The Motor Company Struggles

[MXA121]

The Motor Company Struggles

What do all of the largest car manufacturers in the world have in common? As we dive into a new Battery powered Automotive landscape, new companies are jumping into the fray and making more than waves. The likes of Tesla, BYD, and Rivian are stealing market share away from some of the most established car companies in the world. The reason why is simple – car makers have long been defined by their Powertrains, and that’s no longer enough.

Toyota ‘Motor’, Honda ‘Motor’, Ford ‘Motor, etc. It’s right there in the name. For ages, customers have chosen their preferred mode of transportation based primarily on what flavor combustion engine fit their need best (along with styling, price, features, etc.). With the Model S introduction in 2012, the Motor companies were put on notice. The ICE can no longer be the most ‘reliable’ and is no longer considered ‘efficient’ or highest 'performance'. Today, we are seeing everyone scramble to change their company from a Motor company into an EV company.

You can argue there are Motors in EVs, but the unique advantage that longtime ICE makers had in reliability and performance have vanished. The best case to look at (which many news outlets have highlighted recently) is Toyota. The largest, most reliable engine builder in the world is faced with this changing landscape, and appears to be behind the curve of electrification. Their leadership has a larger mission than Rivian or even Tesla, though, which is to provide cars to everyone/everywhere. EVs simply cannot be the car for everyone – yet, and Toyota is banking on that. In addition, they are investing $35B into EV tech (twice Rivian’s market cap) over the next 10 years and it should yield some great results. The majority of this spending is on battery development. This will be spreading their R&D between no less than 4 powertrain technologies (Hybrid, Hydrogen, Gasoline, Battery). Only time will tell if this is a good path for the company.

Toyota may be OK considering their market focus is different than Rivian and Tesla (for now), but what about Mercedes, BMW, Audi, Cadillac? Recent reports confirm Tesla is the best selling ‘luxury’ segment brand in the US, easily eclipsing BMW and Mercedes and putting an American manufacturer atop that list for the first time in years. (They are also the top selling car in Europe right now.) Those familiar with the ‘luxury’ brands can confirm their reliability is typically substandard but the performance was what you paid for. What performance are they offering over an EV today?

With the Automotive landscape changing, which ‘Motor’ companies do you think will drop out? Can Mercedes, Audi, BMW, Cadillac compete with Tesla? Will Rivian be able to survive Land Rover?
Thanks for tuning in.

- MXA

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[NY_Rob]

It's particularly sad when you consider BMW's case history where they had a full fledged revolutionary EV (carbon fiber based i3) almost 10yrs ago and they just let it languish and die on the vine. They could have built on the advanced tech in that car and they could have been miles ahead of most of the manufacturers by now.. but management brought in after the i3 was introduced was a ICE motorhead and had no use for electrification so he decided the i3 was the only full electric they would build.. till management was again changed and now they have a couple of full electric vehicles to offer. But, they lost years of development and insight they could have gleaned from the i3 program if they hadn't literally killed all development years ago. Dumb decisions made by petrol head management

 

[PappaBolt]

Interesting points. It almost feels like your saying EVs level the field and turn vehicles into commodity toasters, differentiated by style.

I think the shape and function of vehicles we know today will be very different down the road. In that sense, EVs move us more toward a blank canvas of imagination.

 

[TexasBob]

And with appropriate irony, none of them actually know how to make motors at all. They are internal combustion engine companies. Not one of them outside the start-ups can scrape together a credible electric vehicle motor.

And do not even get started on a software architecture - all outsourced, all hopeless. The best of them can put a decent skin on the Android Automotive OS. They outsourced the important stuff (materials science, coatings, software, electronics, batteries, even cabin amenities) and they held onto the unimportant stuff (engines and transmissions). Then they squeezed margins on the outsourced Tier One supply chain so hard that it killed innovation in the important stuff. Now, neither legacy nor Tier One are well positioned to compete.

 

[NY_Rob]

... And do not even get started on a software architecture - all outsourced, all hopeless. They outsourced the important stuff (materials science, coatings, software, electronics, batteries, even cabin amenities) and they held onto the unimportant stuff (engines and transmissions).

And some even outsource the complete vehicle manufacturing to Magna:
Mercedes-Benz G-Class (2018–present)
BMW 5 Series (2017–present)
Jaguar E-Pace (2017–present)
Jaguar I-Pace (2018–present)
BMW Z4 (2018–present)
Toyota Supra (2019–present)
W Motors Fenyr SuperSport (2019–present)
Fisker Ocean (2022–present)

 

[crashmtb]

And some even outsource the complete vehicle manufacturing to Magna:
Mercedes-Benz G-Class (2018–present)
BMW 5 Series (2017–present)
Jaguar E-Pace (2017–present)
Jaguar I-Pace (2018–present)
BMW Z4 (2018–present)
Toyota Supra (2019–present)
W Motors Fenyr SuperSport (2019–present)
Fisker Ocean (2022–present)

The g-class has been built by steyr Daimler Puch/Magna steyr forever.

 

[DuoRivians]

There are two themes I think will dictate future auto industry:

- The more verticalization, the better. Sales, eg auto dealerships or direct from manufacturers. Software and hardware stack.
- Brand association. I think this is one of the most underrated aspects, yet one that will carry a lot of long term value.

In regard to R&D dollar spend amount, I’m not too concerned about this. It really depends on where the money is spent. IMO, any amount spent on ICE, hybrid, hydrogen tech is a waste.

Edit: here are the list of bigger brands that I think will take bad hits by 2030:

- Honda
- Nissan
- Stellanis, in its current form. Some sub brands might make it
- GM: about half the size as it is now. Why are they using rectangular battery packs in their ultium structure??
- Toyota: I think they gradually decrease market share in developed economies

 

[MXA121]

Interesting points. It almost feels like your saying EVs level the field and turn vehicles into commodity toasters, differentiated by style.

I think the shape and function of vehicles we know today will be very different down the road. In that sense, EVs move us more toward a blank canvas of imagination.

In a way, I think EVs do level the power train playing field. Everything will be quick. And most likely everything will be reliable. I mean, my Model 3 needs less attention and service than any reliable combustion car.

The effect of this will be a win for consumers. More focus on ride, handling, quality is expected. Look at the Rivian air suspension system, and it's impact on buyers. Suspension will be a major differentiator in the segment, with more emphasis than before. My Model 3 shocks are not great, I fully expect them to offer improved suspension after they lose their power train first mover advantage.

 

[mikehmb]

It's particularly sad when you consider BMW's case history where they had a full fledged revolutionary EV (carbon fiber based i3) almost 10yrs ago and they just let it languish and die on the vine. They could have built on the advanced tech in that car and they could have been miles ahead of most of the manufacturers by now.. but management brought in after the i3 was introduced was a ICE motorhead and had no use for electrification so he decided the i3 was the only full electric they would build.. till management was again changed and now they have a couple of full electric vehicles to offer. But, they lost years of development and insight they could have gleaned from the i3 program if they hadn't literally killed all development years ago. Dumb decisions made by petrol head management

PREACH

The i3 is a weird, delightful little bundle of energy. We have a ‘15, and will soon be upgrading to a newer one with larger battery (probably a ’20 without Rex). The construction of the car was also something to behold - they really tried to make the car sustainable, and not just with marketing.

I’m a lifelong BMW stan and petrolhead (2002tii, E46 ZHP, M3, 1-series M … you get the idea) and watching them blow their tech lead with the i3 is such a waste. And then driving a rental 428 recently was enough to make me avoid any of their sedans for the foreseeable future.

 

[NY_Rob]

PREACH

The i3 is a weird, delightful little bundle of energy. We have a ‘15, and will soon be upgrading to a newer one with larger battery (probably a ’20 without Rex). The construction of the car was also something to behold - they really tried to make the car sustainable, and not just with marketing.

I hate to even admit it, but now having my R1T.... I much prefer to drive the i3 for local errands..... it's just so easy to pilot and a joy to drive. My daughter has now assumed ownership of it.. we sold her 2019 Mazda last weekend. She loves her little Protonic Blue i3!!

 

[mikehmb]

I hate to even admit it, but now having my R1T.... I much prefer to drive the i3 for local errands..... it's just so easy to pilot and a joy to drive. My daughter has now assumed ownership of it.. we sold her 2019 Mazda last weekend. She loves her little Protonic Blue i3!!

It’s an absolutely great city car and commuter, I love the weird little beast.

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