OEMs Must Cannibalize ICE Sales To Chase Tesla: Is It Even Enough?

OCT 21 2018 BY EVANNEX 133


Legacy automakers have a dilemma on their hands. Transitioning to electric cars is hard. A few German automakers have calmly voiced their concerns. Others have resorted to all-out whining. So what about Big Auto in America? To get some perspective, Seeking Alpha’s Scott Morton takes a look at GM’s vexing EV challenges as the company tries to face-off with Elon Musk on Tesla’s turf.

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

Above: Tesla’s all-electric, long-range Model 3 (Photo Credit: Kyle Field / CleanTechnica)

GM should be applauded for launching the all-electric, long-range Chevy Bolt. And Morton notes, “GM currently operates at a scale of vehicle production that Tesla can only envy.” But there’s trepidation, “the company is reluctant to [really] put its resources to use. In order to compete with Tesla, GM must expend additional capital in order to transition from manufacturing ICE-vehicles to manufacturing electric vehicles.” Is GM facing a “damned if you do, damned if you don’t” moment?

No, EVs are destined to spark growth downstream. The bigger issue for a legacy automaker like “GM is that, by nature of being a mature player in a mature market, they [may] have experienced all of the significant growth that they are ever going to.” In fact, “legacy automakers must undertake [significant] R&D simply to maintain current revenue streams. Between 2013 and 2017, GM spent a combined $36bn in R&D yet revenue declined from $155bn to $145bn. Over the same period, Tesla spent a combined $3.7bn in R&D, but revenues grew from $2bn to $11.7bn.”

Above: Tesla and GM are at completely different stages in their business life cycles (Source: Seeking Alpha)

While some of GM’s R&D efforts went to EVs, some (likely) went to improving internal combustion engine tech. And looking ahead, “shifting the focus to EVs, GM will render their current factories, production lines, patents, designs – anything that specifically relates to ICE products and production – either partly or fully redundant.” Some of those assets could become liabilities. “This is the equivalent of owning a printing press in the advent of the Internet or a Blockbuster franchise during the birth of Netflix.”

And whether they like it or not, “EV sales will simply cannibalize and replace ICE vehicle sales.” This is a hard pill to swallow. At this stage in their business life cycle, “GM must therefore undertake all of these additional challenges and expenditures knowing full well that [short term] revenues will not grow by any significant amount,” writes Morton. In turn, GM’s CEO Mary Barra rightfully argues that the US federal tax credit for EVs should not only be continued, but extended.

Above: GM’s Renaissance Center (Source: Michigan Radio via Flickr / Andrea_44)

Long term, the change over to electric cars is mission critical. Yet Morton notes that “GM has little incentive to rapidly transition to EV manufacturing and would rather stave it off as long as possible… regardless of it being widely accepted as the socially responsible thing to do. You may label me as a conspiracy theorist for suggesting this, but the unfortunate reality is that for [car] businesses, profits often trump ethics.” Proof? Look at Germany’s massive Dieselgate scandal.

In contrast, Elon Musk is turning away from fossil fuels. So, Morton concludes, “Tesla has no such internal conflicts… and is therefore free to pursue a future which represents nothing but growth for the company. The combination of a lack of internal conflict for Tesla and the extreme baggage that is the legacy for established auto manufacturers may very well lead to Tesla significantly outpacing the competition.”

*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.

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133 Comments on "OEMs Must Cannibalize ICE Sales To Chase Tesla: Is It Even Enough?"

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This article portrays the logic that big auto has used to justify limited investment in electric-car infrastructure. If GM or Ford doesn’t come out with an CUV with a electric or voltech like power train, the model Y will take huge bite out of the most profitable part of their business.

The Model Y will likely be a niche player, no matter what the big boys do. The Japanese, Germans, and Hyundai have little to worry about from Tesla. It will be the other way around within 5 years.

The Model 3 alone is outselling the Germans in North America. They’re the niche now.

The “Europeans” in general have always been a niche, or a limited segment, if you want to be generous with your definitions; I don’t think European they have ever had more than 10-15% of the market.

I am not terribly worried about Hyundai/Kia. Their idea of designing new vehicles with all kinds of powerplants seems to indicate they are seriously gearing for the transition (e.g. the Kona can be either a ICE or BEV; the Niro – as a PHEV or BEV, the Ioniq as a hybrid, PHEV or BEV), and their effort in the FCEV area demonstrates they wanted to have all the bases covered. Diligence and flexibility usually is a good thing.

A chassis designed for both EV and ICE is by definition a compromise. This simply means that space is wasted in the EV version, and it is not competitive to EV only chassis. “Flexibility” means that an automaker is not dedicated to EV production. It means that Hyundai/Kia are afraid to make the EV commitment.

Making a dedicated platform does not confirm commitment. The reality of compliance & niche is a bitter pill to swallow.

there is a reason why the Europeans, along with the Japanese, were not going to stop making sedans in America. They WERE selling well. Until this year.

“The Model Y will likely be a niche player”. is that a quote from the recently fired CEO of MB?

He wasn’t fired. He is stepping down from his CEO role next year, somewhat earlier than originally planned.

LMFAO, serial anti-Tesla Al D and his “alternate facts”!

The fact is that highly innovative Tesla has already become established as the leading designer, producer and seller mid-high end compelling EVs in those lucrative segments at the expense of the laggard, legacy OEMs, especially the German luxury/sport brands.

In fact, Tesla has already accomplished what no American auto OEM has ever done by beating the German lux/sport makers at their own game and Tesla will reap the profits instead of the Detroit Big 2 1/2 who will have to go after the lower end of the EV market.

And the article is absolutely correct, the laggard, legacy OEMs are in a serious dilemma of having to wind down their existing LICE portfolios and ramp up their mostly compliance-level EV programs with the resultant hit on their profits.

Theses non-innovative LICE-based laggards will also have to cope with stranded assets/IP.

Tesla’s market performance with the Model III this year is a flight of fancy for any US auto maker. I’m just waiting for a brand to fail, as there’s only so much market to go around.

They won’t even be available here for a couple of years and I know several people who put down the deposit. I will probably buy one myself. It’s hard to imagine the market running out any time soon.

Sorry but Cadillac and Lincoln haven’t been good brands for the Americans market since 1980s.

True. Cadillac and Lincoln have tried for years and failed beating the Germans lux/sport market. Tesla has done it in a short time. Heard today that Sears execs. didn’t take Walmart serious by thinking it was just a discount type of store, I think it was the wrong decision. These OEMs are doing the same by not changing their old ways.

Say What?

The Model S will likely be a niche player, no matter what the big boys do. Update: Strike/

The Model X will likely be a niche player, no matter what the big boys do. Update: Strike/

The Model 3 will likely be a niche player, no matter what the big boys do. Update: Strike/

The Model Y will likely be a niche player, no matter what the big boys do. For sure this time!

Ah, here is someone who has been paying attention.

Yeah, the anti-Tesla pravduh certainly does get regurgitated again and again, doesn’t it? But the number of people willing to swallow it keeps getting smaller.

Go Tesla!

“The Model Y will likely be a niche player…”

A fine example of “pravduh”.

Tesla obviously has a lot of the big boys scared, or they wouldn’t pay so many people to write anti-Tesla articles and to attack Tesla in social media!


Yeah Ford and GM sell millions of SUVs compare to one model of vehicle that Tesla won’t produce until 2021

The Model Y will likely follow the same trajectory as the Model 3 with sales volumes putting it in the top 5 passenger cars in the US.

And you work for whom? GM? Ford? Lexus? Audi? etc?

A house divided against itself cannot stand.

Very well said. That’s why ICE dealers want no part of selling EV’s. Your one simple sentence captures the idea perfectly.

Yup. This is why I keep saying carmakers should spin off EV business as independent entity that can compete against Tesla. And that includes managing charging infrastructure. Despite what some claim, that’s not easy.

But if they spin off their only source of future revenue, what happens with the existing companies? Preparing for liquidation?…

Yes, very soon they will have to liquidate their ICE assets. Doesn’t matter it they are spun off or kept under one roof.

Yup. It’s only matter of time before ICE is done. But interim, they can spin off EV division to take point without risking scaring off their investors who like temporary stability with ICE.

Best thing to do would be spin off the ICE to a different name (maybe one of their existing sub-brands) and keep the original name for the EV line. That way in 10+ years when EVs reign, the company name survives. This would require, though, them to admit that ICE has no future, which goes against all their “wisdom”.

Whereas I do not believe that pure BEV’s (w/o a range extender of any nature) will ever take 100% of the market, 50% is entirely possible within the next decade or two.

How many car companies will survive? I don’t know, but I do know that the rEVolution is only one Darwinian factor. A lot of companies went extinct for no other reason than their own poor decisions and unfortunate external circumstances that had nothing to do with the propulsion method.

Within 10 years, the ONLY form of ICE out there will be in series hybrids for offroad, EMS, construction, and military vehicles. Everything else will be EVs.
Not only is electric cheaper, but there is a charger EVERY 50′ in America.

Yeah, sell your assets. Like TWA

Thanks. Brevity is the soul of wit.–Polonius
House Divided is Mark 3:25, also intoned by Lincoln in his famous speech.

When discussing political issues with friends, I like to do it while gazing at a picture of earth first taken from space in the 1960’s and ask them to point out their issue in the picture. All issues are important. It just puts some perspective on what is at stake. Same issue here. Imagine a conversation in the year 2100 as we discuss past decisions. How will the decisions of companies, governments, and individuals be viewed in the rearview mirror? How will the profits of companies be viewed when 20% of species are either extinct or past the point of saving due to our decisions? We know the elements on the periodic table that exist naturally or created in a lab. We know how to harness light outside the visible spectrum to humans. We know what happens when infrared radiation is exposed to asymmetric gaseous compounds formed by those elements on the periodic table. We can measure the ppm of compounds like CO2 in the atmosphere, so projecting the linear regressions are not so far fetched. Of course, if the scientists are still viewed with skepticism, might we move on the cardiologist and pulmonologist who know that stroke, heart disease,… Read more »

Humans have an amazing ability to live in The Now. We have an incredibly evolved free will, but it’s unfortunately not directly tied to foresight. I’m baffled why super intelligent multi-billionaires would feel compelled to knock out the ladder behind them. I get it, they could care less about us, but the baffling part is their children, grandchildren, etc are stuck right with us, too!

Exactly. Global Warming and College costs.
Republicans solutions: None.
How do you make America “Great Again” by not addressing the two most important issues of our time, our Future.

The one good thing about the Trump position on immigration, is, it’s apparently not based on personal hate. It’s about the political system being influenced by lobby money. Immigrate retention centers apparently are now a big business, with profits to shareholders.

And the thing about college costs, these costs stop the middle class from economic advancement. The Trump White Middle Class.

Democrat solution: confiscate more of your money and give it to their buddies who won’t have effect on global warming and raise college costs even more by throwing your confiscated money at them without increasing supply.

There will be tons of down votes for this comment, but know that EV enthusiasm extends to Republicans, too. In fact, if not for left wing hysteria equating EV with quixotic fight against climate change, Republicans who like to put US first would be far more enthused about EV than Democrats who see EV as expensive elitist toy.

You keep saying that but tax law is funneling all of our money to the top .1%, while they take their lower tax rates and offshore that money.
With Trump having the largest deficits in recorded history.

Here’s the thing. Republican policy, for 40 years, has failed to actually work. Just how long will it take for you to figure that out? How many Hurricanes have to blow thru Red States, creating massive economic damage, will it take for you to learn a policy has a long track record of failure? I guess the rest of us are just tired of waiting for your fake news, fake logic, and fake results.

Does disaster have to personally hit you before you get it?
And Why? Why do we have to wait for your personal house to be destroyed before we do something to save our homes?

Yes, Republicans cause hurricanes and they give money to top 0.1% the money take from bottom 0.1%. *rolls eyes like slot machine*

Really, this kind of nonsense is why people think left is nuts.

What he meant to say is that Red States love their disaster hand outs but claim to dislike government handouts.

It’s only a government handout if they paid no taxes. But the rich pay far more than their fair share. They’re only getting some of their money back, not taking any more. Only the poor who get more than their tax liability get handouts.

This is also true with EV tax credit. It is tax cut (not handout) since one can’t get back more than the tax paid. All low tax Republicans should be for this.

“…the rich pay far more than their fair share. They’re only getting some of their money back…”

Over the past 30+ years, the super-rich in America have had so much success at rigging the financial system, the stock market, and the tax code to benefit themselves, that America now has the greatest disparity in wealth since the days of the Rail and Oil barons. In 2017, worldwide, 82% of newly created wealth went to the richest 1%.

And yet, despite their ongoing almost complete and total success with this class warfare, many or most of the very rich — just like “BoltEV” — have managed to convince themselves that they are actually paying more than their “fair share” in taxes.

Reality check: Back in the Eisenhower and Kennedy years, the top marginal tax rate was 91% for many years, except for the year it was 92%. Today it’s 39.6%.

Self-delusion can be a very powerful thing in the human mind.


To be fair, there were so many ways of not paying the 92% that it isn’t really an apples to apples comparison. There are less deductions today. I think most on the left would just be happy if the upper rate was actually paid.

There is another argument that modern society creates a greater disparity just by itself. Just look at the tech money – that is all something that didn’t exist in the “days of Rail and Oil barons”. And tech allows scaling in ways that Oil doesn’t. That reality is not controllable by tax policy even though we could do a lot better.

Fair share in taxes is a really tough one. That probably isn’t the right way of looking at it. I doubt “BoltEV” is very rich. I mean – a Bolt? I live in an area of reasonable wealth (not too many very rich) and I never see a Bolt because they are so darn cheap looking. I literally see 100 Teslas to every Bolt. There is no “very rich” person driving a Bolt unless they are perhaps on GM’s board.

Tell me about it Push. They will throw their moms under the bus if she thought Social Security was a good program

There’s more rich people in Blue states then in aRed States 🤔


See comment re EV subsidies. yes, the top IS taking from the lower income. Any head count tax does that. Econ 101 stuff.

Roughly 50% in US pay no federal income tax, and vast majority of them are bottom 50% earners. It is a total lie that top do not pay their fair share.

This is why I want EV subsidy to roll over to following years instead of “use it or lose it” like it is now. Most poor get out of being poor in about a decade. They deserve to have that EV tax cut as they climb the income ladder. Remember, poor are getting richer, too, despite what “I am Sheriff of Nottingham to take your money” Bernie says.

You mean conservatives that take advantages on deductions, losses, and loopholes that don’t pay taxes. You guys set up the rules and bs afterwards when guys don’t pay taxes and blame in on the poor.

Bill Gates Jeff bezos warren buffet George soros mark zuckerberg. Those are the richest people in the world. All liberals. All with private jets. All pay lip service to environmental causes. All pay their employees sh/t. That is your 1% so STFU.

Gates is donating his fortune for health care causes. Buffet is NOT liberal. Neither is Zuckerberg. Bezos is working to move humanity into space. Let’snot forget Vinod Khosla is not Liberal. Peter Thiel is a hard right libertarian. Davos Family, Kochs, Walmart heirs, etc. ALL repubs. 400 People control over 50% of our wealth and income.

You’re right that they don’t pay enough in wages. They’re not required to due to Republican pushed laws and opposition to things like decent health care, education, housing and minimum wages.

Your argument is poor and does not reflect well on you.

Gates is wealthier now then when he starting “donating his fortune” so he isn’t going fast enough….

Bezos and Bloomberg are fairly left. I would think that Gates and Zuckerberg are fairly left leaning in certain things. Libertarian is certainly not what the Republican party is nowadays.

I thought the GOP was about fiscal conservativism ( which I agree mind you) and state rights( which I disagree since the states lost that battle in the civil war) but don’t mind funneling money to those red states that contribute at all

Confiscate who’s money exactly? The increases in wealth and income are almost entirely going to the wealthiest among us.

Example: EV incentives and credits are paid for by 100% of taxpayers yet only 4% of of the vehicles sold go to people who rent rather than being wealthy enough to own a home. That’s a reverse robin hood situation if there ever was one.

Even Adam Smith advocated taxation based on relative share of income and wealth rather than regressive head count taxes in order to achieve a stable system.

If the wealth and income are tax proportionally then it’s fair and people operate. Otherwise it’s not and you’ll get worsening instability and anger.

Another good example: A parking ticket which is intended to act as a deterrent is meaningless if you’re wealthy enough. In EU locations the tickets are in “Days of Income” rather than a fixed cash amount. That way the relative pain is the same and so the incentive works. Otherwise the richer you are the less relevant fairness is to you.

So your’e telling me the roughly bottom 50% who pay no federal income tax do not use any services like the roads, schools, medicare, etc. and only the top use them? Total nonsense.

What’s total nonsense is pretending that only Federal income tax matters. Even the very poorest pay sales tax, and even renters indirectly pay property tax. Federal income tax is less than half of federal taxation; the bottom 90% pay most of the federal payroll taxes. Of course, BoltEV wants us to forget about State taxes and fees, too.

How terribly unfair it is for those who get more than 80% of new wealth have to pay a maximum of 39.6% taxes on part of that income! Why, we should double taxes on the bottom 50% so the top marginal Federal income tax on the super-rich can be lowered another half-a-percent. 🙄


You probably should not use Medicare for your argument at all. That is a payroll tax which is pretty regressive. Roads – gas tax – pretty regressive (supplemented mostly by state tax but some federal budget). Schools – property – pretty equal although definitely wealth based. But everyone pays property even if renting.

So your examples are really really bad for the point you are trying to make. Federal income tax goes to defense primarily. SS and Medicare are huge items and they are paid for by payroll tax which everyone with a job pays.

The argument about fairness comes down to the rich have more to lose so they get more out of defense spending. Flimsy I know. Life is the most important and is equal among all.

Right now – we are just borrowing for so much of our discretionary (ie paid primarily by income tax) that we are really being unfair to younger people. The wealthy aren’t paying too much, our children are….

Say what? Now you’re trying to say that Democrats bear the sole blame for rising college tuition?

Wow! You must live in a double-walled plastic bubble, to be that isolated from the real world!

Hahaha. So you hated the New Deal and American involvement in the war before Japan bomb us then. Ok. Sorry but both parties are crap but I know where human and social progress in one those party platforms and I know which party brings economic progress to the masses. It’s like they say. GOP destroys the economy and Dems always fixes it.

Actually, to be fair, I think conservatives tend to believe that the Federal college loan spigot should be dialed back. When “free” money, vis a vis school loans, is given out like candy, then colleges jack up tuition because they get paid. Young, immature students who live in The Now only care about the “College Experience,” not the “College Interference” on their financial futures. I believe their idea would be to drive the cost of tuition down by being more judicial with Federal loan money.

THANK YOU! When I point this out, I’m called racist sexist homophobic Nazi. Weeds (showtime TV series) had few episodes dealing with this topic, and that’s totally true. Now the left wants to throw even more money to colleges because they (or gov’t policy) made it so expensive.

Solution is simple: discharge college loan in bankruptcy and have the lender (not gov’t) take the hit. I can assure you, the lenders will be very careful who they give money to. Currently, college loan makes indentured servants out of people, and the left wants to make even more servants. As with free charging,

Free college SUCKS!!!!

So you would then eliminate college for all but the upper middle. Not really the best long term strategy. I honestly think the left would prefer for government to pay for college which would make no one an indentured servant. Not ideal either.

A program where college was paid for by payroll taxes on those that used it is pretty darn fair. When college raises your income $20k a year, asking people to pay for that seems reasonable.

Over the last few days I was working on a local news paper story on how we could get revenge on the Middle East for their behavior by taking 2 billion dollars from 12 billion dollars from the farmer payment bill to add ethanol pumps to existing gas stations to raise ethanol demand for farmers. The Goal would be to convert five thousand gas stations to have 85 pumps and all gasoline cars would be required to be flex fuels. At the same time some type of large two billion dollar federally funded quick charger building program that would be three to four times bigger then Electrify America’s building project. Expect all charging stations would require having a equal number of CSS and Chadamo chargers. How this would work is the government would pay half the cost of the station 50% but the deal is the station has to operate for five years or the owner of it has to pay back the government. The odd part when I started working on it with the number of EV’s growing very fast I think ethanol or spending money on ethanol might be useless. Expect maybe to use research to use corn… Read more »

I firmly believe converting an important food crop to fulfill transportation energy needs is short sighted and a recipe for disaster.

Until every girl goes to college, slowing the birth rate, yes, we don’t have excess surplus of farmland to direct to fuel crops. Solar Fields are far more efficient at extracting energy into electric power.
City Rooftops could solve this too.

Nuclear power could solve the problem. Solar isn’t 24/7, but nuclear can provide baseline load. Even the Democrats who scream about climate change don’t really believe it, because they don’t support this simple change will have real meaningful improvement in energy.

By the way, girls outnumber boys in college by about 55/45 split and that gap (lack of boys) is increasing. Even in science, number of girls is about the same as number of boys and there will be more girls than boys at the current rate.

Nuclear power is non-dispatchable, and thus doesn’t solve anything.

And your plan for the 10,000 year life of the super toxic byproduct?

Solar and wind are dispatchable if you add the correct storage and controls. Being done today.

If the concern is climate change, 10K years of byproduct can be dealt with easily, especially if we apply 21st century technology (eg. breeders, Thorium, etc) instead of using technology from 1930’s. Unlike solar and wind, nuclear provides stable source of base line energy for lot less money than equivalent battery storage. Combined with Solar and Wind, fossil fuel for energy could be irrelevant today.

But climate change is non-issue for almost everyone, including left wing democrats who scream that they care. That’s why nuclear power research is halted with 1930’s University of Chicago design.

Adding inflexible nuclear to solar and wind does *not* reduce the need for expensive batteries (and/or demand response) — it *exacerbates* the problem.

(Not to mention that batteries will become cheaper than nuclear much sooner than any new nuclear project started today would be ready for use…)

Nuclear tech have progress that it doesn’t make sense why we haven’t built new facilities

The problem of safe long-term storage of waste from nuclear power plants, an amount which is incredibly tiny compared to waste from coal-fired plants, was solved by the French decades ago. It’s no longer a technical problem; it’s just a political one.


Now more nukes!

Solved? Germany has been trying to find an appropriate place to store that shit for decades; last I heard, they still haven’t found one… Refurbishing isn’t nearly as nice and clean as the article suggests, either — the Sellafield facility is notorious for extreme contamination.

I wonder how old the article is. I’m pretty sure the arrogant “Chernobyl only happened because the Russians are dumb” stance died with Fukushima. Though the article sounds like it’s much older than that even…

But even if all these problems could be solved, building new nuclear generation just makes no sense today. We have better, cheaper, faster options not coming with such problems in the first place.

When the cows start dying off, more people will become vegetarians. Then this will greatly reduce methane pumped into the atmosphere. Capturing gases instead of flaring them off should be a current priority because that is really bad. I think the gas leak in SoCal released more gas than all the cars in CA do in half a year. So prevent leaks, and finding them and stopping them quickly, should be a matter of course.
So yeah, solar is just better, and wind. hydro, whatever, just get off fossil fuel.

There’s been more cows in the 1700s then now but we putting blame on those animals for our undoing

Most corn is fodder not, food. Creating meat wastes 90% of the agricultural inputs. If you are concerned about short sighted recipes for disaster, become a vegetarian like most of the people in India. Oh, is that too hard for you to eat something different? Well then maybe you are the problem?

True, but just wait until artificial meat becomes commercial. When theyr’e made from clean energy, sweet texture of Korean BBQ need not be sacrificed.

You’re ignoring reality. We can already see the worldwide extremely bad effects of diverting corn production to ethanol. That was one of the major contributors to the doubling of food prices in the Mideast, which triggered the social unrest and rebellions called the “Arab Spring”.

You said “Most corn is fodder not, food.” That’s true in the rich U.S., but not in poor and developing countries, where it is imported as food.


True. Sugar cane or beets are better source of ethanol

I don’t think I would be interested in an article about revenge on a group of countries, but adding a little bit of ethanol will not materially effect global oil prices. It might have a greater impact on North American prices, like US and Canada which is probably not your intention.

Also, from an environmental perspective using land and water resources for transportation instead of food is not positive. Really we should be moving away from ethanol.

If the idea is to reduce demand for oil, then in my opinion, the most effective thing to do is to tax the unpriced externalities of oil, ie. a carbon tax. But good luck with that in the current political environment.

More effective is if you just go out and right now buy a Volt. New or used.

And remember, the Saudi’s were the funders of the 911 terrorist cells.

It’s just politics for Trump. Give the farmers some candy cause he screwed them on farming commodities.
Luckily for him is the fact that farmers are so red, the term red-neck is not just a coloration of the skin, but also a political coloration, and he knows all the buttons to push, and they are a patient lot, until suddenly they’re not patient anymore. The Democrats found that out years ago, when they, the farmers, flipped, and never flipped back, in brief.

These days it almost does not matter, what Trump does, the farmers will stand by him. Even though a number of soybean farmers in ND are losing a lot of money, and increasing the use of ethanol is not going to help them, but Trump wants this to be perceived that his doing something for the farmers, promises made, promises kept, something easy to remember like “4 legs good 2 legs bad.” Anyway he can’t lose the farmers, that would be a catastrophe, for him, a boon for the rest of the world.

You mean the plantation owners and rural landowners in the south that flip red in 64 and went back

It’s as simple as asking how our children will look back at this. You had the technology; yet, you chose to not make an effort to actually use it to change the status quo. That has been GM’s problem even before the plug. They had Two-Mode, then abandoned it. They had Volt, but roll out the tech to any of their ordinary offerings. Loyal GM customers looking to replace their old GM vehicle with a new GM vehicle simply had no choice. After all those years of supposedly being market leader, you still cannot purchase a green model of a traditional vehicle from GM. Their SUVs should have taken on the plug-in Two-Mode design a whole decade ago. Remember the prototype plug-in Saturn Vue? Seeing GM move on to Bolt is a head-scratcher. Are they going to abandon plug-in hybrids entirely, completely contradicting their own “range anxiety” approach they pushed for all those years? If so, when can we expect a competitively affordable version of one of GM’s traditional vehicles as a EV model? Toyota is often claimed to be an industry laggard, but their path to electrification is clear. Prius already offers a plug. Corolla hybrid will next year… Read more »

Toyota has dragged it’s feet all along the way.
And Honda too, Where’s their CUV hybrid or plugin?
They now have the Clarity ( fully funded by CARB credits ), that looks like the Ford Edsel. A design choice to obviously lower sales.
Where’s the Honda Fit EV?

That’s just rhetoric spin.

Anyone taking the time to actually look at the technology Toyota has delivered, they would see a remarkably efficient & affordable design. Their approach of rolling out first to hybrids is a very effective means of establishing high-volume production to take advantage of economy-of-scale benefit… which is absolutely vital for a successful paradigm shift.

The upcoming next-gen RAV4 hybrid is another big step forward. Like with Camry hybrid, we are witnessing great potential for vehicles larger and more powerful than Prius to capture sales from a very large audience. So what if a model without a plug isn’t available yet? Motor & Invertor production is well underway. Real-World rollout of their heat-pump and carbon-fiber tech is taking place too. Let’s not forget the lithium battery-cells being used either.

In other words, the claim of “dragging” actually reveals Toyota’s electrification effort to reach mainstream buyers without tax-credit help is well underway.

If their approach indeed gives them an edge in introducing actual EVs, let them show it. Until then, nobody cares.

Every negative vote and every negative comment is confirmation. As for an edge, who would that be over. Legacy automakers are competing from within, as this thread addresses.

“That’s just rhetoric spin.”

Speaking of rhetorical spin… your comment reads like it was copied and pasted from a Toyota press release. I guess now we know why you post comments here!

Toyota isn’t the auto maker pushing forward the EV revolution. Toyota is the auto maker clinging to mild hybrids, which still get 100% of their miles from gasoline power; the auto maker which keeps claiming there is no market for BEVs while it keeps promoting the dead-end tech of fool cell cars.

If Toyota continues down this path, then in about 15 years or so we won’t see any more PR from Toyota… because it will be bankrupt.

I think Toyota is actually sticking with full hybrids?

(Though of course these are also 100% combustion powered — just a tick more efficient than mild hybrids…)

As soon as one of the Legacies gets serious about US EVs, the whole house of cards will come down, for one simple reason: The other companies will be faced with a nasty truth: Either they cannibalize their ICEv sales with their own EV sales, or someone else will. Making a small profit on these predatory EV sales is preferable to making none and losing customers for years at a time or even permanently.

Example: My wife and I owned several Hondas over the years and loved them. Then the Leaf came out, a car I’ve been waiting for since the mid 70s, and I leased one. We liked the dealer, so when it came time to replace her Civic we researched, test drove, and then bought a Rogue. And when we decide to replace her Rogue, if one of Nissan’s 4 upcoming EVs (plus another 2 on the Infiniti side) are something akin to a Rogue EV, that’s what we’ll buy. If Honda had kept the Fit EV in production and had halfway decent local support for it, none of this would have happened.

What does “serious” actually mean? Think about the situation from a mass-market perspective. How do mainstream consumers shop? From a dealer perspective, that means the vehicles with a plug must be cost-competitive to the traditional offering. GM’s approach with both Volt and Bolt have been disastrous in that regard. Neither supports a profitable approach and neither even resembles anything in their current product-line. What loyal GM customer would be interested? Seeing such strong demand for the highly profitable SUVs that GM dealers carry, it’s easy to recognize the lack of interest. Salespeople face an even greater challenge. Should the dealer decide to push plug-in choices, what incentive is there for a change sales approach? A fast & large commission from a traditional SUV is far more appealing than making an effort to educate a consumer about how to upgrade their garage for plugging in. That’s a major challenge to address without even talking about the vehicle itself. Think about how much easier the transition could be getting customers who already own a plug-in hybrid charged with an ordinary 120-volt outlet to consider the upgrade to an EV with a 240-volt charger. In other words, expecting a jump directly to EV… Read more »

A lot of negative for a reasonable post. The downside with the 120V approach is you are asking for an action from people without losing something else. You still have the maintenance and gas station trips. If the dealers/OEMs wanted, they would just arrange a free trip out to the house and bake the install cost into the deal.

This brings to mind one of my favorite quotes: Cannibalize your own sales or allow the competition to do it for you. My former now defunct employer failed to heed this.

This is the dilemma facing legacy auto makers: That if they put compelling PEVs (Plug-in EVs) into production, those cars will compete most directly with their own gasmobiles. This is perhaps the primary reason that legacy auto makers have been dragging their feet on putting compelling PEVs into high-volume production. Certainly there are other reasons, but I think history and evidence points to that being the primary reason.

Of course, all this was entirely predictable from the start of the modern EV revolution. It’s the same dilemma that market leaders face in every disruptive tech revolution; see The Innovator’s Dilemma.


No, that isn’t the case. It was with Volt though, but that is the past. The situation now is different. The moment GM announces a plug-in hybrid SUV, sales of the traditional model will stall.

It’s known as the “Osborne Effect“.

I’ll give your comment all the consideration that a Toyota shill’s comment deserves, which is none.

The moment GM announces a plug-in hybrid SUV, sales of the traditional model will stall.

What part of that do you dispute ?

The big boys are a lot smarter than you Tesla fanboys think and Tesla will be in a lot more trouble in the near future than you think. If I were in charge of a major manufacturer, I’d slowly work my way into the EV market and pick up the pace when solid-state arrives. ICE and hybrid vehicles are where the profits are, after all.

Musk and Tesla have earned their reputation as the leader in the field.
You didn’t comprehend the article, and the current lost sales the majors are seeing right now, across the board: GM, Ford, BMW, Audi, MB, is where Tesla competes, sales are down.

The question is now, can they raise the money, but now with lost sales going forward.
They were not keen on making the necessary investments yesterday with higher sales, how is lower sales going to help?

Tesla has battery production for 100,000’s of cars.
The major automakers do not.
If solid state appeared tomorrow, it would get implemented faster at Tesla.

More BS from Al D waiting for the solid state unicorn.

Destiny is being made now, not waited for sometime in the indefinite future, one only has to look at RE to see how this plays out.

The issue is still much more focused on the low profitability of EVs on balance sheets. When the day comes where ICEs aren’t profitable, they will be dropped. Both Ford and FCA have dropped unprofitable car lines from their portfolios. If anything EVs will take over segments, not the whole market.

Wall Street knows this, with the continual drop in Ford stock price.
They will drop lines and become smaller companies.

EV’s will be unprofitable, if you don’t expand manufacturing volume to lower unit cost. Tesla is scaling.

There is nothing inherently unprofitable about EVs. EVs are a problem when they are half-arsed efforts built only for compliance, and need to be sold regardless of profitability. Tesla however has proven that when making *desirable* EVs, they can be sold at prices allowing for a healthy profit. Legacy makers are still struggling to accept this realisation…

Healthy profit? That’s hilarious.

It’s amazing how many otherwise apparently sensible people can’t grasp the concept of a growing company re-investing its profits in company growth. That used to be pretty common, before Wall Street’s “greed is good” era of the 1980s.

The other point not made in the article, is that with autonomous driving the total demand for vehicles will decrease, as people decide the don’t need to own a car. In other words, these large car companies will have to undertake a costly transition, which cannibalizes their current product line, and will end up with decreased demand overall. If they take a hit with lower profits for years this could be done and the company survive. But management has difficulty looking past the next quarter, let alone years so companies may die.

There is a huge societal interest in these companies not dying, because they have huge unfunded pension obligations and provide good employment (and in the US health care) to large numbers of people.

This is why there is an economic and not just an environmental reason for governments to force these companies to undergo a difficult transition much more quickly than they would if left to their own. Otherwise there are going to be huge government bailouts on the back end, or foreign automakers (ie China) taking over the markets, especially in North America.

I am constantly amazed by how Government Regulation has helped keep the auto industry relevant, and saved them from bankruptcy.
As your point explains.

That is prevalent throughout the US economy, whether it is technology supported by defense spending, farmers supported by subsidies and ethanol requirements, or car dealers supported by franchise restrictions. Or oil industry exploration subsidies.

The US economy is FAR from being the open free market economy people like to think it is. For better or worse, it’s a reality conveniently ignore by most ideologues.

I don’t buy the theory that autonomous driving will significantly reduce the demand for cars. Even if most city dwellers give up car ownership, the autonomous taxis replacing them will have to drive just as much — or likely even more in fact, because they will encourage a modal shift. There will be somewhat fewer cars in use at the same time, but they will need replacing more often.

The real problem for the car makers is that car brands will become mostly irrelevant, thus completely destroying their existing differentiation strategies…

That’s why car makers are getting into the ridesharing business and going heavy after autonomous tech.

Yup. It’s amazing how many EV advocates have bought into this pie-in-the-sky idea that many or most people are suddenly going to start putting up with the inconvenience and wasted time of carpooling, merely because cars will become self-driving. Because that’s what “ride-sharing” essentially is; carpooling.

I think ride-sharing is going to be like the Air BnB business. Sure, some people will use it. But the majority of people will not rent out their bedrooms — nor their cars — to strangers.

Agree with you Push.

That was not really my point, though. Frankly, I’m not sure how many city dwellers will be willing to replace car ownership by autonomous ride hailing. It involves some inconvenience, but also a lot of convenience — I wouldn’t be surprised if a majority actually does the switch.

(It wouldn’t work nearly as well in rural areas — but that’s not my main point either…)

What I’m actually saying is that even if many people do the switch, that won’t significantly reduce demand for car production. (Though part of the demand will likely move to smaller vehicles, since ride-hailing opens the possibility only to hail a five-seater when you really need one, which is rare…)

Which is actually an argument for not ramping up to make the same millions of EVs as they make ICE today. By some estimates, 90% of miles will be by ridesharing by 2030/2035. Global demand for new vehicles for individuals may decrease by 90%. So a company that makes 10million cars today, will only be making 1million. Transition to many models of EVs but at much lower volumes then before. Enter the ridesharing network business. GM states they can make 40X profit by making a car they put on their ridesharing networks, vs selling that car to an individual. So they should be able to keep profits up even while sales drops.

Here In NA don’t care for Ai cars. Americans love thier cars and won’t give up the freedom to robot cars

Tesla fans spend a lot of energy fighting the ones announcing Tesla bankruptcy.
Now Tesla fans are doing the same. All others will go bankrupt, they’ve no chance of catching up the 6 years Tesla head start.
Believing both sides, I will buy a bicycle, because all car makers are going to go bankrupt :).

This article is not about a head start at all. It’s about sunken assets.

Believing that all legacy auto makers will go bankrupt would be no more foolish than believing none of them will. Every disruptive tech revolution winds up with the market leaders at the end including some new players, and the notable absence of some of the former market leaders.

I wouldn’t be surprised if one or two big makers go bankrupt, but it’s not that simple.
Makers were in trouble during 2008 and 2010, it wasn’t because Hyundai was growing like crazy, or China makers were starting to flood the market. They were in trouble because economy was bad.
Even after that severe downturn, they were rescued and GM, Fiat, Ford, and others are still alive.
There is no evidence that current car makers are not graciously going electric, they are shifting towards EVs.

Will Tesla survive? I don’t know, there is definitely a chance of bankruptcy.

Will all other manufacturers survive? Definitely not, most of them will, but not all of them.

Unless something unexpected happens that has a very profound and long-lasting effect on Tesla’s profitability, there is no real danger of bankruptcy.

(Also, even if they were to go bankrupt, it would likely not be the end… The brand and product portfolio are just way too valuable for someone not to revive the company.)

Harvard: Disrupt Yourself:

Either the automakers should sell flex fuel vehicles that can run on Methanol/Ethanol or bi fuel vehicles that can run on CNG/LPG, or sacrifice some of their sales if they want to sell just gasmobiles.

According to Bob Lutz, Tesla will fail (some day) because they can’t hide EV losses in the sale of ICE vehicles:

‘Tesla is an “automobile company that is headed for the graveyard,” … and can’t recoup EV sales losses with sales of gas-fired cars, General Motors’s former vice chairman Bob Lutz told CNBC on Tuesday.’
Source: https://au.finance.yahoo.com/news/ex-gm-boss-tesla-headed-200000454.html

Obviously Bob Lutz has never read a Tesla quarterly report.

Full disclosure, I recently put ~25% of my 401k into TSLA and putting the for sale at $420/share to keep them from being loaned to short sellers. FYI, T. Rowe Price fund holds ~17 million TSLA shares.

What if we finally get the promised short squeeze (e.g. after Q3 earnings), and the price shoots past $420?…

This situation was well understood five years ago. The longer they whine the harder it’s going to be. What a bunch of fossils.

Actually, by trying to delay the inevitable as much as possible, they are hoping to squeeze out as much as they can out of their sunken assets…

What I like about the (source) article is that it doesn’t attempt building a hypothetical bull case on maybes such as an autonomous taxi fleet, but rather just sticks with the realities of what Tesla is doing already.

Unless Tesla can build* 3 million Evs for 2019 and 5million in 2020 we are going to need other manufacturers for the EV transition.

*It can’t

Unlike most Evannax articles, this one isn’t simply being a cheerleader for Tesla in a biased way. This article is pretty much entirely factual. If you don’t like it, well, reality is rather indifferent to that.

This article certainly does not claim that all legacy auto makers will go out of business as the EV revolution continues. It merely points out — correctly — that the transition will be difficult. If history is any judge, we can confidently predict that some of the legacy auto makers will go out of business as the EV revolution continues… and that others will manage to make the transition, partly become some of their former competitors will fail, leaving more room to expand into the new market.

A couple of observations that I think significantly change the gist of this article.

Firstly, GM does not belong to the top tier global manufacturers anymore – both its geographical and product footprints leave it dangerously reduced, especially in the US.

Secondly, looking at Tesla’s US customers, very many were owners of foreign cars, be they imported or domestic.

There was a big opportunity to turn Cadillac around with some standout EVs [already lost now], but in the near-luxury sedan and crossover segment – where everyone wants to be – GM could still achieve enormous gains at the expense of marques whose customers it hasn’t reached in ages.

The time to act is now, though.

This article is the WHOLE gist of why Tesla will destroy a number of these companies.
Legacy car makers are going to hold off as long as possible and think that by advertising they can push customers to buy their POSs.
To counter this, I think that Tesla will start advertising early next year. Not that Tesla really needs it, but more of a way to stop customers from buying ICE vehicles.
I know many will say that it will not happen, but by early 2019, tesla should be around 8-10K M3 rolling each week. No doubt, about 1/2 of that will go to Europe and CHina, while the other 1/2 will stay with America. And if Tesla can stop westerners from buying ICE vehicles, then it will be a HUGE blow not only to legacy car makers, but also to oil companies.