Published on June 11th, 2018 | by Robert Dee0
June 11th, 2018 by Robert Dee
Elon Musk is changing manufacturing and how cars are made. His compact in-house assembly saves manpower and a good portion of third-party involvement along with shipping costs. Traditional automakers will have a tough time competing with that in the EV (electric vehicle) market and won’t be able to compete much longer with an equivalent product in the ICE (internal combustion engine) car market due to their sheer complexity. One on one, their construction model is different, seats are made in one place, engines in another, and for EVs, batteries still another.
Right now, the advantage of traditional carmakers is that they have ICE cars to fall back on, but once the world transitions to EVs, that ICE market will no longer be an asset — it will be a problem, a very big one. GM is riding the fence, but it still thinks that EVs won’t be a threat. They’re wrong, and worse, traditional automakers haven’t figured out how to transition from the ICE car to the EV. It’s almost a “you can’t get there from here” scenario.
Look at it from the perspective that EVs and ICE cars are the equivalent of two completely different products that just happen to both address transportation. We’ve seen this before. Kodak, a giant corporation, built a complex system to take pictures and made huge profits doing it. All of a sudden, digital cameras come along, but Kodak wasn’t worried or even able to transition out of making all those chemicals and mechanical cameras — remember, large corporations can’t transition rapidly. So, what happened? Their goldmine became a curse. What do you do with all that assembly, the workers and obsolete photo papers? Well, you try to keep your cash cow and balance between the two while trying to hold up both ends. But you’ll never be able to compete with someone making just digital cameras who doesn’t have the massive overhead you do.
Now, add that to the inability of large corporations to change rapidly. Then envision the ICE as a mechanical camera that needs film and chemicals to work as opposed to a digital camera with little to no moving parts, no chemicals, and instant pictures. Digital cameras had to be a big success — they’re almost foolproof. They had technology on their side, just like EVs and renewables.
GM is making lots of money on ICEs and ICE cars. Why would it want to kill that business? Why would it want to speed up the transition to EVs with genuine mass production of highly compelling, competitive electric vehicles?
There are lots of parts and suppliers all over the world — with, of course, assembly plants all over the world too. Workers, spare parts suppliers, shipping costs, complex assembly machinery, etc., etc. Sound familiar? Is it GM or Kodak we’re talking about? Both — they’re the same. They’ve both built a product for a very long time, both thought they knew the market, and both thought, if the market changes, it will be a slow process. Kodak was dead wrong and so is GM.
How do you transition from that complexity to in-house assembly of the major portion of your product? How do you massively cut your workforce and dealer repair network? Forget whether we are talking about cars or cameras, the hurdles are the same and when the inversion comes, the stodgy corporation isn’t going to be capable of switching from mechanical, chemically laden cameras to digital cameras. Kodak tried, GM is dipping its toes into EV water, but, like Kodak, it doesn’t see the threat.
The fossil fuel industry, for years, pumped (pun intended) out statistics showing the small amount of renewable energy supplying the grid with electricity and the slow growth rate. Now, investment is going to renewables. Now, the world is going to better, safer, cleaner — and cheaper — and we’re doing it fast!
EVs and renewables have a major technological advantage. Can you make a better mechanical camera? Not really — a tweak here, a tweak there but you won’t get much out of it, certainly not enough to entice everyone taking a picture to use your camera … or drive your ICE car.
The only question now is at what point the dam will break and the world will embrace EVs the way it has digital cameras, smartphones, and MP3 players? They’re all the same — they’re more dependable, easier to use, and cheaper — and they will only continue to get better and cheaper.
For the Kodaks of the world, the clock is ticking. Elon Musk got it a long time ago. He implements it in his processes, manufacturing, and end products. He’s not burdened with ICEs. He picked the right camera.
It’s technology, stupid!