In other affordable EV news, BYD’s long-anticipated move into export markets continues. They’ve launched the Dolphin (their mass-market entry) in Thailand at a price of about $23K after incentives (about $26-27K before incentives):
For comparison, a Model 3 cost about $50K in Thailand, (about $45K after incentives):
And the winner is!
JimA
If Gen Z’s attitude continues, what will the the auto manufacturers be building?
Cars. Because it’s not likely Gen Z’s attitude will continue.
The claim that the current younger generation has made some material, lasting change in its driving preferences isn’t new. It was first made about millennials:
But as the chart in your article illustrates, now that millennials are (mostly) in their thirties, they’re driving pretty much the same amount as Gen X’ers did before them.
Younger generations are delaying various stages of life compared to Boomers and Gen X’ers. They are vastly more likely to go to college, get married later in life (if at all), own their own home later in life, etc. A large proportion of the people who would be starting a carrer, getting married, and moving into a home in the suburbs shortly after graduating high school back in 1997 are now looking at doing none of those things for a decade or more. They’re delaying household formation and entering the permanent workforce, which delays when driving becomes necessary rather than a frivolity - but they eventually get there. It’s also worth noting that starting in the mid-1990’s, there was also a move by most states to impose more restrictions on teenage drivers and requiring learner’s permits before you could get your full license.
BTW, that’s why a lot of these “young people don’t want to drive” comparisons use their starting period as the late 1990’s or earlier - right before there was a huge increase in the percentage of young people attending college and changes to driver’s license regulations.
What I am forecasting is that as car electrify and become more autonomous, they will become more like computers and cell phones. A laptop used by an artist looks very much the same as one owned by an MBA. And as you yourself mentioned, cell phones externally all look very similar. The reason for this structural homogenization is that there is a form factor for laptops and cell phones that is most efficient for both function and production. Where these devices compete is primarily with respect to their battery, chip, and operating software.
I think BEVs are headed in the same direction. The functionality of cars will increasingly depend more on the power of computer chips and the sophistication of software, and increasingly less on external features. The same vehicle platform can emphasize range or speed or towing capacity by simply changing the software package. No real need for a lot of different models with different functions when a single model can be reprogrammed to do any of those functions. Much more efficient production with the latter as well.
But that is because ICEs still dominate. ICEs are analog. With analog, different functions require a different structure. Electronic is different. Analog camera systems require many more lenses and accessories than electronic cameras to perform the same functions. Simpler product line with electronic cameras. Simpler product line means lower production costs.
It is already happening with luxury cars, with Tesla forcing the issue by making fewer models more efficiently than the rival OEMs. The shift to electric “smart” cars will accelerate this simplifying trend.
Very true, but a bit too narrow. Folks these days are not enamored with cars, or perhaps more broadly the freedom of mobility that cars used to represent. They are in love with technology and connectivity, with the companies seen at the cutting edge of those traits in consumer products having the potential to rise to “cult” status. See Amazon, Apple, and now Tesla.
“Cult” is simply a very successful brand. Folks here make it sound like a bad thing, but successful branding is a pretty important objective in marketing.
Also wanted to note that I finally found the article that suggested the idea that autonomous BEVs were mostly going to look the same.
Virtually all self-driving prototypes developed from the ground up look like toasters on wheels. The advantage of the box shape is that it maximizes interior space while its simplicity and symmetry simplifies the placement of cameras and sensors. Reducing complexity usually reduces production costs. If one isn’t driving the vehicle then interior space and cost will likely be among the most important sales factors.
No, it’s not. Cars like the Mercedes S-Class, the Fiat 500, the Ford F-150, and the RAV-4 are different from each other not just because they have ICE powertrains. It’s because people use cars for different things, because they have different budgets, and because they have different style preferences. Luxury vs. economy, big vs. small, cargo vs. passenger space. That’s why there’s such a huge diversity in EV models already.
“Computer with wheels” is a metaphor - it might be an apt metaphor, but a car is still a car. It carries people and things in the real world. Unlike computers or cellphones, its functions are not and cannot ever be purely electronic. It matters whether the vehicle has a cargo bed, or room for seven, or a better suspension, or reduces cabin noise, or leather seats. Those are real world, physical things that can’t be changed with programming. And they have real budget impacts - not even Tesla can make a small car that costs the same as a big car, which is why you have the S/3 and X/Y product lines even though they have access to the same electronics.
I think your premise is just wrong. Cars don’t primarily serve an electronic function, so no matter how much electronics become instrumental in their operation, their real world characteristics will always be critical. And therefore consumers will continue to have widely varied needs and preferences, and manufacturers will continue to provide a widely varied product mix to meet those needs and preferences.
This, is think, is a good summary of why you’re pursuing such a mistaken idea of the future. There are more cars and models and sizes and styles than ever before in history. People love cars although I acknowledge there is a small minority which does not, and views them simply as “transportation.” For those, a basic Chevy is as good as a Mercedes, because “it’s just 4 wheels and gets you there.”
The amusing thing is that there are more varieties of EVs on the market today than there were ICE cars even in the 50’s, and there is no indication that there are going to be fewer.
As for “toasters”, well, a simple glance at Amazon will tell you there are (literally) hundreds of different toasters you can buy, in color ranges styles and features. Likewise with hot water heaters and most anything else.
People are going to buy EVs in much (but not exactly) the same way they have bought cars forever: on size, hauling capacity, passenger room, cargo storage, color, amenities, price point, style, and occasionally, whatever the neighbors can’t afford. They are not going to be buying ugly rolling boxes (although a few will) any more than they’re going to be buying some kind of uniform house - even though a house is just a place to eat and sleep, after all.
You’re letting your own prejudice about cars overtake good sense about a developing market. That will lead to a poor investment outcome, as it usually does.
As for this, it’s because all the self-driving prototypes discussed in that article are being purpose-built for robotaxis. Mobility as a Service.
When people don’t own the vehicle, and are instead just hailing a ride, then yes - they don’t care all that much about the features of the vehicle. Nor, BTW, will they care much about the electronics, battery, or driving software in the car, either. They just want the ride.
Boxes - toasters - are necessary to solve some of the issues that arise with robotaxis that don’t arise with privately owned vehicles. All parts of the interior need to be visible at all times, so the operator can remotely monitor for security and any clean-up requirements. All cargo space has to be with the passengers to minimize items being left behind in a trunk. The doors need to be operable by the car, remotely, to avoid having a passenger inadvertently leave one open and paralyze the vehicle. And the interior appointments need to be relatively spartan and durable to deal with the increased wear that comes with a robotaxi. Etc.
Cars used as robotaxis are indeed likely to share some common features, and because they’re not privately owned are definitely going to be more homogenous. After all, their intended purpose is to be used by countless different people, not reflect the preferences and needs of a single owner household. But if cars remain privately owned, that’s not likely to happen.
Just a guess, but, maybe they were buffaloed into buying a huge SUV by “marketing”, hate having to horse the huge though around, hate the amount of money thrown into the gas tank, but have been so brainwashed by “marketing” that they don’t consider any alternative to the huge SUV they hate?
I was constantly amused by coworkers crying about how much they spend on gas every week, as they use the remote to start up their car, 10 minutes before quitting time, so it will be suitably warmed or cooled when they set their fragile tush in it.
Steve
Absolutely! Just look at the TV ads for pickups, for big SUVs, then compare it to the ads for sedans. They are TRYING to get that emotional pull to the large vehicle because that is where the $$$ are for the manufacturer. ADVERTISING WORKS. And it has worked very well in influencing the cars people buy.
Interestingly I think it is exactly the reverse. It is your prejudices that are limiting your perspectives. The car market will be like that of the telephone. All kinds of styles when the phone was mostly analog and wired, from antique to ultra-modern looks. Once it became an electronic computer, all that is available is some variation of a rectangle. The same is true with cameras. Once cameras became electronic they more often than not look like cell phones.
Why don’t cell phone makers produce phones with more distinctive shapes and styles? The answer is because what consumers are most interested in are function and cost, and that rectangle shape optimizes both.
If you aren’t driving the car then the focus for the consumer will be on the interior, with an emphasis on comfort, space, and functionality. The box shape optimizes these characteristics. From the manufacturer’s perspective the ideal form is one that is easy to mass produce and that simplifies the placement of sensors for self-driving. Once again, a symmetrical box is difficult to beat. To change that form factor would be like producing a spherical or triangular cell phone. The increased production cost and loss of functionality isn’t worth the style change.
Au contraire, there is every indication that there will be fewer, much fewer. VW has already announced a single EV platform for the entire VW group, which it will make available to others. The Chinese car companies are anticipated to undergo massive consolidation as Tesla and BYD continue their price war. As I linked, other car manufacturers are trying to reduce production costs by simplifying their model offerings.
The Tesla strategy of a small number of models with variations within each model class determined by software packages has an enormous production cost advantage over the Goofy/albaby status quo of many different models and styles. I think production costs are important.
But consider what is the attraction of buying a huge SUV for all those younger suburban buyers who do very little off-roading and weren’t all that eager to drive in first place? Stuff I’ve heard are things like safety, driver visibility, and interior space. If you aren’t driving the vehicle, then visibility doesn’t matter that much. What you want is something safe, comfortable, and roomy. Hard to beat the box on wheels form factor.
Another thing that happened was schools stopped offering driver’s ed. Now kids need expensive private instruction on their own time. That’s a barrier no matter how you slice it.
What? I’m not suggesting that it makes sense for one manufacturer to be making fifteen variations of a midsize SUV. But there will be fifteen variations on a midsize SUV in the market, because there are (and will continue to be) a large and diverse group of different manufacturers that participate in that market segment. The fact that you’re going to still have pickups and small sedans and midsize SUV’s and hot hatches and minivans in all shapes and sizes doesn’t mean they’ll all be offered by one company.
Of course it can be more efficient to make a very limited subset of car models. You can lower production costs if you only offer one color car, too. That said, you’re not going to do that - if you only offer one color, and your competitor offers 10 different colors, and consumers care about color enough to absorb the cost, then you’ll lose sales. Now, there might be 50 colors in the market place - and it doesn’t mean you have to offer all 50 colors, either. You might offer 10, and another company offers seven that you offer and three different ones, etc.
Back in the Golden Age of American Auto, it made sense for each of the Big Three to offer countless plates and models so that they could fight for each of those slices of the market. In a world where there’s dozens of different manufacturers, it doesn’t necessarily work for each manufacturer to try to be all things to all people. Efficiency may direct Ford to concentrate on trucks and Honda to concentrate on small cars, rather than Ford trying to make a compact car and Honda a pickup.
Apple only made one model iPhone at first, because that was easier for them. Then competition happened and Apple had to respond with different sizes, capabilities, colors and cameras, and you can now get many different kinds just from Apple. And dozens and dozens more from other manufacturers. They may look similar, in the same way cars look similar (4 tires and a windshield) but otherwise, really different.
They were for Henry Ford at the beginning, too. Then they weren’t, as GM showed, consigning Ford to 2nd place forever, and forcing them to match with the style ladder, colors, options, etc. Not a great analogy.
But if all you’re talking about is TaaS, maybe it’s different. People don’t really care about what cab they get in (well, to an extent, which is why Uber & Lyft have size, style, manufacture date rules), but that’s not a really big market. Less than 1% of current manufacture. You think people are going to abandon their cars entirely, but I see no evidence that’s a possibility, much less likely.
By the way, Tesla started with just one model. Now it’s three, with a pick-up on the way. Models and EV choices from other manufacturers now number well over 50. Weird, huh?
Sounds suitably snarky, but I somehow doubt that many would buy another of (an expensive) something they hate.
DB2
Why do you believe that? Ford recently disclosed that its EV business lost $2B in 2022 and is projected to lose $3B in 2023. Ford’s Mach E and F150 Lightening are not expected to be pretax profitable until the end of 2024. So much for the notion that the current generation of OEM BEVs make money.
Because mass producing BEVs has turned out to be so difficult, Ford CEO Farley anticipates major consolidation among automakers.
My guess is that we will go from the current 14 major global automakers to something well under 10, with each of these producing fewer models than they currently do.
A plethora of choices is what you expect when a market is young and the winners/losers are still to be chosen. But then this is almost always followed by a great consolidation. I think it will be even more severe for BEVs because of their dependence on software. As BEVs grow in autonomy, they increasingly need a sophisticated operating system. Our experience with OS software is that there tend to be few winners.
C’mon, the various cell phone models are marginally different at best. The difference between the cheapest and most expensive iPhone is barely noticeable in everyday use. That’s the nature of electronics, which tends to reduce differences between the low and high end. The same will be true with BEVs. The performance difference between the $35K Model 3 and the $150K Model S is much less than between Camry and Porsche ICE models with a similar price differential. There simply won’t be a need to produce a lot of different BEV models.
In any case, it appears that we are approaching some common ground. I agree with albaby’s suggestion that the OEMs will each produce a much smaller number of BEV models than they do with ICEs and I agree with Goofy that eventually the differences between BEV models will be analogous to cell phones, relatively modest changes in performance in models that all look very similar. A self-driving toaster on wheels that comes in different colors.
Except I didn’t say that, and I don’t believe it. I expect that OEM’s will produce roughly the same number of BEV models as they do with ICE’s, and they will continue to exhibit the same diversity of price, design, and form factor as they do today.
I think you’re conflating what is happening with a specific company or two (“Ford reducing number of models”) with what is happening with the industry as a whole. Ford might reduce models - but other companies are expanding their number of models. For example, Tesla is planning to add four more models (CyberTruck, Roadster 2020, “Model 2,” “Unnamed Jeep-like Model Under Sheet”) in the next few years. You have new automakers (Rivian), automakers that don’t currently offer many EV’s adding lots of new models, and an explosion of Chinese models being available in markets that they couldn’t break into before.
It’s like the US market in ICE’s. The Big Three don’t produce nearly as many models as they did in the Golden Age - but we now have Toyota and Honda and Nissan and Kia and Hyundai and Lexus and so on.
Make no mistake - I absolutely think you’re completely incorrect that we’re moving towards toasters on wheels in the privately-owned vehicle space, or that consumers will have any material reduction in model diversity as we transition to EV’s.
Tesla was formed in 2003. They had their first profitable year in 2021.
You were saying?
And Ford has been making cars for over a century. Gee willikers but I think you are finally understanding that BEVs are qualitatively different from ICEs. The ICE experience of the OEM automakers doesn’t provide much of an advantage in their competition with companies like Tesla that understand batteries and software.
Tesla is at double figure profit margins today while Ford is still two years away from breaking even on BEVs, and that is assuming it can figure out how to mass produce batteries from factories that are still being built. Importantly but rarely mentioned is that Tesla has very little debt while the OEM auto makers are among the most indebted companies in the world and are still in the early stages of electrifying their product lines. Debt may not be the best thing to have in the current economy.
Not sure why Tesla gets so much flak when the traditional car companies seem to be more at risk of failing in the brave new world of electric vehicles.
VW, Mercedes, BMW are simplifying their model offerings with VW moving to a single EV platform. Ford is predicting major consolidation within the industry. GM is shifting from 26 different vehicle platforms to four by 2025. The vast majority of Tesla vehicles is currently built from its generation 2 platform and most in the future will be built from its Next Generation platform. About half of Chinese EV companies are expected to disappear in the next three years. The trend lines strongly suggest significantly fewer model offerings in the future global auto market.