Tesla Model 3 and Model Y are Legally Disturbing – What Should Automakers Do?

September 15, 2019 by Zachary Shahan

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An earlier version of this article was published three years ago, in September 2016, but it is still in the news, so I'm republishing it.

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The world changes. That's always the case, but the change is particularly dramatic right now in some technology sectors. For a normal person, changes in the automotive industry can only seem gradual. Cars are becoming a little more "connected", more and more people are using Uber and Lyft's 21st century taxis (do not call it car pooling), and some people drive electric cars. But we have not seen anything yet.

We are on the brink of two massive changes in the automotive industry – massive transformations. These are not incremental changes in the market like the hybridization and obsession of SUVs / CUVs. These are changes that, unlike these, essentially destroy the greatest competitive advantages of conventional car manufacturers.

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Robotaxis / Robocabs

I'm not saying that this chart is 100% correct, but I find it plausible. It comes from a study by Roland Berger (a highly respected global consulting firm), via Blitzzcar:

The highlight of this chart is that Roland Berger expects the number of passenger car owners to decrease by 2030 and that the use of robotaxis is increasing.

Large auto companies can buy the best autonomous car start-ups (and try to buy Lyft, Uber, etc.), but that does not change the fact that a massive drop in the number of cars sold each year is expected. I do not think people who have invested in Volkswagen, GM, Toyota, BMW, Ford, Nissan, etc., would be happy to see such a dramatic decline in car production – I guess the signs of this transition are becoming more obvious , Many will want to bail out and let the giants of the car fend for themselves between the remains.

As the two links above show, GM was quick to attack this market with a lot of money, which was probably the smartest solution to date. BMW, Volkswagen, Ford and others have also taken initiatives.

Ford has predicted that autonomous cars will produce a high volume by 2021. Mobileye + Delphi is targeting the year 2019. Elon Musk, President and CEO of Tesla, recently said that this future was presented in "infinitely faster conditions That you do not think. If that's the case, I think the big builders have to rotate a lot faster, and I'll explain what I mean after the electrification section.

First of all, though, why is it a radical change in the market, not just a gradual improvement? It's huge if the objectives of Elon Musk materialize (text added by me):

When regulators approve of true self-driving, this means that you will be able to summon your Tesla from virtually anywhere. Once the vehicle has caught you, you can sleep, read or do something else en route to your destination.

You will also be able to add your car to the Tesla Shared Fleet simply by pressing a button on the Tesla Phone App and generating revenue for you while you are at work or on vacation. sometimes potentially exceeding the monthly cost of the loan or lease. This greatly reduces the real cost of ownership to the point where almost everyone could own a Tesla. Since most cars are only used by their owner for 5 to 10% of the day, The basic economic utility of a true autonomous car is likely to be several times greater than that of a car that is not.

In cities where demand exceeds the number of cars owned by our customers, Tesla will manage its own fleet of vehicles, allowing you to always come by car wherever you are.

Let's be absolutely clear what Elon said here:

1. With a self-driven Tesla, you could potentially make more money by letting others drive it in robotaxi (when you're not using it) instead of paying the rent / monthly loan.
2. As such, almost anyone could afford it (If you can not qualify for a lease or loan and you do not have the money for an initial purchase, it seems like you do not have the money. have more luck.)
3. This will make the car so much more valuable than a normal car that (I think) it will probably devour the normal car market as quickly as the production of these vehicles can be increased.

So here is.

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Electrification

Electric cars have many advantages over petrol cars, but initial costs, lack of experience and consumer awareness, as well as limited public billing have all been obstacles to widespread adoption. These things have all changed quickly and we are on the brink of real disturbances.

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The Tesla Model 3 has received more than 100,000 unseen bookings and has already registered nearly 200,000 sales thanks to a few key benefits … or 30.

The auto industry may be ignoring it for a short period of time as sales of its competing models fall and depreciation increases, but the delay tactic will not work much longer for these companies, which have interest in being ready to rotate.

However, as I think I explained it a few weeks ago, these giants of the automobile are essentially sandwiched between jumping off a cliff and falling into a volcano. I understand that some people do not agree and think that goals like this one from Volkswagen are enough. Maybe, but I think it 's essentially the approach "get ready to jump off a cliff". What will happen when consumers realize that these electric cars are actually much better than the gasoline and diesel cars offered by Volkswagen? What will happen when the inflection point highlighted in the above presentation will prevent sales of electric cars from slowly rising from 10% to 25% of sales, but will increase rapidly to 50% of sales ? What will happen to the finances of these auto giants, who are not yet ready to write off their old engine plants, their engine expertise and their other sunk costs?

What will happen to companies even less prepared for a disruptive shift to better electric cars?

The only solution I see

For both of these dilemmas, the situation reminds me very much of what we have seen in the German electricity sector, except that I think this is further disrupting the established industry.

Ten years ago, if you asked an industry insider: "How will RWE and E.ON survive the growth of distributed solar energy?", The answer would probably look like this : "What are you talking about? Everything will be alright. However, these utility giants were not doing well. In 2015, E.ON and RWE were in an internal crisis and announced that they were selling companies focused on renewable energy and prosumers. Or, in other words, they were separating parts of their fossil and nuclear energy-dependent activities, planning a disinvestment exit strategy, and were ready to let them die of a slow (or slower) cancer death.

Tesla is primarily intended to sell millions of Tesla Model 3 electric vehicles, Tesla Model Y, Tesla Model S and Tesla Model X a year in a few years. The company survived the Startup Valley of Death. These millions of annual sales of vehicles will come from someone else 's side. Other outsiders are also embarking on the auto market with billions of dollars of support. The disturbance arrives. How do traditional builders survive?

The leaders of these giants of the automobile should recognize that their gasoline / diesel business is a dead weight. They have in front of them a solid solution: to split the segments of electric vehicles and autonomous cars of their company. Create an exit strategy that will escape the business areas that are currently functioning properly but will soon be destroyed by a fast-moving market. Try to make sure your secondary business has everything it needs to compete with Tesla and other leaders in the electric vehicle and battery industry. Return to the state of the art as quickly as possible and hope everything will be fine.

It is easier to manage the transition early, rather than when the full early adoption phase hits the market.

This is my advice. Consider it for free. (However, we do accept advertising funds if you are really helping to accelerate the transition to clean technologies or if you need advice on consulting if you need an electromobility consultant or speaker.)

Keywords: electric robotaxis, robotaxis, Tesla, Tesla model 3, Tesla model Y, Tesla robotaxis