Published on September 30th, 2017 | by Michael Barnard0
Dyson’s Electric Car Play Has (Some Of) The Right Stuff
September 30th, 2017 by Michael Barnard
Dyson, manufacturer of vacuums and hand driers, has announced that it is out of stealth mode on its electric car plans. Dyson is entering an automotive market that’s in transition. Electrification is shaking the underpinnings of the industry. Autonomy is reshaping both cars and the entire driving experience. And China is where the major action is.
Is Dyson well positioned to compete in this new world? Yes and no.
Building on rock: Dyson has many of the necessary elements for a competitive electric car manufacturer:
◊ It deeply understands electric motors and owns primary intellectual capital.
◊ It deeply understands batteries and owns primary intellectual capital.
◊ It is a manufacturer of physical objects and gets that space.
◊ It has global distribution partners to call upon.
◊ It already has a demonstration center plus online sales model in place for its vacuums, similar to Tesla’s, although smaller in scale.
◊ It knows how to make sexy tech. It managed to make people think vacuum cleaners were interesting.
◊ It has access to all of Tesla’s intellectual capital should it choose to use it.
◊ It already sells products globally, with distribution in roughly 60 countries.
No legacy foundations: Dyson doesn’t have many of the inhibitors to success that current car companies have:
◊ It isn’t tied to internal combustion engines. It doesn’t have to keep convincing a bunch of internal people whose lifelong careers are related to burning gasoline noisily to shift gears.
◊ It doesn’t have any intellectual capital tied up in managing the deeply uneven power output of internal combustion cars.
◊ It doesn’t have existing expensive frames, including all of the supply chains and stockpiles it has to get rid of to make a good electric car.
◊ It doesn’t have an existing, powerful dealership network for cars that would also have to be transformed somehow. Given that dealerships lose a fair amount of money selling an electric car vs an internal combustion car (given downstream maintenance differences), this is huge.
A risky bet: Dyson is making at least one bet that may be like betting on bandwidth in 2000:
◊ It is not building or planning to build a fast charging network, but assuming that is someone else’s problem and will be solved. It is just like every manufacturer except Tesla in this regard. Dyson made it clear that it didn’t have the capital to build a Supercharger equivalent. Where this becomes more problematic is that Dyson’s personal statements around this are about the UK subsidizing home charging, which is not a strategically comprehensive statement on this key point.
Building on sand: Dyson has some significant areas that indicate that it will be facing a seriously uphill battle:
◊ Not enough capital. 2.7 billion British pounds, or $3.62 billion, isn’t that much when starting a car company that is intending to manufacture cars en masse. Musk told Daimler that $1 billion was missing a zero and Daimler’s CEO agreed, pointing to another $10 billion in investments it was also making. Tesla has spent about $10 billion so far. Dyson is underfunded right now. This doesn’t preclude further funding rounds, however.
◊ Dyson is promising a “radically different” electric car. One has to wonder, radically different than what? In the developed world, the car categories are reasonably well sorted out into groupings that people will actually buy: compact cars, family sedans, sports coupes, crossovers, SUVs, and premium luxury sedans. Tesla built the fun two-seat Roadster as a limited-production proof of platform and no longer sells it. The Models S, X, and 3 all look a lot like other vehicles in their categories except for the nose and a couple of other stylistic cues. They have seating similar to others in their class. They don’t look odd in garages or in the street. Weird is fun, but it doesn’t sell tens of thousands of units or more. This could be another Sinclair C5 moment, when a rich British inventor goes off the reservation and builds something no one wants.
◊ They’ve never built anything bigger than a vacuum cleaner. Scaling up to a car is a big step. Cars have a lot more riding on them and in them than vacuums and the like do. They require safety engineering that Dyson has never contemplated in any of its other products. Getting something to go safely down a road at speeds in excess of 160 km/h is a much bigger challenge than getting air to move at speeds which feel fast on human skin.
◊ There is nothing cyclonic in cars. Dyson’s expertise is making air move quickly, without turbulence and in interesting ways. None of this is useful in cars except in the vent system inside of one. If it became an OEM for a new model of internal venting such as the Tesla Model 3’s uni-vent, that would be one thing, but that’s not what it’s talking about.
◊ No autonomous driving intellectual capital or chops. It’s not enough to have 4 wheels and no emissions — it has to have a clear path to driving itself much or all of the time.
Dyson might succeed. It might fail. But at 2.7 billion British pounds and with its success points, it is certainly one of the more interesting new entrants.
Dyson is much more a threat to legacy car manufacturers than it is to Tesla. The legacy foundations of those older manufacturers make it incredibly difficult for them to adapt, as can be seen by the ongoing dance of two steps forward — one step back — announce concept car — repeat that they are engaged in.
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