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Photograph by Carolyn Fortuna / CleanTechnica

Cars

Opinion: A Centralized Power Focus Failed Legacy Automakers

Today’s automotive landscape is very different than the one that dominated the late 20th century. Why didn’t the Big Three automakers adapt to increasingly digital and electrified transportation?

David Brooks is a moderately conservative columnist for the New York Times. This week, he wrote about the power of autocracies and outlined how, if we can learn to be patient and trust our democratic system, it will ultimately prevail over reliance on centralized power. It is an interesting argument — one that is provocative enough to apply to the problems that legacy automakers now experience as they attempt to shift gears (pun intended) and transition to electric vehicles (EV).

EVs are gaining in popularity and market share far sooner than legacy automakers ever expected. They poo-pooed the imminence and importance of mass EV adoption for years. They insisted that their own long histories of successful automotive manufacturing gave them insights that the new-EV-kids-on-the-block just didn’t have.

Meanwhile, Tesla absorbed the EV market share in record numbers.

It turns out that legacy automakers’ centralized power focus undermined them. Let’s track the electrify personal transportation movement alongside Brooks’ argument, replacing his focus on government autocracies with the centralized power structures of internal combustion engine (ICE) car manufacturers, and we’ll see where it takes us.

Interlinked, Yet Hampered by Boundaries

Brooks says, “In autocracy, power is centralized.” “Autocracy” is a system in which absolute power reigns. The Big Three US automakers — General Motors, Ford, and Chrysler — were situated in Detroit for decades. They led the industry and held over 90% of the US car market shares in the late 1950s.

Tensions in the US auto industry started to rise at the end of the 20st century, when it became clear that automotive development and production were paradoxically interlinked yet stymied by multiple hierarchies of products, processes, and inter-firm boundaries. This resulted in R&D isolation — what’s now commonly referred to as “silos” — each of which represented a struggle for centralized power within the US auto industry.

“For the past several years,” Brooks offers in retrospect, “the autocracies seemed to have the upper hand.” Autocratic car manufacturing still seemed to be making what Brooks refers to as “global gains” in the early 21st century, even as it was becoming evident that the automotive, transportation, and mobility industries experiencing transformative changes. In US auto manufacturing, a façade of everlasting success hid problems behind the scenes. The Guardian cites General Motors (GM) as an example of bloated centralized power. “Entangled in bureaucracy, paralyzed by inaction, drowning in excess costs,” GM wasted tens of billions of dollars even though it had “huge financial resources, vast expertise, armies of well-versed executives and specialists, global markets, and public demand.”

What went wrong? Legacy automakers could have embraced advancements in connectivity and automation technologies, data analysis, and the rise of new mobility services. But they didn’t see the need to make those moves, at least not in the immediate future.

They thought they had lots of time.

Brooks explains, “Often in autocracies, decisions are made within a small, closed circle. Information flows are distorted by power.” In off-the-record talks recently with two different Detroit-based career automotive engineers, CleanTechnica heard about highly inbred legacy auto manufacturers dominated by company veterans and top-down management. New ideas about electrifying transportation were dismissed by primarily white men in power who had long familiarity and liked playing with ICEs.

“People rise through autocracies by ruthlessly serving the organization, the bureaucracy,” Brooks notes, and that was the norm with the legacy automakers.

Autocracy prevailed in the legacy auto industry. The option of self-managed teams whose leaders would have genuine autonomy to envision and innovate were dismissed as rather eccentric and unnecessary.

Inability to See the Electrified Writing on the Wall

“It’s become clear,” concludes Brooks, that “autocracy has severe weaknesses.” In 2007, US automakers experienced significant loss in market share to Japanese and European manufacturers due to failures to keep pace with changes in basic vehicle attributes, such as price, size, power, operating cost, transmission type, reliability, and body type.

“Given the chance, talented people will go where fulfillment lies,” Brooks says. Enter Silicon Valley, which disrupted the automotive industry with its car-as-computer ideology and transformed the experience of owning and driving a car. Fortune states that Tesla’s Elon Musk has proven that “telematics, infotainment, and advanced self-driving features are becoming every bit as important to car buyers in the future as horsepower and torque, if not more.” Tesla transformed the car into a smartphone on wheels, while legacy automakers lagged behind, emphasizing last-century customer preferences.

“If we steadily, patiently, and remorselessly ramp up the economic, technological, and political pressure,” what Brooks calls “weaknesses inherent” within autocracies grow. The world manufactured more than 10 million electric passenger vehicles between 2010 and 2020, according to the International Council on Clean Transportation. The market share for EVs in the US began the decade at around 0.10%, and by the 2018 had reached 2.1%. That insignificant number will equal what most carmakers will soon match from a single popular EV model in a single year.

For instance, the global semiconductor shortage has made transparent the importance of chips in keeping automotive assembly lines running. Yet Tesla has been able to conduct chip work-arounds and grow volumes 87% last year. To do so, Fortune describes, it depended on “advanced processors that centralize a vehicle’s computing power rather than distribute it among a large array of commodity microcontrollers using proven and robust yet obsolete circuitry.”

By 2020, US automakers represented just 18% of the cumulative number of EVs produced globally since 2010, while share of EV production rose in China and Europe. Semiconductor chip acquisition has been only one of many problems legacy automakers have faced in their late-to-the-game look at EVs.

Today’s Pace Can’t Be Fast Enough

In 2021, the International Council on Clean Transportation warned that the US was falling further behind Europe and China on EV production. Policies “focused on a transition to zero-emission vehicles” spurred EV production and uptake in Europe and China, the researchers concluded. Meanwhile, in the US, policies that could have driven increased production, investment in, and purchases of EVs had been rolled back or phased out.

Then, in 2022, came Russia’s invasion of Ukraine, and the price of gasoline skyrocketed. Haven’t we heard it all over the news? “The past few weeks have been revelatory,” Brooks exclaims. People that were dismissive of all-electric transportation now looking longingly at us as we plug in our EVs. The questions about EV function, range, and reliability have never been so numerous.

Will legacy carmakers in the US catch up to Tesla? Maybe. They’ll only do so if they discard their entrenched focus on centralized power and let new approaches take root.

But, as the Guardian admonishes, “the industry reverts to past form at the flip of a throttle.”

 
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Written By

Carolyn Fortuna (they, them), Ph.D., is a writer, researcher, and educator with a lifelong dedication to ecojustice. Carolyn has won awards from the Anti-Defamation League, The International Literacy Association, and The Leavy Foundation. Carolyn is a small-time investor in Tesla. Please follow Carolyn on Twitter and Facebook.

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