Burdened German Automakers Struggle To Design Profitable Tesla Competitors

OCT 10 2018 BY EVANNEX 99

CONFLICTED GERMAN AUTOMAKERS ARGUE ABOUT HOW TO PRODUCE A ‘TESLA KILLER’

It’s no secret that the legacy automakers are making the transition to electric vehicles only reluctantly, in response to regulatory pressure from governments and to competitive pressure from Tesla. Contrary to what many seem to believe, Big Auto’s reluctance to embrace EVs is not merely the usual corporate fear of the future, nor is it the result of any oil industry-fueled conspiracy (as far as we know). It’s a simple matter of money – there are good reasons to believe that electrification will take a major bite out of industry profits, as BMW and Daimler execs recently acknowledged.

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Charles Morris. The opinions expressed in these articles are not necessarily our own at InsideEVs.

Above: German automakers remain conflicted about how to transition factory production lines from gas-powered cars to EVs (Image: Werner Budding)

Now Volkswagen has warned that its stated plan to offer an electrified version of each of its models will cost more than it estimated. VW previously predicted that the coming shift to battery power would cost some 20 billion euros ($23 billion). CEO Herbert Diess, in an interview published in VW’s internal newsletter, indicated that this figure was too low, but didn’t offer a new estimate. “The burden for our company, such as the cost of bringing to market electric cars, will be higher than expected,” Diess says. “This is particularly so since some of our competitors have been making more progress.”

A recent article in the Financial Times discussed the challenges legacy carmakers are facing. Whereas industry disruptor Tesla started from a blank slate to design its vehicles, and has “bet the company” on EVs, incumbent OEMs can’t go down that road – the risks are too high. Analysts have warned that a substantial number of Germany’s 800,000 auto industry jobs could disappear along with the internal combustion engine.

FT points out that VW, BMW and Daimler have each earmarked billions of euros for electric technology, but are taking different approaches – some automakers hope to build EVs using the same architecture as legacy vehicles, whereas others intend to introduce new platforms. The choice of strategy “will re-sort the carmakers in profitability,” says Christian Senger, head of the VW’s e-mobility line. “Those who [take] the hardest road will be more successful than the others.”

Above: Germany protects its car industry as EU goes for just 15% cut in CO2 car emissions by 2025 (Source: Transport & Environment / Image: Plugin Cars)

Volkswagen is leveraging its scale advantage – earlier this year it awarded €20 billion worth of contracts for battery supplies as part of a plan to introduce 50 pure EVs by 2025. This represents an about-face from VW’s previous strategy – the e-Golf and e-Up, introduced in 2013, were basically existing models stuffed with batteries.

“To make it a fully fledged electric car, you need to start with a battery pack between the wheels and then you build up the car,” Herbert Diess, CEO of the VW Group, told the FT. “Then you have an effective battery system, the range, and you get a lot of freedom for the design of the car, to make more interior space with the same footprint.” (His words echo what Tesla designer Von Holzhausen said back in 2011.)

The first VW model designed this way, the ID Neo, is to come out late next year, the first of several models belonging to the ID electric sub-brand. Although recent reports suggest the program could be delayed.

Above: VW’s ID concept car appears to be another unconventional design approach typically relegated to Big Auto’s electric car efforts (Image: Charged)

BMW seems to be taking the opposite tack, touting the advantages of “flexible architecture” that can accommodate fossil, hybrid or electric powertrains. BMW plans to offer all its models with a choice of powertrain starting in 2021. “We can’t afford having two factories standing still,” says CEO Harald Krueger. “With a flexible approach you can always manage the capacity of your plants. But if you have a specific EV architecture, what do you with the old one? What do you do with the people?”

Daimler is combining both approaches, designing purpose-built architecture for its EQ sub-brand while also setting up its production plants to accommodate all types of powertrains, including fuel cells. “We have hybrids, plug-in hybrids, electric cars and maybe robo-taxis tomorrow,” says Daimler Production Chief Markus Schaefer. “It’s hard to predict volumes for the best way in an uncertain world, so this is the most efficient approach to supply the market.”

Some analysts think the flexible approach is too complex in both design and production. “I don’t see how they can consolidate traditional platforms, from small hatchbacks to large SUVs, and at the same time try to include EVs in the equation,” says Pelham Smithers Analyst Julie Boote. “That’s incredibly complicated.”

Above: In another revealing move, Audi decided no e-tron inventory for its US dealerships would be made available (Source: Charged / Image: Automobile Propre)

Others see merit in the flexible approach, pointing out that it’s hard to predict how quickly the shift to electric cars will take place. “Most carmakers proceeding with EVs are following an ‘If you build it, they will come’ approach,” says Bernstein Analyst Max Warburton. “If you have a dedicated EV platform and the demand doesn’t come, you’ve lost a lot of money.”

===

Written by: Charles Morris; Source: Financial TimesBloomberg

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers, free of charge. Our thanks go out to EVANNEX. Check out the site here.

Categories: Audi, BMW, Daimler, Mercedes, Tesla, Volkswagen

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99 Comments on "Burdened German Automakers Struggle To Design Profitable Tesla Competitors"

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Robert Weekley

There is another way: fund Promising Startups, and sell them Direct, Tesla Style, while doing various in house approaches!

Al D

If I buy an EV from a major manufacturer, I want it to be serviced by my local dealer while under warranty. I’d want parts to be readily available should one fail or if I had an accident.

Mark.ca

You will never buy one so what is the point of posting this?

WARREN

Yes, having a local dealership that is not overburdened is a big thing. The ot
her weekend the Tesla service center next to the Burbank Ikea had customer’s cars parked all along the street curb after hours!
The Germans have the technology to build, it’s just they are fighting with the profitability of EVs.
I sat in the new X5, there is no comparison in the quality, craftsmanship, and details vs a Tesla. They now have twin 12″ screens. Gesture control. Cameras in the dash to watch if your falling asleep. Even heated and cooled cupholders.

http://i.imgur.com/SDj7Y04.jpg

And the shifter is lighted crystal. And the cupholders is electronic cooling, not air conditioned.

http://i.imgur.com/sR4Xz0v.jpg

The fact that you will be able to buy the plug in X5 45e next year with near Volt like AER range is pretty amazing. And with almost 400hp this time around, it can be a long distance autobahn cruiser. Plus it will likely sticker less than a comparble line Model X is big too.

REXisKing

You’re seriously comparing a Plugin with an Engine, to an EV?
That’s minor leagues to major leagues comparison.
You’re still going to hear that engine roar, and pay premium fuel to get that thing moving. You still won’t have massive electric torque, you’ll have a little electric torque.

The X5 is good if you can’t afford a Tesla.

Get Real

BMW fanboy, wake me up when they actually build a compelling EV that isn’t weird.

Mr. M

sure, why not. A PHEV can easily be 50% of miles a BEV. without the charging hassle on the road during long trips.

Mark.ca

“And the shifter is lighted crystal. And the cupholders is electronic cooling, not air conditioned.”
I’m sold! Can i get the cupholder and use it on my recliner?

Pushmi-Pullyu

Gesture control looks very promising. I think it has the potential to be far more reliable than voice control.

Here’s hoping Tesla starts using gesture control soon!

Peter

I have a Volt in Australia, can’t even get a replacement windscreen from GM, right now I’d take a Telsa model 3 any day!

Speculawyer

That is the Silicon Valley way of doing things. And it is probably used a lot for various car parts.

But full car designs? They probably have too much ego that would prevent them from buying an outside car design. NIH syndrome.

eject

Poor EVANNEX, too heavily invested.

Prsnep

To me, they come off as being Tesla’s marketing department disguised as a separate entity. The constant barrage of Tesla marketing material pretending to be independent journalism has really been a turn off.

Bikejumper

Prsnep, you have a choice.

Pushmi-Pullyu

What Bikejumper said.

Prsnep, the link on InsideEVs’ front page is clearly labeled “BY EVANNEX”.

If you don’t want to read such articles, then why click on the link?

Another Euro point of view

Very obviously.

pjwood1

Lately, Evennex has become more sane. Profits will suffer, because people get how much better electric is, where it works, yet others will stick with ICE.

Offer both, or lose market share. That is the wonderful thing Tesla has done. We’re skipping trashy 48v micro hybrid crap, for the “Full Monty”. Now, these makers have failed at 5-10KWh cars, and then a hasty death of battery use. Things not going to plan.

M Hovis

@ Another Euro point of view: I wasn’t aware that in Europe money was set aside for the funding of health-related illness caused by the burning of fossil fuels. ZEV like credits are being used in China as well as other parts of the globe. Unlike turning our backs for hundreds of years on the subsidized health cost that auto manufacturers enjoy, the ZEV credits are the most effective method to force manufacturers to stop their participation in health costs and global warming. So Tesla is the cheater for acting responsibly, and at the same time, profiting from those who refuse to stop hurting their bottom line while they transfer the cost of pollution on to others. Got it. /s

Another Euro point of view

To what post are you replying to ? 😛

M Hovis

The one you deleted.

Mark.ca

To the garbage you posted…

amt

Burdened & Struggling : Who Saw That Coming !.. Wait Until The Rest Of Big Auto Joins In On Playing “Catch Up”…..It will Spell … “CHAOS” …………

Benz

The auto industry in Europe is going to have to face a lot of competition coming from the US, China, Japan and South Korea.

Next decade we will see a battle for marketshare.

It’s going to be very interesting.

Quiviran

Other than Tesla, I don’t see much from the US. South Korea is well positioned with some good designs, they just need to figure out how to make a lot of them. Nissan is good, not great, but the rest of Japan is pretty quiet. I see the big player as China. They’re going to build a lot of EVs for their domestic market, they can focus on longer term objectives than next quarters earnings, and they can build to any quality standard the market demands. I see low cost, pretty nice Chinese EVs in every Walmart in the country in five years.

Speculawyer

GM & Ford will come out with more. But yeah, it is pretty weaksauce. South Korea really seems to be the growing force in the EV world. Which is strange considering the adoption in South Korea is very low. But I think the South Korean companies see the reality due to the heavy EV push in China and the success of Tesla.

Pushmi-Pullyu

“China… can build to any quality standard the market demands.”

Then they need to demonstrate that they can do so. So far… not so much. BYD’s attempt to test market the e6 here was downright embarrassing due to shockingly low quality components, and the CODA Sedan was at best mediocre and seriously outdated.

I agree that sooner or later, China will start exporting large numbers of PEVs (Plug-in EVs) to first world countries. But just how many years in the future that is, I wouldn’t venture to guess. It could be 1 year away; it could be 20 years away.

Al D

I don’t see the Germans arguing about producing a Tesla killer. I see them realizing they had better get into the low-profit EV and HFC game because their fleets have to meet increasingly higher mpg standards throughout the world. If I were running one of these companies, I would do what is necessary on the EV front to meet these standards while selling as many of my most profitable vehicles as possible.

Mark.ca

…or you could just buy off politicians and lessen the emissions laws. There are many way to pass on responsibilities to others.

Get Real

LMFAO, fool cells are and will remain DOA for light vehicles. The reason that the laggard, legacy non-innovating LICE companies are uncompetitive with hyper-innovative Tesla is that they have ENORMOUS sunk costs in their LICE technology and assets including their only real IP anymore which is in ICE engines.

Some of the legacy, laggards, will fail as a result.

Speculawyer

Oh they WANT to create a Tesla killer because their market share is dropping significantly due to Tesla. The Taycan, etron, and Mercedes ECQ (or whatever the TLA is) are real attempts. But they are still falling short, IMHO.

amt

Falling Short Because they’re “NOT ALL IN” & Reluctantly Building All There Inferior Scrap Product That Can Never compete .

Cypress

Which is exactly what Mary Barra has said GM is doing. Using their profits from SUV/Truck sales in North America, to fund EV development and transition in markets like China.

G2

Al D; that sort of thinking is exactly what is strangling the planet. Why not suggest emissions cheating software while you are at it. (head shake)

Nick

‘If you build it, they will come’ approach,” says Bernstein Analyst Max Warburton. “If you have a dedicated EV platform and the demand doesn’t come, you’ve lost a lot of money.”

So follow the auto industry philosophy and build it right the first time. Tesla has already proved they will come.

Mark.ca

…or you “prove” there’s no demand by building something subpar to thir ice lineup.

G2

Self fulfilling prophesy like GM’s EV1.

F150 Brian

Why do people in the EV community insist on making this an antagonistic exercise against anything Tesla?

If we want a transition to green vehicles, we should be supporting and celebrating progress, even if players make progress at different rates. Let those who are trying find their way and ignore the others.

Mark.ca

Many of us simply doubt the intent of these top tier manufacturers. Are you telling me that you can’t beat Tesla even after you can buy one, dismantled it, look at how everything is done, access the open patents? I have a better theory, which say they don’t want to make a good ev because that will seriously impact their ice sales.

theflew

I think they could easily make a competitive offereing to Tesla if they wanted to. The question is could they do it as profitiable as one of their existing ICE cars. And I think the answer to that is no. If their whole business model is built upon a certain profitiable level – selling cars that don’t meet that threshold requires a lot of fundamental restructuring. I think it will happen at some point, but with EV’s at 1-2% of the market there isn’t the level of hurry as some on this site would have to to believe.

antrik

With market share doubling every two years, there is actually quite a lot of hurry.

Andy
Doubling of a small number is very different to doubling of a large number – i.e. is the market going to continue doubling consistently over the next 5-10 years? No, because that would mean more than half the vehicles produced by 2023 would be EV’s… Which is not physically possible, With a only a few models from a few factories making up the bulk of the EV’s sold there will leaps and plateaus for a while yet, we’re currently in the “leap” phase – the rampup of a factory and the Model 3, once that peaks EV production volume will plateau/trickle upwards a bit until another major factory opens up, then another leap, etc etc. The established manufacturers certainly need to make headway in their EV products (most manufacturers are), but the biggest issue is still cost. They have two options – ramp up fast, hope their product sells and make a huge loss while gaining market share in a new market, or; ramp up slowly, gauging interest while keeping losses to a minimum and so making a much smaller loss, while having a revenue stream to keep them afloat during what is going to be a long transition. They… Read more »
Pushmi-Pullyu

What you’re missing, Andy, is that the adoption rate of a disruptive new tech isn’t straight-line growth; it’s logarithmic growth which produces an “S-curve”. One new PEV (Plug-in EV) assembly plant next year will be followed by two the next year, four the year after, then 8, etc. (Obviously not precisely, but that will be the general trend.) This acceleration will continue until PEVs are at least 25% of the market before it flattens out into constant year-on-year growth.

comment image

Andy

That’s actually what I’m describing, as opposed to antrik who is suggesting (essentially) exponential growth.

The point I’m making is taking the growth curve on the upwards trend of an S curve as consistent year on year growth will produce a number way off the reality. You need to take into account the flat spots as well.

antrik

I said doubling every *two* years — which would mean surpassing 50% around 2028, if the exponential growth is more or less sustained up to that point.

This is the growth rate we have seen — with some minor fluctuations up and down — over the past several years; and there is no indication of slowing down.

Cypress

They can’t use Tesla patents without permission. Tesla gets to determine what “in fair use” means. So any player with decent lawyers is going to insist on a signed agreement, that Tesla won’t pull the football away at the last second. And you gotta bet that Tesla will insist on monetary clauses.

Pushmi-Pullyu

That’s very far from the actual case. It’s close to 100% wrong.

Tesla has laid out its terms of service in a public pledge for what amounts to a free license to use its patents, and that doesn’t include any payments, monetary or otherwise. It does require the other company make its patents free for others to use in the same manner, which is most likely why nobody has taken Tesla up on its “free” offer. It’s not really “free” when it has that many strings attached.

Furthermore, Tesla’s terms of service specify “any party”, so Tesla can’t pick and choose who takes them up on their offer.

https://www.tesla.com/about/legal#patent-pledge

antrik

AIUI, Xpeng Motors has actually taken them up on that offer… Don’t know whether anyone else has. It’s unlikely any established maker ever will — but for new entrants, it’s actually quite an attractive proposition I think.

(Also, I disagree that having a “share alike” condition makes it not free. Or do you also believe that any society having laws against harming other people is not free?…)

Vexar

It is easier to write a story everyone knows than to write something new. Also, there have not been many other exciting developments in automotive manufacturing. Promising prototypes, a-plenty, but I’m waiting for GM to say they will build 350,000 BoltEVs a year.

amt

Don’t Hold Your Breath! …….lol… That Would Kill Their ICE Business…

Loboc

350k Bolt-based vehicles is definitely in the cards that Mary is holding. They really don’t care if it’s a Bolt or a Silverado. Both sell at a profit. A luxury Bolt (XT3 maybe?) would support a Silverado-like profit margin.

antrik

No, GM execs admitted that only their next-gen EV platform will be profitable. That’s when we should start seeing serious volumes.

Cypress

People take that quote out of context all the time to try and show the Bolt is not profitable. But the original context was that the next platform would be as profitable as an ICE.

antrik

Even if that was true, it wouldn’t really change the situation: since most combustion cars have very thin profit margins, anything below that would likely be in the red anyway…

(Also, the Bolt program is of course profitable, but only indirectly, by saving on fines / ZEV credits… Or when selling at a much higher price, like the Ampera e after they cast off Opel.)

theflew

I doubt you’ll ever hear them say that about the Bolt EV. The Bolt EV was an effort to get their foot int he door, beat Tesla to a low cost EV and set the tone for their future vehicles. So unlike VW that keeps telling what they are going to do GM released a vehicle. I think from this point forward GM is going to be a lot more closed door about their plans when it comes to EV’s. There is no benefit for them to annouce things like VW or Tesla. We know they have money, contracts with LG, manufacturing capacity and EV expertise. So it really comes down to when they want to hit the market with their EV’s relative to the other major OEMs.

Cypress

GM and Tesla seem to be in bit of a poker contest in terms of their next products. Elon May have learned to keep his cards closer to his chest regarding Model Y. Saving it for next years Q1 reveal. So as not to give GM a heads up as to what they need to beat. And GM likely has to reveal something at the Detroit Autoshow regarding the rumored Buick CUV EV. Or will they wait to see what Tesla does first? Who blinks first?

Cypress

They won’t. But they might make 20k-30k each of 20+ BEV models.

Pushmi-Pullyu

“Why do people in the EV community insist on making this an antagonistic exercise against anything Tesla?”

F150 Brian, I find myself in rare agreement with one of your points. However, the zero-sum attitude on display in many comments here is certainly egged on by the term “Tesla killer” in the sub-heading of this article.

Note to everyone: The word “Tesla” does not appear in a single quote above. And the primary driver of German automakers’ shift to EVs isn’t competition from Tesla, it’s the German government’s mandates for lower and lower emissions.

If we are to see a tide of PEVs coming from Germany, then every true EV supporter should enthusiastically welcome that trend… even if the German auto makers have to be dragged kicking and screaming into the 21st century of building automobiles.

I look forward to the day when Tesla has real competition. So far… not so much.

Al D

The major manufacturers have either formed partnerships for the development of solid-state batteries or are funding promising companies that show the most promise. I’m sure they all realize EV’s will rapidly become mainstream when they can compete with ICE vehicles in all the important areas. That’s not possible with the current Li-ion batteries. When solid-state arrives, the competition will really heat up.

amt

The Major Manufacturers Have Been Doing It “ALL WRONG” All Along , Producing 0nly “Necessary” Compliance EV’s , Only To Meet Their Needs, “WHILE PRETENDING OTHERWISE” . In Hopes That The EV Would Just Go Away . ….Surprise Big Auto…….People WANT GOOD EV’s…..

Mark.ca

They are competing now with ice, that’s why we drive them….but go ahead and keep telling yourself stories. Lol…your kids will drive evs before you do.

Get Real

I doubt Al D will ever drive an EV as he waits for this or that unicorn sometime in the indefinite future, kind of like the hydrogen hoax, fool cell “just around the corner” BS.

Andy

They’re competing in relatively niche markets economically – Longer range drivers, with (usually) much deeper pockets than the average driver.

When something the equivalent of $25k comes out that’s economical for someone doing 12,000 miles a year then the floodgates will open up. There’s just not the same market for a $50k+ vehicle that breaks even at 30,000 miles a year (for an average priced buyer), or just a $50k+ vehicle in general (i.e. the premium market, which has always, and will always be smaller than the mainstream market).

MikeG

Tesla has shown that it is possible to make a desirable EV with current technology. If the top tier manufacturers cannot do the same, they will pay with market share.

Pushmi-Pullyu

“…EV’s will rapidly become mainstream when they can compete with ICE vehicles in all the important areas. That’s not possible with the current Li-ion batteries.”

I guess you didn’t get the memo. The Tesla Model 3 is now the #4 best-selling car in the U.S. market.

Apparently you also did not get the memo about fool cell cars not being competitive, neither economically nor based on the physics/chemistry involved.

Bunny

Globally I think they will be just fine. That this is an EVANNEX article, it’s almost not worth posting a message to it.

MikeG

Apparently the article was still worth a low value comment from you. Kinda refutes your own logic, doesn’t it?

Andy

I’d normally agree, but outside the title this article was actually pretty reasonable. They’ve pretty much hit the nail on the head – cost, and risk.

Counterpoint

I can now see the point of the auto executive who said in another article that electric vehicles could never be price comparable with combustion vehicles. If that executive was viewing electric vehicles as powertrain diversification, then I would tend to agree, since that requires substantial complexity and investment into basically everything. VW probably is taking the best approach for future profitablility, although there is greater risk if electric cars don’t sell.

Another way to put it is this: viewing electric vehicles as one of many powertrain options better preserves profits now, but risks profits going forwards. Viewing electric vehicles as the predominant powertrain option risks profits now but has a better chance of ensuring profits for the future.

Loboc

Which is what Cadillac tried to do with CT6. They didn’t do so well making PHEV a ‘checkbox’.

Making a CT6 EV would be even more difficult. They’ll run out of trunk space completely instead of only 1/3 of it.

BTW, I own a CT6 PHEV. Best car I’ve owned in my life even with the warts.

Bill Howland

HI Loboc, = the two things I disliked about the CT6 PHEV was

1). Seemingly horrible AER what with the 53 mile AER Volt battery.
2). Very very sluggish performance while test driving it.

I’ve called the car an overly complex joke. Please tell me all the things you LIKE about the car. For instance what is its AER city range, and its highway AER range?

The car has sold roughly 1/10th as well as the decently-selling ELR, a car that was made while an EV-Hater was at the helm, whose production only lasted 9 months in 2014 and 3 months in 2016.

LarsP

We also really want to see Tesla being profitable soon…

Taylor Marks

Making the switch isn’t risky. They have two options:
1 – Switch, possibly survive.
2 – Stay the same, definitely die.

If they don’t have the money in place to make the switch, they should go to investors and banks to raise equity, raise debt, do whatever they have to do. Because the alternative is dying, and only the most short-sighted of shorts want that. (As a short, if you succeed… what then? The company you were shorting is gone now – you’ll have to find something else.)

Andy

That’s what Kodak thought, then it made itself broke by investing too much into Digital, too early. The EV market is still very young and has a long way to maturity. A lot can change in the next 5-10 years.

Pushmi-Pullyu

Say what? That’s 100% backwards. Kodak “made itself broke” by delaying its entry into selling consumer-grade digital cameras for too long; for clinging too hard to selling film and film cameras.

Kodak invented the digital camera, but then shelved the tech. They certainly didn’t invest a significant amount of money in developing the digital camera market. They left that to their competitors, an ultimately fatal mistake.

We can be sure that some of the current leaders in selling gasmobiles will go the way of Kodak; will cling too long to gasmobile tech, and delay the move to PEVs (Plug-in EVs) too long. The only question is which ones. Right now, among the major auto makers, Toyota and Ford appear to be leading the pack in that regard.

Andy

Nope. Kodak spent huge sums and had a strategy for digital. They just ended up concentrating on the higher end market, anticipating that film would still be a better option for the lower end, then when they realised their mistake it was too late.

They certainly didn’t just “ignore” digital and shelve the tech as some people (you included it seems) like to think. The problems with Kodak were a lot more complex than just “sticking with film and ignoring digital”.

Harold T

800,000 job at risk is why Mercedes was not prosecuted in the same way VW was. Audi CEO in jail. Winterkorn going down, Dieselgate hit VW but BMW and MB skirted out of there with a slap onm the wrist because the German economy is at risk of losing mega jobs and world leading manufacturing due to financial penalties. We cried out on bailing out our US car industry and Germany is doing the same now.

antrik

The comparison of the different approaches of the three German makers, as in the source article and retold here, is pretty interesting. Framing this in terms of “Tesla Killers” is ridiculous.

ffbj

Legacy auto makers are like the occupants of a Lifeboat in the movie with the same name, arguing about where they want to sit, as the leaky boat sinks.

Niki

“Burdened German Automakers Struggle To Design Profitable Tesla Competitors”

Well, also “Tesla Struggles To Design Profitable Tesla Vehicle”.

Get Real

Uh, I hate to introduce reality to your distortion field but you might want to have a look at the EV scorecard shown at the top of the page.

With scale comes profits in EVs and everything else.

Link

Right? That was my first thought: Why do they have to design profitable EVs but Tesla don’t?

Pushmi-Pullyu

Tesla makes a fat gross profit margin (~25%) on every Model S and Model X they sell, and likely will soon do even better with the Model 3. The only reason Tesla doesn’t show an overall net profit is because they wisely re-invest nearly all their profits in company growth.

This has been pointed out at least thousands of times by now. Why is it so hard to understand?

It’s not at all that Tesla’s designs aren’t profitable. According to Sandy Munro’s teardown analysis of the Model 3, it should have an average 30% profit margin, altho obviously that can only be an estimate.

https://insideevs.com/munro-tesla-model-3-profitable/

Speculawyer

They have a long way to go. Tesla has software that has been refined over 10 years. And they are all reliant upon public charging infrastructure which remains thin, unreliable, and not strategically deployed across the nation. Has anyone even tried to drive across the country using CCS or Chademo chargers?

And as I always say…Aerodynamics, Aerodynamics, Aerodynamics! Tesla is the only company to FULLY take aerodynamics seriously. (Yes, the others do *some* adjustments & tweaks…but they still haven’t done enough.) Aerodynamics is the only way to build a fast electric car that can go a long distance at a reasonable price.

Andy

Aerodynamics are a major function of looks and practicality, which is the issue.

Looks are what makes a car sell, outside of first adopters and tech heads – it’s why something like the Prius did well, but stayed a relatively niche product.

People buy cars they desire, and most people desire cars they like the look of – form following design; but also form following function – People want vehicles that fit their lifestyle – sedans aren’t that for most people.

Hinging everything on aerodynamics also cripples a vehicle if it loses that aerodynamic advantage – things like roof racks and trailers being two obvious ones, alongside convertibles. They’re all important factors for many people, especially people that want larger vehicles because they have families or regularly move larger things (and I include the Model 3 as it’s a pretty large vehicle outside the US).

I agree to an extent, Aerodynamics do currently seem to be the only way companies can build long range EV’s at a (semi) reasonable price, which is why they’re still a relatively niche product. When the price comes down, or technology advances so aerodynamics aren’t as important so will uptake in general society.

Cypress

Tesla’s unwavering devotion to aero means the X had crippled utility as an SUV. And made it look like a weirdmobile. I hope they don’t make the same error with the Y.

Pushmi-Pullyu

That is unfortunately correct. The Model X certainly has much lower aerodynamic drag than other CUVs (it’s not an SUV; the “X” stands for “crossover”), but only at the expense of not having a flat roofline, lowering the car’s utility.

I’m betting they do the same with the Model Y. I think Tesla considers longer range (and lower cost for the battery pack) to be more important than a flat roof.

The problem with roof racks could easily be eliminated by installing 4-6 mounting points for a roof rack, slightly protruding above the roof of the Model Y*… that is, assuming Tesla does not foolishly put falcon-wing doors on the TMY, as Elon keeps threatening to do. 😉 However, not much they can do about the restriction in cargo space at the back due to a curved roof.

*Obviously that needs to be mated with a specially designed roof rack which has longer legs in back than in the front, or an adapter kit to put longer rear legs on an existing roof rack.

EV-A

In my humble opinion…:

I reckon the whole thing will take a totally different spin soon (within 3 to 8 years), whereby the general population simply won’t replace their cars, but use available autonomous EV Fleets (ride-sharing). Its cheaper (cost per mile) and more convenient (no hassle with maintenance, no parking issues, etc.) The numbers just make sense to me.

The consequence of this will obviously be that there will be less cars (thus car sales). Car companies that don’t have competing cars in a ride-sharing market, will simply go extinct, and it will happen much sooner than many may expect. You may quote me in 2025 😀

Cypress

Smarter people than me predict that in the US market, 90% of miles driven will be via ridesharing. And that ridesharing and autonomous capabilities will reduce the demand for individual car ownership drastically. So why ramp up to produce millions of cars per year, when that demand is going to evaporate in a short time span.

Pushmi-Pullyu

I find it puzzling that so many people buy into this mad idea that most drivers will suddenly start carpooling when cars can drive themselves. Most people today don’t carpool because it’s inconvenient and wastes time. This reality won’t change just because cars are driven by robots instead of people.

Kenneth Bokor
I totally disagree with this article. All the other major manufacturers are yes playing catch up to Tesla lead in BEVs that is for sure, however to say they struggle is IMO not correct. All the others (not-Tesla), with an exception to Nissan/Renault, have not really been putting much efforts behind consumer vehicle electrification with a goal of offering lines of all-electric vehicles. That’s because they were not really motivated other than for compliance reasons (California!). However, the whole consumer automotive industry is going thru a paradigm shift that has not really been seen like this for decades. Electrification is now becoming a major initiative for most of the major automotive manufacturers and many of them are pouring Billions of Dollars into this future, as indicated in the article. To say this is a struggle is nonsense. They may be begrudgingly moving forward with this initiative, however none-the-less they are. And someone like the VW Group (which Audi is a part of) has many more resources available to easily crank out 1 million or more all-electric cars a year then Tesla can and maybe can’t do for quite some time. And IMO, those ICE-building jobs can be converted to BEV-building… Read more »
Get Real

No matter how much serial anti-Tesla FUD you try to spread or how many dumbass video clips you show your still an Azz from whatever land you are from.

Pushmi-Pullyu

It’s most definitely a struggle, and a very serious one. See The Innovator’s Dilemma. The fact that it’s going to be a serious struggle will become very clear as some major auto makers fail to make the transition to selling mostly PEVs, over the next 15-20 years.

https://en.wikipedia.org/wiki/The_Innovator%27s_Dilemma

Milfan

The talk of 800,000 jobs is utterly baseless. With more people in the developing world buying vehicles, all these people will get the jobs in the newer factories that will be built.

A smartphone does the function of a watch, calculator, gps, camera, video games, audio player, video player, audio recorder, video recorder, computer and so on. So what happens to those workers who produced those equipments along with its media like compact disks, DVD, camera films, floppy disks, etc.

Jobs will spring up. Don’t give excuses. Chinese are coming up with many electric / plugin vehicles and they will crush german/japanese leadership and end their ICE business anyway.

EV Tart

Why is it always the Germans ? Please explain ? What about Korean and Jap ? They are more relevant for EVs. Germans are irrelevant in EV tech like electronics and battery , only lead in marketing and luxury, not in drivetrain and tech.

Pushmi-Pullyu

The Japanese have little incentive to build BEVs for their domestic market. Japan foolishly shut down almost all of their nuclear power plants following the Fukushima incident, blown all out of proportion into nationwide hysteria by the mass media.

Anyway, with Japan facing a long-term electricity shortage, there is little domestic demand for BEVs. However, you would think that they would build to sell in the the U.S. and European markets, and I find it puzzling that there has been almost no movement in that direction other than the Nissan Leaf.

This has left the door open for S. Korea, and as you may have noticed, they are busily working to exploit it. Currently their production is limited by availability of batteries, but global supply will inevitably grow toward demand, while almost certainly lagging at least a year or two behind (altho perhaps not in China) for the next decade or two.

EV Tart

Well , with earthquakes, they want the bi directional chadmeo. But Toyota is not on board. Honda does not do batteries like others manufacturers . Nissan wants to , but kinda messed up with leaf and its brand.

Alan Campbell

ICE manufacturers are making the transition to EVs more difficult than it needs to be. I think the Germans are stuck in their own ‘uncertain’ world, wanting to hold on to traditional ICE vehicles they know, while the world is moving to EVs. And instead of making what EV consumers are lining up to buy, they make the most expensive lowest volume version of an EV(huge SUV), and then ‘worry’ about demand. VW is on the best track, as long as the ID does not look less expensive than it actually costs. This generation of EVs will need to be premium at all segments. MB seems to have a good plan as well, but it should be obvious that the C-Class/3-Series need to transition to EV NOW, because it’s the gateway EV for their high volume consumers. Which helps bring down costs across the slower selling models in their lineups.

Pushmi-Pullyu

“With a flexible approach you can always manage the capacity of your plants. But if you have a specific EV architecture, what do you with the old one? What do you do with the people?”

Major changes are often hard for people to deal with. But this change should have been seen coming decades ago. If BMW is only now thinking about how to make the change, if it doesn’t already have plans in place to retrain its workers and to re-tool assembly lines to make EVs instead of gasmobiles, then whose fault is that?

Might as well blame Tesla Autopilot. Why not? Let’s blame it for everything! 😉

http://blameautopilot.com/

Nix

They shouldn’t have blown their money on fuel cells.