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Originally Posted by Truenorth00
Before I rebut a few points, I'll just say that I sincerely hope you're right and I'm wrong. I want these companies to survive, if not for the people they employ, then for the sake of competition as a consumer.
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Agree completely. We are on the same page with our hopes.
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Originally Posted by Truenorth00
But looking at their financials and the steep hill they have to climb, I am not at all certain most of them will survive. A year ago, I would have shared your optimism (and I posted on here to that effect). Now, I've seen a whole year go by and Tesla and BYD (mostly) are actually maintaining or even increasing their lead, just a few years out from EVs becoming cost competitive with purchase price on gas cars. I think a lot of big names will be toast by the end of this decade to the middle of the next.
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Perhaps? In terms of vehicle development and amortizing of R&D costs, a 'whole year' is just a drop in the bucket. As I mentioned in another post, hybrids were not profitable when they were first introduced to our market - companies knew they had to take a bath on costs in order to get the technology out there (especially Honda and Toyota, as they were the first). I've heard that the losses on some of the vehicles was in the range of $20K per unit, in year 2000 currency. That's not meant to equate the two situations, but just to state that this is nothing new to the "legacies".
Additionally, I'm not privy to each manufacturer's financial situation, or level of technical expertise, manufacturing flexibility, etc., but I also think it's important to not think of them as a monolith. Losses and development/manufacturing challenges will not be equally difficult to all companies.
I will agree that the timelines imposed by the government(s) is very tight, and will cause undue hardship to these companies. Definitely not saying that it's going to be easy. In that light, it also makes me think that there will be political pressure to provide financial assistance to the struggling companies, as losing large parts of home-grown industry and employment would be very unpopular politically (potentially political suicide, in a sense).
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Originally Posted by Truenorth00
I know some lash out against the credits as a government prop up for Tesla. All I'll say is that this is how technology has always been developed and commercialized. Governments routinely invest in technologies they think are socially or economically beneficial.
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I think that's a fair point, and to most it is obvious that this is what was happening. It was mostly pushed as a movement by the government to reduce overall emissions but clearly the 'side effect' of that action was to give Tesla (and other startups) an opportunity to create new technology with a business case that would have been 'bad' without the credits. Tesla was taking all the risks, though, and that's an important point that should not be forgotten.
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Originally Posted by Truenorth00
What we should be asking are why all those giant automakers rolling in billions of SUV profits and bailed out in 2008, never bothered to even start seriously experimenting beyond compliance cars? Instead a bunch of them even got together with the Trump administration to try and sue California out of its mandates. If it wasn't for the people who work at these companies, I'd be inclined to say that I hope they go bankrupt for this alone.
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This is an important question that everybody should have been asking 20 years ago. The Trump/lawsuit thing is indicative of how inept the "big 3" were, and now they are paying for it... but I'd stop short of wanting them to go out of business, for reasons of employees, but others as well.
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Originally Posted by Truenorth00
You're looking at this as a car guy. I assure you the vast majority of consumers, especially outside North America, just don't care. If it works and its cheap, they'll buy it. But also, fixing issues like corrosion is far easier for Tesla, than building competent EV software is for the legacy automakers.
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Well... yes and no. Most people don't know or care about whatever work goes on behind the scenes to make a quality product, but they do care when their 6 year old car, out of warranty, takes a crap and the costs to repair are higher than the value of the car. Nobody plans for their car to be junk prematurely (IMHO, the expected practical life of a vehicle is 12 - 15 years... I read that somewhere but can't recall where... so sorry, no source), and customers do remember a stressful hit to their wallet like this.
That said, there's no guarantee that this will happen with Tesla, but we'll see soon as their infiltration into the 'rust belt' is starting to come of age. Personally, I hope this doesn't happen, as I hate to see somebody take a bath on their car costs.
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Originally Posted by Truenorth00
The poster boy for hybrids, Toyota is proving you wrong right now. Their first EV is a commercial flop and the majority of it was built by BYD. They don't have the tech or the expertise. Or they would have done it in-house. They've now said they are going back to the drawing board to develop a proper EV platform. That won't be ready till 2027 at the earliest. In the meantime, the few EVs they do build will largely have to rely on platforms sourced from BYD and sold at a loss.
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I don't think this should be a surprise, though. A few makers have tried to rush the introduction of 'new' EVs by using companies that produce a poorer quality product. Knowing Toyota, their in-house development will be rock solid and well done. However, I agree that the tight timeline is a problem. I do think, however, that they are large enough to absorb some losses, and remember that North America is only a small percentage of their market.
Again, just my opinions.
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Originally Posted by Truenorth00
A huge problem for the legacy OEMs is that they all thought exactly what you thought. They thought it would be easy to build BEVs since it's just a propulsion change. Except that it's not. It's a computer on wheels. It's the equivalent of writing an operating system like Windows or OS X. Once you understand this, you'll start to understand why they are finding it so hard to compete.
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I can't comment on the software issue, it does sound like a formidable task, and is probably the reason that some companies have formed unlikely alliances to work this out. Again, it doesn't sound impossible, as the skills that were used to create complex drivetrain/vehicle management software is also useful in creating EV software. Sure, there's a timeline advantage, but I suspect this will soon just be industry standard, not something that they will never be able to figure out.
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Originally Posted by Truenorth00
All the talent they have in building engines. All the supply chains for their power trains. All the engineering done to specifically tailor cars to an ICEV engine. All obsolete. A recent example I heard on a podcast was the example of the crossbeam behind the dash. In a Tesla (and with several new EV automakers), it's a simple extruded aluminum beam that is lighter, stronger and easily manufactured. For legacy OEMs it's a complex piece of engineering because they were worried about resonance from the engine in front. It's a small example, but just imagine how much of that kind of engineering is there in the parts inventory and supply chains of legacy OEMs. They literally have to re-learn how to build cars from the ground up in 5 years and scale that process across their entire business to survive.
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I think this is being overplayed a little. Engineering is engineering, and EV platforms from the 'legacy' makers will be specifically engineered for this purpose. A crossbeam from an existing ICE vehicle will not be used for an EV vehicle, just like a crossbeam from a previous model will probably not be the same in the current or next generation. Plus, several OEMs have produced EVs in the past, so it's not like there is zero expertise on the subject. It's just engineering/development/testing/production - the same principles are involved regardless of the propulsion unit for the vehicle.
Another thing to consider is that there are already people who have worked for Tesla that are now working for 'legacy' makers, helping them in development. It has always been this way, and will continue.