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this post was submitted on 25 Feb 2024
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[Dormant] Electric Vehicles
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It's been obvious for at least ten years now that the Chinese are going to use the transition to EVs to try and take a big bite out of the automotive world market. But western manufacturers just sat on their hands. Now that it's actually happening the only answer they have is cry for protectionism.
So basically the way Japan took prominence in the auto industry after the 1970s oil shocks?
Or how the Koreans moved from also-rans in CRTs to the forefront of the flat-panel display market?
Or how GM consumed the century-old locomotive industry during the rise of diesel?
A seismic change in an industry always invites new competitors. There's no room for Surprised Pikachu faces here.
The more interesting question: is this a classic Innovator's Dilemma: they don't want to compete with BYD on a $16k EV for a global market when they can still sell $40k petrol SUVs to a diminishing slice of the first world? Or is it an admission their processes and designs are so ossified that they can't compete?
Don't pull the cheap-labour card. If there's more than a $1000-per-car difference in price to build a car in a modern automated factory in China vs Mexico, then something is very wrong with your process.
My opinion is that the US and European incumbents are basically in the grip of the financial industry. All that counts are short term returns. Technically, they'd be up to the challenge but that would mean reduced margins in the short to medium term which is why it's not happening.
And that's how they sealed their own fate. And they should face the consequences imo.
The problem is, the rest of the world are the ones who will end up suffering. The company runners mostly take their golden parachutes and peace out to a board position on one of the surviving companies while they sit on the beach near their thirteenth house.
They won't see any real consequences.
U mean, our fate
It isn't a true Innovators dilemma because the petrol cars they make don't require any further innovation.
All the innovation can happen in the EV drive train, any other innovations can apply equally to both ICE and EV models.
You're right the innovation is also on the production line.
The fact is China is investing in technology and innovation has halted or been misapplied elsewhere.
Look at Motorsport. Formula E is dominated by Stelantis but a European and American conglomerate. F1 by Europe and Japan. New technology in endurance racing by Europe and Japan.
The US has one high quality player in the EV power train world and that is because they joined with other companies.
The US has fallen into the middle ground of not being high quality, and not being cheap.
The US auto sector has globally fallen towards the missing middle. They can escape by going in either direction. Or European and Japanese makers will take the premium market while China takes the basic volume consumer market.