Legacy autos vs EVs

[ptheland]

Who would have though that the FRUNK is so great a new feature?

New feature? NEW Feature?

Have you never heard of the Volkswagen Beetle? One of the most produced cars in the world? Began production in the 1930s, IIRC. Continued production until the 1970s for the US market. (Another couple of decades after that in Mexico and other places around the world.)

Rear engine. Front Trunk. For more than half a century. With plenty of them still on the road.

Or powering up your house during a blackout?

Frankly, that’s mostly a gimmick. What isn’t a gimmick is the ability to take a truck version to a job site and power your equipment from your truck without having to fire up a noisy and polluting generator. A lot of contractors are going to like that feature. Maybe ranchers with lots of fences and remote equipment to maintain.

–Peter <== who grew up in a household with a Corvair - also rear engine and front trunk.

[mschmit]

Again, legacy auto has shown every indication that they’re perfectly happy to sell EV’s.

Some of them, yes, others notably not. But all a bit late to the party, even as Tesla took coveted high margin market share starting in the Luxury segment (any drive train) over the past decade.

Certainly a few of the legacy companies are going to do well in EVs if they can convince their dealers to sell them. But none are really detering Tesla’s growth. And in the medium term Tesla is going to end up with a large chunk of the refueling market too because they are installing fast chargers faster than even the VW dieselgate-mandated EA is.

https://electrek.co/2022/06/10/tesla-deploys-35000th-superch…
(worth a click just for the picture)

https://insideevs.com/news/581263/tesla-supercharger-deploym…
During the first quarter of 2022, the company installed 248 new stations and 2,159 new individual connectors

The Tesla Supercharger network in the US has quarterly growth of 35% - 50% (annual) over the past few years (see table halfway down)
https://en.wikipedia.org/wiki/Tesla_Supercharger

Undoubtedly, at some point Tesla is going to open up these chargers to non-Tesla EVs, gaining more refueling market share.

Meanwhile EA only “plans” to grow at 25-30% for the next 5 years starting from a much smaller base of about 1/5th the number of US chargers.

https://electrek.co/2022/05/02/electrify-america-reports-a-f…

EA currently operates about 800 charging stations housing about 3,500 individual chargers with speeds ranging from 150 to 350 kW. Additionally, the company has already shared plans to double its charging network in the US and Canada by 2026, expanding to about 10,000 chargers across 1,800 stations.

Mike

[albaby1]

Some of them, yes, others notably not. But all a bit late to the party, even as Tesla took coveted high margin market share starting in the Luxury segment (any drive train) over the past decade.

Certainly they didn’t rush in as fast as Tesla. But they’ve had little difficulty taking back market share in Europe, which is the market that the Legacy Autos moved into first. Tesla had 17% of the European market in 2019, but by 2021 that had fallen to just over 7%. When they really turn their sights on the U.S. market, which won’t likely happen until after the European market gets more EV penetration, you’ll see a similar reduction in marketshare. Well, actually greater, since Tesla has an absurd 70+% of the U.S. market right now, which won’t last once the Europeans exhaust the better market opportunities overseas.

And in the medium term Tesla is going to end up with a large chunk of the refueling market too because they are installing fast chargers faster than even the VW dieselgate-mandated EA is.

True - but is that really a great business to be in?

One of the awesome features of EV’s is that they don’t need to be fueled at a charging station and that electricity is vastly less expensive. You can fuel them at home, at residential rates. Unlike gas stations, recharging stations will ultimately be limited in how much volume at markup they can get for re-selling electricity, because they have to compete with that home alternative. And I’m not even sure that gas stations are all that great a business, except for the oil companies that make the gas - pretty much they’re in the convenience store business, a brutally low margin line of trade. That becomes an even bigger part of the business, since there’s so little revenue on the fueling sid - the cost to fill up an EV “tank” is a fraction of the gas station equivalent. Putting a lot of capital into owning a electricity fueling network, rather than having that be provided by third parties with their own capital, seems like rather a misallocation of resources for any company that’s really focusing on growing their EV production.

Being in the business of building charging stations is a great thing if it helps you sell more cars. As a business venture? Re-selling rather modest amounts of electricity doesn’t seem like a business that automobile companies want to be in, just as none of them own gas stations today.

Albaby

[ptheland]

It certainly means switching out all of your manufacturing processes, maybe even redoing the entire factory. But in most instances, incumbent companies are perfectly fine doing that.

Not only are the fine doing that, they make changes all of the time. Whenever there are major changes to a vehicle, the assembly line needs to be reworked. And they often will do small changes to processes between model years. In the past, there was a traditional auto manufacturing shutdown between Christmas and New Years, when the unions had negotiated a week off. That time was used by the company to make changes to their production lines. I don’t know if that’s still a thing, but it’s not at all foreign to US auto makers.

Re-tooling a line to make an EV, while a fair amount of work, isn’t going to be that hard for legacy makers to do. There are still a lot of similarities - paint and body, suspension, interior - in all likelihood, not much change to those areas. The power train parts of the lines are the big change, but I’m quite sure they’re up to that task. I’d hazard a guess that they’d probably outsource production of the main electric motor, as other companies are almost certainly better equipped for that task. Perhaps the same for the battery. So the car maker just needs to mate that motor and battery with the rest of the vehicle in some way that makes sense for the line.

Even major changes, like large castings rather than dozens of stamped and welded body pieces, aren’t going to be too foreign to legacy car makers. Remember, engines and transmissions have been made from cast metals for decades. Obviously, body castings are going to be physically larger. And there are undoubtedly complexities that get added with that size. But the basic process isn’t that much different. Instead of a line that puts together those dozens of steel stampings for the body shell, you have a line that produces the body shell out of just a couple of castings. The end of that line is still a basic body shell, which is pretty much the same to handle and outfit no matter how it was produced.

–Peter

[BenSolar]

Tesla had 17% of the European market in 2019, but by 2021 that had fallen to just over 7%.

Tesla will be hitting back hard in Europe over the next couple years as Giga Berlin gets rolling.

[ItsGoingUp]

Tesla had 17% of the European market in 2019, but by 2021 that had fallen to just over 7%.

There is no EV market, there’s just a car market. Tesla has a small piece of it and is growing by leaps and bounds (>50%/year for a decade, see https://public.flourish.studio/visualisation/4045651). Everybody else in the mass market is losing market share and selling smaller numbers of cars. Everybody. While Tesla is limited only by how many vehicles they can produce.

VW can sell EVs to VW fans, and nobody else. They lose a sale of a VW ICE when they sell an EV, and make less profit. They are hesitant to do more because they are killing themselves and have no workable path forward. Pretty much they have to pray for subsidies, bailouts, and mergers, while they figure out how to make competitive EVs profitably and junk everything they currently think is valuable. And they’re in better shape than any other legacy manufacturer. Toyota isn’t even trying (see https://electrek.co/2022/08/25/toyota-says-no-ev-demand-try-…).

And meanwhile Tesla is doing automotive gross margins of >30%, unheard of in the industry. And growing vehicle deliveries as fast as they can, limited by battery supply.

Meanwhile, European sales of Teslas are about to grow substantially as their Berlin factory ramps up. They plan to produce 5000 Model Y per week by the end of 2022 (now at about 2000/week). While Model 3 is still being imported from Shanghai. It’s not even a competition any more, it’s a massacre.

-IGU-

[ItsGoingUp]

Not only are the fine doing that, they make changes all of the time.

Yeah, right. The kinds of changes we’re talking about will take at least five years. And when they have a car to sell, they’ll discover that to make money on it they’ll have to charge double what Tesla does and it will be much less efficient. Because all that outsourcing is horribly inefficient and means many compromises.

Most of all, they’ll pretty much never get the software right because integrating all those separate pieces won’t happen easily. So over-the-air software updates? Not going to happen easily either. On top of everything else, what top coders want to go work for big auto?

Big auto is so screwed. They might be able to survive for a while producing form factors that Tesla doesn’t. But otherwise? No. Look for mergers, bailouts, and bankruptcies.

-IGU-

[mschmit]

True - but is that really a great business to be in?
…
One of the awesome features of EV’s is that they don’t need to be fueled at a charging station and
…
Being in the business of building charging stations is a great thing if it helps you sell more cars.

You make some good points, but also are missing some.
Surely Tesla knows what it costs to build, install and maintain the Supercharger network. If it wasn’t/isn’t a good business they could spin it off. And maybe it is just so strategic that they want to keep it. Since I suspect you’ve never charged at a Supercharger you probably don’t know how well integrated it is with the Maps/Nav system. You get real-time status of how many chargers are in use, maintenance updates, pricing, automatic battery preconditioning as you approach, etc. I imagine a future OTA updates may allow reserving a charger. You also get PIN codes to some sites that have cypher locked restrooms.

Gas stations are required (in the US, I think) to have employees so they sell low margin food since they have an employee sitting there. Charging stations, of all kinds don’t need this. So far Tesla has only dabbled in this, but reportedly will open a 50s diner in Santa Monica soon.

Also, Tesla does more than just resell electricity…they generate it it too! Although it is probably a small percentage. Unlike the other charger installers Tesla makes PV solar and grid batteries and related equipment that helps minimize demand fees.

As for helping to sell cars…of course it does. It starts with the better customer experience in the car. But Tesla tracks usage during high demand (like Thanksgiving weekend) and actively does things like lowers costs during non-peak times to help reduce peak usage. They have also built portable chargers that can temporarily deployed to high demand areas or in case of power outages or damage to a site
https://electrek.co/2019/11/29/tesla-mobile-supercharger-meg…
Tell me, what legacy company or charger company is doing anything like this?

Tesla is looking at the entire experience of owning and charging an EV and trying to make it better, trying to minimize the possible downside compared to ICE cars. It seems that the legacy car makers just want to sell EVs to dealers instead of ICE cars to dealers.

There is also room for innovative thinking in charger installation. This link shows how they can roll them out faster in general or make quick additions to an existing site:
https://www.teslarati.com/tesla-prefab-supercharger-images/
I was at a site that had 4 or maybe 8 normally installed Superchargers and then they had installed another 8 or 12 like shown in link – prefabbed on a concrete pad just dropped into place.

So, yeah, the legacy guys probably look at chargers as a low margin business they’d rather not be in. This is why we have this:

https://www.newsweek.com/electric-vehicle-charger-study-flaw…

Maybe it will be different in 5 or 10 years and Tesla can exit this low margin business.

Mike

[albaby1]

VW can sell EVs to VW fans, and nobody else. They lose a sale of a VW ICE when they sell an EV, and make less profit. They are hesitant to do more because they are killing themselves and have no workable path forward.

IGU, you’re among the first (and loudest) to criticize people when they say these sorts of things about Tesla without evidence - so why are you spreading FUD about VW? Do you have any evidence that VW makes less of a profit on their current EV cars than they would make on their ICE versions of those cars? Do you have any evidence that they are hesitant to move forward in selling EV’s? Because right now, they have about 24% of the European EV market - they’re the leading manufacturers of EV’s in Europe, with double the sales volume of Tesla.

Meanwhile, European sales of Teslas are about to grow substantially as their Berlin factory ramps up. They plan to produce 5000 Model Y per week by the end of 2022 (now at about 2000/week). While Model 3 is still being imported from Shanghai. It’s not even a competition any more, it’s a massacre.

It’s statements like this that illustrate perfectly how little awareness there is about the vast numbers of EV’s that Legacy Auto manufacturers are making - simply because they’ve mostly emphasized the European market rather than the U.S. market. The European EV market is running about 2.2 million vehicles, of which Tesla has a 7% market share. If you could push a magic button and get GigaBerlin instantly up that extra 3000 Model Y per week (or roughly 160K per year), and if no one else’s production grew at all, and if every single one of those new vehicles was additive to their European sales (rather than, say, replacing a Model 3 imported from Shanghai), it would certainly raise Tesla’s share of that market…to about 12.8%.

Which is still good! But that still represents a loss of market share from 2019, when they had 17% of the market. It’s an even greater loss of market share in the BEV only market, since the incumbents’ product mix has been moving away from PHEV’s. And Tesla still wouldn’t be the market leader in Europe (VW would still have more than 20% marketshare). And still the vast, overwhelming majority of EV’s would be made by Legacy Auto, rather than Tesla. That’s not a massacre. And that’s with the magic button - Tesla’s actual sales this year won’t exceed VW’s or Stellantis’ in Europe.

There’s very little reason to believe that Legacy Auto’s delay in entering the market was due to any economic reluctance to convert their ICE sales to EV sales, rather than wanting to make sure that there actually was viable consumer demand for EV’s before investing many many billions in it. Over the last several years, now that fear has been allayed, Legacy Auto has been producing the overwhelming majority of EV’s - and growing by leaps and bounds.

[albaby1]

Tesla is looking at the entire experience of owning and charging an EV and trying to make it better, trying to minimize the possible downside compared to ICE cars. It seems that the legacy car makers just want to sell EVs to dealers instead of ICE cars to dealers.

Perhaps. Even probably! That doesn’t mean that decision by the legacy automakers is a bad one, or that not wanting to enter the charging station business full bore means they’re not committed to converting from ICE’s to EV’s. Selling cars is the core competency of companies that make and sell cars! That’s kind of their actual business. So focusing on that, rather than operating fueling stations, isn’t necessarily a bad choice.

They’ve managed to avoid having to spend a lot of capital “minimizing the possible downside” of EV’s, by waiting until battery technology was better (and thus ranges could be longer) and there were a lot more third-party chargers out there. And now Tesla’s trying to get some more revenue from their deployed capital by selling electricity to other automakers’ EV’s (and now charging fees to their own users) - which eliminates most of the advantage that conferred on their own sales.

Was that a good decision? Who knows! We don’t have detailed access to Tesla’s internals on their capital outlay in the charging network vs. their expected revenues from the network, once it starts being an “open to everyone” system and not an amenity that sells more of their cars. It sure doesn’t seem like it’s going to be a great business to be in. It’s so much cheaper to fill up the ‘tank’ of an EV than a gas vehicle, and these stations are going to be a second choice compared to filling up at home or office (which will be cheaper), there’s just not a whole lot of revenue that’s going to come in from reselling electricity.

[albaby1]

Tesla will be hitting back hard in Europe over the next couple years as Giga Berlin gets rolling.

As noted upthread, even when GigaBerlin “gets rolling,” Tesla’s still going to have lower market share than they used to back in the day. That’s true even if none of the other Legacy Autos grew their own production a single bit (which is, of course, not going to be the case). More than 20% of European auto sales are EV’s now - the market’s going to end up being about 2.4-2.5 million vehicles this year. Pushing Giga Berlin up to 5K cars per week, which Tesla hopes to have accomplished by the end of the year, isn’t going to get Tesla’s European market share back to the old days. Maybe they get back up to double digits? Perhaps. But it’s unlikely they’ll regain that 2019 level of market dominance - or even reclaim the sales lead from the VW automotive group, which currently has about 19% of the market.

Albaby

[saunafool]

Mike,

I have one major correction to your post. You said, Gas stations are required… to have employees so they sell low margin food since they have an employee sitting there.

Actually, it is the gas that is low margin. Gas stations added the stores because the food and drinks are high margin items. The store is where a gas station makes most of their money.

As for EV charging infrastructure, it might be too early to know how it will shake out. The logical thing for EV charging stations is to be located in a restaurant parking lots and hotel parking lots. One would wager that the restaurant or hotel will be far more profitable than the charging.

[BenSolar]

when GigaBerlin “gets rolling,” Tesla’s still going to have lower market share than they used to back in the day. That’s true even if none of the other Legacy Autos grew their own production a single bit… More than 20% of European auto sales are EV’s now - the market’s going to end up being about 2.4-2.5 million vehicles this year. Pushing Giga Berlin up to 5K cars per week, which Tesla hopes to have accomplished by the end of the year, isn’t going to get Tesla’s European market share back to the old days. Maybe they get back up to double digits? Perhaps. But it’s unlikely they’ll regain that 2019 level of market dominance - or even reclaim the sales lead from the VW automotive group, which currently has about 19% of the market.

I agree. Some of the incumbents will prove formidable competitors, while some may see their overall market share shrivel. You expressed some puzzlement over Toyota’s slow entry into the BEV market, and I agree they could have done it better and faster, but I also don’t dismiss their strategy of pushing regular hybrids first, plug-in hybrids second, and BEVs last. They have vastly more experience than any other company building high quality cars with electrified drivetrains, and that should transfer fairly seamlessly to building BEVs as they ramp up, not withstanding the embarrassing recall of their BZgobbledygook EV that could have potentially had its wheels fall off!

Still, European market share aside, Tesla’s increased sales on a global level, through the pandemic and continuing now, are nothing short of extraordinary.

[tamhas]

Tesla had 17% of the European market in 2019, but by 2021 that had fallen to just over 7%.

Given the dynamic nature of the EV market, one should accompany such percentages by the actual number of cars sold. I.e., it is easily possible in the current market to increase the number of cars sold, but to have a lower percentage since other cars are being added into the mix.

[tjscott0]

China EVs (Xpeng & NIO) coming to EU. Competitition is ramping up.

https://insideevs.com/news/604685/nio-rumored-enter-united-s…
NIO’s plans to expand to several global markets is no secret, with the company first announcing in December 2021 that it aims to be present in 25 countries and regions worldwide by 2025.

The map displayed during the December 2021 presentation included countries such as the United States, Australia, France and Japan, which was a pretty strong hint that NIO has the US market in its crosshairs.

https://carnewschina.com/2022/04/22/xpeng-p5-electric-sedan-…
XPeng has announced starting prices for the P5 electric sedan for Europe. It will be launched in four countries: Norway, the Netherlands, Denmark, and Sweden. Its lowest price tag lies between 42,660-57,920 USD. The cheapest XPeng P5 will be available on the Norwegian market.

In Denmark, where the first XPeng store opened on April 9, the XPeng P5 is expected to start from 390,000 DKK (56,690 USD). It is a high figure, but its primary competitor, the Tesla Model 3, costs 409,990 DKK (62,560 USD). So it seems like the XPeng P5 is out of competition in terms of pricing in Denmark.

Look out Tesla:
https://www.marketwatch.com/story/xpeng-to-launch-two-new-ev…
The company said Tuesday that it will launch an advanced driver-assistance function in the coming months and equip its flagship SUV model with its next-generation XPilot platform in the third quarter.

The company also said Tuesday that it has reached a milestone of 200,000 cumulative smart EV deliveries.

XPeng completed its first production model in December 2018 and reached 10,000 monthly deliveries by September 2021. The company delivered 98,155 smart EVs last year.

[albaby1]

You expressed some puzzlement over Toyota’s slow entry into the BEV market, and I agree they could have done it better and faster, but I also don’t dismiss their strategy of pushing regular hybrids first, plug-in hybrids second, and BEVs last.

Yeah, but I think they also got seriously side-tracked by hydrogen and fuel cells as an alternative power source…more than almost any other major incumbent. Some of their public comments about the EV market indicate some real institutional skepticism about whether there’s really a big market demand for BEV’s, especially in the U.S.

https://www.forbes.com/sites/jimhenry/2022/08/23/toyota-exec…

Still, European market share aside, Tesla’s increased sales on a global level, through the pandemic and continuing now, are nothing short of extraordinary.

Absolutely. It amazing what Tesla’s been able to do. The fact that Legacy Auto is also building lots and lots of EV’s doesn’t make what Tesla’s done less amazing. It just makes it untrue that Legacy Auto is hindered from converting their power trains by “Innovator’s Dilemma” type shackles…because they’re converting their power trains pretty darn fast.

I think the European market is far more representative of what the ‘mature’ EV market will look like than the American market. Once the Legacy Auto companies were comfortable that the market was ready, they flooded in. So there’s lots of Legacy Automakers offering lots of different makes and models and vehicle types and finishes and body configurations, different consumers have ended up gravitating to different ones. In a market where there aren’t a lot of options for EV’s, Teslas are the only ones that sell - because only the consumers who want those types of cars can get what they want, and consumers that want other kinds of cars don’t have any other choices. Once the Legacy Auto companies enter the market, though, the market expands and there’s plenty of room for them to sell their cars, too. Tesla’s done incredible things, but what they haven’t done is erect a barrier to entry for other makers to enter the EV market.

[albaby1]

I.e., it is easily possible in the current market to increase the number of cars sold, but to have a lower percentage since other cars are being added into the mix.

Of course. I’m not arguing that Tesla’s selling fewer cars. I’m arguing that incumbent automakers have added a lot of their own EV’s to the mix. IOW, the “Innovator’s Dilemma” hasn’t really stopped them from converting power trains. The argument that incumbents can’t or won’t move to sell very large numbers of EV’s is utterly unsupported by what’s happened in Europe. Looking again at VW, about 17% of their sales in Europe last year were EV’s - up from 10% last in 2020, and representing 64% growth in volume from year-to-year:

https://electrek.co/2022/01/24/volkswagen-group-increases-ev….

Those are big numbers! One in six VW’s sold in their home market was an EV last year - with 64% year-over-year growth! That’s not a company that’s “reluctant” to make the switch in power trains, or unable to do so. And globally, their EV sales have risen to about 9% of total volume, but their profit margins went up (their margin in 2021 was higher than in 2020 or 2019) which makes it very unlikely that they’re losing money on their EV’s, or even getting a lower margin, compared to ICE cars.

[telegraph]

Albaby:"And I’m not even sure that gas stations are all that great a business, except for the oil companies that make the gas - pretty much they’re in the convenience store business, a brutally low margin line of trade. That becomes an even bigger part of the business, since there’s so little revenue on the fueling sid - the cost to fill up an EV “tank” is a fraction of the gas station equivalent. "

Most gas stations would close if it weren’t for the sales at the convenience stores. Beer, snacks, junk food, energy drinks, tobacco, LOTTERY TICKETS andlast minute needs for milk and bread, etc Only large stations along the main highways that have 20 pumps would make it selling gas, and even most of them have stores to keep them afloat.

Now, if people sit at the EV ‘pump’ for 5 times as long, buying less $$$$ worth of fuel, that makes a very tough business environment. They make about 20-25c/gal. So if you buy 10 gal, that’s $2.50. If you fill up with 15 gal, $3.75.

Now, if you only need ‘half as much’ fuel for your EV, unless they can charge you 50c/KWH for less KWH needed, (plus you can typically fast charge to only 80-85% of battery capacity), they won’t be making enough money. You’ll still buy the same cigarette pack, lottery tickets and energy drinks and junk food, maybe. But less people at the pumps as each takes 5 times longer.

I wonder if the EV network chargers will go the same way as the ethanol business where every refiner would up filing for bankruptcy even after billions of dollars of federal loans and subsidies and mandates?

t.

[syke6]

As for EV charging infrastructure, it might be too early to know how it will shake out. The logical thing for EV charging stations is to be located in a restaurant parking lots and hotel parking lots. One would wager that the restaurant or hotel will be far more profitable than the charging.

That’s where they are putting them, along with places like malls and other shopping centers. Basically, where people are going to be parking away.

I predict we are going to see an increase in the number of dumb, unmetered chargers in those locations. Why? Because they don’t cost very much. At the average US electricity price of $0.13/kWh, a 40A L2 charger (9.6kW) costs about a $1.20/hour to operate. If you bring in just a few extra customers a day (like possibly as many as just one) you paid all the operating costs.

Locally, at least I’m seeing lots of free chargers for office parking. They are typically card operated so not totally dumb in that you need an internet connection, but as an employee amenity it just doesn’t cost very much to provide.

[syke6]

Given the dynamic nature of the EV market, one should accompany such percentages by the actual number of cars sold. I.e., it is easily possible in the current market to increase the number of cars sold, but to have a lower percentage since other cars are being added into the mix.

Does that change the conclusions though? The claim was Tesla was going to “massacre” the competition. But if Telsa is losing market share even while increasing volumes it doesn’t seem much like a massacre.