        • There are a number of reasons why the transition won’t be overnight.

          Let’s fantasize a world in which the Bolt and Mod 3 are everything we hope them to be (and GM solves the rapid charging problem). Word spreads rapidly and most of buyers want an EV. The car industry cannot switch over to EVs that rapidly.

          By 2020 between Panasonic/Tesla and LG Chem there should be only enough batteries manufactured to supply about one million EVs. We’ll need many more Gigafactories worth of battery plants to produce enough for 90 million EVs. About 180 more Gigafactories.

          We’d have to ramp up electric motor production and control equipment production. And battery materials.

          It will take more than a decade to pull that off. Some people will be forced to buy an ICEV even if they want an EV simply because needs can’t be met. In this fantasy scenario.

          I think the transition will be fast but supply limited.

          • Average car ownership time frame in 2015 was 6.5 years too and the trend seems to be increasing. This will lengthen the tail a bit and many of those cars are not 35k+$ either. So some cheaper models will have to show up. Multiple dimensions will give more time for the transition…

          • I just did some arithmeticing. A $35 EV is actually a much cheaper car. Take a look at monthly out of pocket expenses during a six year payoff…

            4.5%, 6 year payoff. 13,000 miles per year. 12c/kWh and

            $35,000 Model 3
            Monthly payment = $556
            Electricity cost per mo. = $ 39
            Total = $595

            $28,000 ICEV 30 MPG
            Monthly payment = $444
            Monthly fuel bill = $108
            Oil change = $12
            Total = $564

            A $35,000 Model 3 is a $28,000 ICEV. (Then it gets a lot better for years 7 through ‘year of the crusher’.

            Now, a Tesla 3 after the $7,500 federal subsidy.
            Monthly payment = $437
            Electricity cost per mo. = $39
            Total = $476

            $22,000 ICEV 30 MPG
            Monthly payment = $349
            Monthly fuel bill = $108
            Oil change = $12
            Total = $469

            If there were Tesla 3s sitting in the showroom today you should be comparing a Mod 3 against a Camry or Civic. About the same cost.

          • My credit union is now financing new cars for 6 years at 2.1%. That brings the cost of the Mod 3 down even more.

          • Arithmeticing or using a credit union instead of a bank?

            Ah, must be arithmeticing. I can do it which is why I use credit unions….

          • It’s even better than $22k. Calculate the long term O&M costs of brakes, transmission fluid changes, timing and other belts, hoses, spark plugs, fuel pumps, injectors, MAP/MAF sensors, O2 sensors, catalytic converters, and other fluids and parts that are not present or significantly reduced in an EV. Also what is the value of the time saved by not stopping at a gas station? What is the value of the improved health from not breathing fumes in your garage,

          • I didn’t dig for all the savings on purpose. When making a point I like to under-calculate a bit, leaving me some room to push back if challenged.

          • The financial advantage of EVs is larger if you keep the car longer. If you’re the sort of goof who replaces his car every six months because he gets bored with the old one, the advantages are pretty nonexistent. If you keep your car for 20 years, the advantages are huge.

          • I think your analysis makes sense but only so far as consumer perception allows. No doubt Tesla will help improve the perception of cost of ownership. Let’s hope so.

            Your point frustrates me at the same time because I see third-tier suburbs building new homes in farm fields which could be super high-efficiency housing (thing geothermal, passiv, solar, …) which would have at worst a small increase in mortgage payments…nope. So logic can sort of fly out of the window for consumers.

          • I expect that once the Bolt and Mod 3 are on the road (and assuming they are quality cars) we’ll start seeing articles and TV programs talking about the cost of driving an EV vs an ICEV. The media will educate people because the media needs content. And the two million or so EV/PHEV drivers the road in the US by 2021 are each going to educate a few people.

            I suspect awareness and desire will stay ahead of supply for the next few years. Looks like Tesla may be pre-sold through 2019.

          • There’s a conflict of interest in building those homes in farm fields. Yes, sometimes the homeowner is commissioning a custom house and doesn’t want to spend the extra to make it more efficient. But often homeowners do see the value in efficiency.

            But much, much more often a developer is building houses on spec. The developer just doesn’t give a damn — the house could be a leaky sieve which costs a fortune to operate and falls apart in a year, but once it’s sold the developer has his money. The developer has an incentive to build garbage.

          • Believe me I know they don’t give a dam. Even less to spec homes built in the city (e.g. teardowns) seem to be built like crap. I can see a massive house from a teardown near me which had ice dams this winter (this was not a bad ice dam year) and I wonder what the hell is going on. This is hardly rocket science…

            Personally, I think the biggest problem is people are not commissioning new homes but they are being built on speculation by builders. That speculation makes them cut every corner they can while still being able to find a buyer.

          • True, what we need is a cheap and cheerful EV with a 200 mile range, anybody on here remember what the Honda 50 did to the established UK motorbike industry?

          • LG Chem has shown they can bring new planets online very quickly. They brought one of their plants online with partial production in around a year with only 4 years to full production. If someone is buying LG Chem will produce allot of batteries quickly.

          • By 2020 LG Chem should have the capacity to manufacture batteries for 450,000 EVs. The Gigafactory is expected to supply 500,000. I’d say there’s not too much difference between how rapidly the two companies can scale up.

          • Bob_Wallace Yes but LG Chem smaller factory design means they can bring more factories online faster than Gigafactory can come online.

          • I don’t know how one could figure out whether it would be quicker to build one big factory (Panasonic/Tesla) or several smaller factories (LG Chem). So much would depend on site discovery, permitting, lining up construction crews, etc.

          • True but the latest LG Chem factory was built and brought online in a year not to full capacity but it came online in a year. The Gigafactory 1 is how many years old? and they haven’t started building cells yet.

          • We don’t know how much capacity LG had prior to start of construction of the P/T plant. By 2020 LG is expected to have enough capacity to power 450,000 EVs, P/T enough to power 500,000. That suggests that P/T is ramping faster, but I don’t think one could make a future prediction based on that small amount of data.

            The more interesting question, to me, is which approach will be more efficient. (I’m betting P/T has the upper hand here. They will bring raw materials in one door and finished product out another.)

          • Two trends, Chinas rapid move from FFs with the corresponding loss of jobs, coupled with Its burgeoning EV industry, the two trends would dovetail nicely and along with Chinas command economy, provide a perfect opportunity for China to do unto the Wests faltering approach to EV adoption, what Japan did unto Europe’s ( esp the UKs) car and motorcycle industry.
            Tesla will cause a big dint in the ICE car industry but, if we aren’t careful, China will steal the march on every bugger.
            Take a look at steel, they have the dosh to subsidise any of their products until the competition goes under, I have no doubt they are prepared to do the same with EVs of all descriptions.

          • In the case of unfair subsidies the harmed countries will almost certainly set up offsetting tariffs such as have been put on Chinese solar panels.

          • The US certainly would as they did with steel, however the Tories here in the UK wouldn’t as they would be scared of the Chinese retaliating by boycotting our ‘financial services’

        • Tesla has already kicked the snot out of the high end luxury sedan market. What are the big lux brands going to do? A Cadillac ELR refresh with a rebate? LOL. By the time Tesla do that to the mid lux sedan market….. Tesla is rolling all over the big boys and they know it. TIme to get out the PR machine for them. Engineering is not going to save them unless they completely reverse course. Despite the Bolt, GM shows no signs of changing spots. VW, now thats interesting. They have a fire lit under them. Toyota and Honda, what a wreck.
          It will be interesting to see who wakes up first. Once a few more start into the market, the rest will start falling like dominoes. They will be forced to.

      • Agreed, no need to kill off the old models immediately, but as models age, sales go down. Instead of developing a new ICE model, develop more EV models. As the old ICE models are retired, don’t replace them with new ICE models, replace them with EV models. This will take years, but the transition will be less painful for the manufacturers and dealers.

        As for the dealers, they will still be needed for tires, brakes and maybe some warranty work but most may need to convert to coffee bars where people can wait while their car is charging.

      • I think you’ll have to retire a whole generation of dealers/ salespeople in order to get the next generation of EVs onto the market big time.

        • Maybe. Change will be driven by consumers. How long did it take for the minivan to kill the station wagon when Chrysler introduced it? Then SUVs cut into sedan sales. I think that if a compelling EV were to come to market, you would see consumer demand force the manufacturers and dealers to change.

          • We need one of the top ten manufacturers to release a serious EV.

            I’m getting a little less convinced that GM is doing it. I’m thinking that the Bolt might be a “CAFE car”. Not a compliance car targeting a few state regs, but a zero emission car designed to offset low MPG offerings that GM wants to sell. The big pickups/SUVs/sedans that earn higher profits.

            I well remember the pieces of junk that Detroit turned out as “economy cars” years ago in order to get their fleet mileages lower. That’s when Japan ate the US car manufacturer’s lunch.

          • Fair comment, but they are all ICE vehicles with the commitment to regular services warranty sales etc, the ‘lifeblood’ of your current car salesperson.

  • I expect that the major manufacturers do not believe that the model 3 can be profitably manufactured in 2018.

    • I’ll bet they’ve done the math and know it can be. They can take the GM/LG Chem battery price of $145/kwh, calculate that a 60 kWh battery pack would cost about $10,000.

      They already know that they can build a fairly nice car body and sell it for $25,000. They retail the Camry for just above $23,000 including an ICE and systems. Trade the gas motor for nicer upholstery, quality stereo and some other sweeteners to make a entry-luxury medium sized car. ($2k for unlimited Supercharger use. ;o)

      • Well, part of the $145/kWh cell price from LG Chem was purchasing much of the technology bits of the Bolt from LG (the parent of LG Chem) instead of producing in-house like they did with the Volt.
        Meanwhile, Mercedes and Toyota outsourced their EV’s drive train + battery to Tesla when Tesla wasn’t a true competitor, but decided to stop sending more money Tesla’s way and stopped those programs.
        It’s pretty clear the manufacturers would love to slam Tesla, but aren’t capable of doing so, or they would have already. None of the incumbents enjoy seeing the new kid on the block get all the press and stealing their most lucrative markets away.

  • In Melbourne on a big digital billboard outside Southern Cross station there is an ad running which brags about how inovative a new fossil fueled car model is because it has ‘push button’ start. It features a close up of someone pressing the button. Hilarious! A lot of old-school manufacturers are doomed.

    • The ’49 International pickup I drove on the farm had a push button starter. On the floor.

      As did the 1952 Chevy pickup I learned to drive on.

  • What makes this discussion all the more incredible, is that Tesla has released ALL of its patents for anyone to use, especially its competitors! And do not forget that Mercedes Benz was at one time the main shareholder and guardian angel of Tesla. It is possible that GM, Ford, MB, and others are secretly working on Tesla clones. Let us hope that is the case.

    • VW is working on a long range EV sedan using its Porsche brand.

  • Tesla/Elon Musk said his patents are open for the taking so Why don’t the BIG 5 take advantage and make their own Tesla EVs’ or even better yet just Licence the motor&batteries from Tesla and install in their own cars.

  • Yes, and these guys and gals will often retire in a few years, so why bother?

  • I don’t get. Apart from the obvious warm feelings for Tesla leading the author to WISH that it should be difficult for the incumbents to build an EV similar to a Tesla there’s nothing here. Not one reason was given to show why this would be difficult.

    As far as I can figure out, electric drive trains are really simple. Making a good chassis is far more difficult, but the incumbents do have the skills (in somewhat varying degree, but still).

    He is also obviously correct to point out that nobody’s made any money making EVs. I hope he is utterly wrong when he claims it’s impossible, and I look forward to seeing their Tesla clone at most twelve months after Tesla has reported a real profit (I.e. US GAAP).

    I love EV technology and think it’s very clear that it’s the propulsion technology for cars with far and away the lowest total cost – once you include lifetime energy use, maintenance and the cost of pollution. If they cannot be made profitably then capitalism isn’t doing its job. The whole point of it is that it’s supposed to align the selfish choices of individuals with the best choices for society. And if externalities were better accounted for – if there was a carbon tax that made the price of fossil fuels reflect the full cost of setting fire to them, not just the cost of extracting them – the market probably would work and Fiats boss would be busy making the best EVs he could instead of explaining why he doesn’t want to make them…

    • He’s wrong here –

      “He is also obviously correct to point out that nobody’s made any money making EVs.”

      Tesla is making industry leading profits on the EVs it produces (only bettered, IIRC, by Porsche). Tesla has a very high gross profit margin.

      Tesla, the company, is spending a lot of money growing their business, designing new cars, acquiring and building factories, and building the largest battery factory in the world.

    • Traditional automakers are limited by their core business structure. Union labor adds cost and complexity in making a major paradigm shift and the cost of the middlemen (dealer networks and franchises) cannot be easily eliminated. Dealers and automakers make their biggest profit on service, parts, and the used car lot. Two out of these three take a serious hit with theoretically more reliable and lower maintenance pure EVs. Also, Tesla is open to other carmakers using their supercharger network as long as its use is free for the end user after purchase and the cost is included in the price of the vehicle. So far I’ve seen no takers willing to accept these terms. I also wouldn’t be surprised if the oil industry and its supporters (cough Koch Bros cough) is somehow persuading traditional automakers to drag their feet a bit.

      • ‘Tesla is open to other carmakers using their supercharger network as long as its use is free for the end user after purchase and the cost is included in the price of the vehicle. ”

        That is not what Muk said. the conditions are:

        1. The other companies vehicle need to charge as fast as Tesla vehicles. This condition is needed to inure the that Tesla supper chargers are not clogged with slow charging vehicles.

        2. That the other manufacture must share in the cost of running the supper charger network. Musk doesn’t care where the money comes from. It is up to the manufacture to determine if the charger access will be free, and extra cost option, or a charge per use service.Musk never said it had to be free to the owner of the vehicle. They don’t even car where the money comes from.

        Tesla’s only concern is that everyone using the stations share in the cost and that all cars charge quickly so that traffic jams don’t occure at the charging stations.

    • It’s *psychologically* difficult for the incumbents to build an EV like a Tesla. In *engineering* terms they could have done it ten years ago. But their corporate culture prevents them from doing so.

      And interestingly, they proved this by crushing the EV1 and recalling the first generation RAV4-EV, and not making any more electric cars in the 1990s. *And Elon Musk knew this before financing Tesla*. So he had strong evidence that the incumbent automakers would be pscyhologically hobbled, that they would fail to compete with Tesla even though they could, before he put his first dollar of investment into Tesla.

      • It is crucial to understanding the dilemma of incumbent automakers that they are run, managed and led by the engineering and science specialists for internal combustion engines. The electric motor is completely uninteresting for them because it does not need this endless cycle of incremental tweaking and improvement to meet the next round of efficiency and pollution standards and customer expectations of horsepower. The incumbent automakers are ICE specialists, and the rest of the car they outsource to parts suppliers that they slap into the cars on the assembly line.

      • Agree, however he still rated Tesla’s chances as slim. Despite that, he threw his last millions into it. It was never about sound financial decision making and always about forcing change.

  • From what I read here, the dealer networks – a system the incumbents built up in the 1930s – are now a drag on their transition. Simply adding an ev to the model lineup and relying on existing dealers to sell them does not work. The dealers and their salesmen are wedded to the ICE world, more than their customers. Either the automakers need to set up specialist ev dealers (just as they have different dealers for different brands now), or if they want to use the existing dealers, they need to license and train them and their salesmen specially. A dealer only gets to sell the Bolt if he (I guess it’s a macho world) has been through the course.

    • That’s my experience, two years ago I was seriously interested in leasing/buying a leaf , the total lack of interest and follow up to my enquires put me off totally ( even with the involvement of The leafs (UK) director of operations.
      With that level of disinterest in flogging me a leaf, I shuddered at the thought of their back up operations.
      Thought their latest sales drive seems to be more ‘ focused’

      • That was not my experience in the US when I purchased my volt. They responded quickly to my inquiry, promptly answered all my questions and took me for a test drive. i was even told it was there best selling car. In fact they had more volts than anything else in the lot.

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