How long until manufacturers go completely electric?

Amp34

Amp34

Amp34

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Thought I'd start a new thread rather than clog up the Model 3 thread (again ;o)

I was just reading this blog post/opinion piece about the car manufacturers most likely to be first to 100% EV and thought it may be an interesting discussion on a slightly less(?) bias board.

https://cleantechnica.com/2018/06/13/which-legacy-automakers-will-be-1st-to-step-up-to-100/

The premise is manufacturers are going to have to change over their lines in the very near future (5 years max) or be left completely behind Tesla, and that there will be a cliff edge for ICE vehicles.

I think there are a lot of fundamental flaws in his analysis, which I could write a long post on, but I don't have time now, but it does bring up some interesting questions.

Will there be a mass transition in the near future from ICE to BEV (not just hybrid)?
Which established manufacturers are likely to go fully BEV in the next 10 years?
Which segments will go fully/majority BEV first?
Which (if any) established manufacturers are going to lose out/gain market share with the transition to electric?

While Tesla have certainly shaken the market up I don't think they will be causing most established manufacturers too many problems for at least the next decade. They just don't have either the model range (both type and price) or the manufacturing capacity to impact things in a major way. Even with next years prospective manufacturing numbers they'll still only be making around 30,000 vehicles a month, which is about the same the sales figures for a single model from one manufacturer in the US.

EV adoption is going to be constrained by production and availability, as well as just requirements, for a long time to come. Many people may want an EV but it not be practical - that may continue on for decades, not just the next 5-10 years.

Some segments are going to be hit harder first and have more rapid transitions to EV (for example the higher end saloon and crossover segments), but even in those segments I think there will still be a buoyant market for ICE for a while to come, even if the range is lower. We may also find that other models have a single ICE engine (perhaps the cheapest in the range) for a while to come too.

I think the blog is on the right track with the kind of manufacturer that will "transition" first though. Small, more city oriented manufacturers will have the sales volumes, mobility and type of vehicle to be able to sell entirely EV, whereas many of the larger brands may take 20-40+ years to transition completely, as they will be catering for a much broader market with multiple requirements.
 
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This is a subject my friends and I have all been discussing recently, however really there is no clear answer.

But I dont think it will take 40+ years for some manufacturers. Recall that 2040 will see the banning of new cars with an ICE completely.

Personally, I think 5-10years before all of the mainstream manufacturers have a broad range of EV, as you said with maybe lower models having an ICE for the last 10years before the ban is introduced.
 
ci_newman said:
This is a subject my friends and I have all been discussing recently, however really there is no clear answer.

But I dont think it will take 40+ years for some manufacturers. Recall that 2040 will see the banning of new cars with an ICE completely.

Personally, I think 5-10years before all of the mainstream manufacturers have a broad range of EV, as you said with maybe lower models having an ICE for the last 10years before the ban is introduced.
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2040 is the ban on ICE only cars. No ban on PHEV. I say ban loosely as there is no legislation in place yet, just a plan which the media got all over.
 
By 2040, cars will be phev with 50 miles electric range and petrol for the rest.

The only way it goes pure electric is:
- if u can fill it up in under 5 mins, and
- if you can get 400 miles range
- and such a car is cheaper than the phev variant
 
Another big consideration is the markets they operate in. The UK is pushing gently for transition but could absolutely not sustain electric only for a significant portion of the population in the next 5 years. We're a small country anyway though, look to the middle east, India, China, Brazil etc. Are they wanting these cars and how will that impact the strategies of more global manufacturers?

Tesla operate in a convenient niche at the moment, they can sell expensive cars to people who happen to be in the position to use an electric car and that model is working for them. I don't think BMW, VW, Merc etc are overly concerned about Tesla leaving them behind, more so each other.
 
I highly doubt any manufacturer is going to go EV only, and they certainly won't get left behind. That is if Tesla doesn't go belly up first. Copy-paste from a Reddit user otalp which was a surprising read;

This will get buried, but for a lay person, this is why Tesla is the most shorted stock on the market and why some people want Musk out:

Summary of Tesla's situation:

  • Tesla currently has 2.67 billion in cash.

  • About 1.1 billion of this is in loans that need to be returned early next year

  • Around 40% of their cash in hand is from refundable deposits, many from people who thought they would get a $35k car

  • Tesla cannot make $35k Model 3s at a profit right now or in the near future(this is generally accepted, and even Tesla hinted at it), they'll probably lose money even making $42k cars. They need to make $50k cars at scale to earn strong profits

  • When asked in the earning call last for last quarter about reservations and how many people chose to cancel/take up their car once offered, Musk stunningly called the question "boring" and "boneheaded" and went on take questions from a youtuber for 20 mins. This was considered unprecedented and bizarre and stock dove.

  • Tesla is losing about 800-900 million a quarter, so they will run out of money without a cash infusion. Literally everyone(all major banks/investors/analysts) knows that Tesla will need to raise capital this year.

  • Musk though, has insisted that Tesla will not need to raise cash because they will be "profitable by Q3 or Q4". A reminder that they lost 780 million in Q1, and even small profits won't be enough to prevent running out of cash. In order to make sustainable profits they need to sell around 10,000 model 3s a week. They were supposed to produce 5000 cars a week in 2017. They have just now been able to produce 2500/week.

  • Even bulls say that Musk is bluffing and he will eventually raise cash this year. Moody's downgrade of Tesla to essentially junk stocks makes it harder to raise cash at good interest rates. Moreover, there is speculation and some evidence that the reason Tesla haven't already done so, is that they are under SEC investigation which would prevent them from raising cash without disclosing a lot of details harmful to them.

  • Tesla has access to standard credit lines for about 500 million, but they recently had to pledge their Fremont factory to just maintain these credit lines.

  • A lot of Tesla's financial executives have left the company - a red flag to many including Jim Chanos, who famously shorted Enron due to similar indicators. The head of autopilot left and the head of engineering left 'for vacation' recently

  • Tesla's autopilot is complete false advertising. Their original autopilot was developed by MobilEye. MobilEye hated tesla's exaggeration of the system's capabilities and withdrew their supply after a person died using autopilot. Tesla responded that mobileye was jealous of Tesla's superior "Enhanced Autopilot" which has hardware capable of full self driving. It is generally accepted on owner and enthusiast forums that enhanced autopilot is worse than mobileye's system right now(edit: in the last few months some people feel Enhanced AP has surpassed the original one in terms of capabilities, though most agree it is still less relaible), and in general both are basically lane-keeping system with AEB. Waymo and GM/Cruise are far ahead with their FSD capabilities than Tesla(again, widely accepted)

  • Part of Tesla's debt comes from bailing out Solar City, a completely unprofitable company loaded with debt that was run by Musk's cousins. Some people saw this as nepotistic and a conflict of interest(Musk held part ownership of SolarCity while his cousins ran it), with a few investors suing Tesla over the deal.

  • Starting from 2019 and 2020, all the major automakers are bringing out electric models. This will further damage Tesla's competitiveness, since they have the wost QA and build quality due to their haphazard and panicked development process and their $7500 tax credit is about to run out.
Despite all this, the market cap of tesla is larger than Ford, Fiat and nearly equal to GM. Their inflated market cap(which even Musk admits is inflated if you "look at past results") is fuelling their funding which inflates the market cap even more as they lose more money trying to make bigger promises.

What does Tesla have to its advantage? Tremendous marketing and brand value. They're probably inching towards or even surpassing Apple - and virtually all of this is tied to Musk.

What does Tesla have against it? The realities of running a business and actually making the products.

Edit: I did not expect this to blow up and regret not linking the sources(the original text was for myself and people who follow tesla closely). Most of it is from quarterly earnings report, public statements, article and analysis. It's very late night here, I will update this comment with sources for every point tomorrow. In the mean time you can google most of the specific ones. (Eg: 'Tesla Fremont factory pledge' leads to this: https://www.reuters.com/article/tes...ory-to-boost-liquidity-ifr-news-idUSL1N1SF2LU) or ask at r/RealTesla

Also: I don't short Tesla and I am not an investor or stock expert: just someone who's spent the past few months researching them out of curiosity that stemmed form my interest in them. I think people should be exposed to the reasons why Tesla is betted against, as people don't hear the reasons in the mainstream - just the fact that they are 'in trouble' or 'shorted'. But most people would like to know more, so I posted this.

Edit 2: I'm back, here are some quick responses to common questions:

1)'Some German engineers recently said Model 3 cost 28k to make after Production and Materials were accounted for'.

This only takes into account production costs but Tesla have way more costs with them due to being new to the industry and creating their manufacturing process.

Erik Gordon, a professor at the University of Michigan’s Ross School of Business says the margins on the Model 3 must still pay for a cost structure that legacy carmakers don’t have, including planned factory expansions, new automation investments, and its own dealership network. While Tesla has its own advantages, like integrated solar and energy storage products and no costly pension liabilities, the company is counting on fat gross margins of 25% to stay in the black. (Ford by contrast has 10% margins.) The $28,000 estimate for building the Model 3 “shows there’s some possibility of making money at the low end,” said Gordon. “But it actually doesn’t leave very much [money] per car for all the other expenses. If they’re selling it for less than $50,000, I don’t think it’s a good business.”

Source

2)'Weekly rate is not 2500 but 3500 or it will soon hit 5000'

Last official numbers(Q1 report) are 2500 at the end of March and that was a burst rate(they put all their efforts over a short period of time, not consistent rate across the quarter). They "expect" to reach 5000 by end of q2 but they also expected that by 2017. Again if it's a burst rate it's a pretty useless metric. Tesla aren't expected to reach 5000/week on avg on q2, but 5000/week one week in q2 which is very different.
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It will only happen when costs come right down, range and charging times improve massively. Also when we get some fun and good handling EVs that are going to attract car enthusiasts.
 
Nasher said:
It will only happen when costs come right down, range and charging times improve massively. Also when we get some fun and good handling EVs that are going to attract car enthusiasts.
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I’m sure for the majority of car users current ranges are perfectly sufficient.

What I would like to see is improved infrastructure. Example at the moment at my work we have a 400 space underground car park yet only 3 of those spaces have the facility to plug in an electric car. Now if every space or even half of the spaces had this suddenly its a viable option for lots of people (mostly doing under 20 miles each way) to charge their vehicle whilst it is sitting not moving for 7 hours Monday to Friday. If you then add in overnight charging the majority of common driving scenarios for a high proportion of people would be covered.

Obviously this ignores any technical requirements in order to facilitate charging 200-400 electric vehicles at the same time in one location.

I do agree however that entry cost is going to be a big deciding factor. Why buy an electric car if I can get the same car cheaper with a petrol engine.
 
For commuting maybe, but what if you want to go on holiday to Scotland?

We really need some completely new battery tech for EVs to replace ICE cars. It needs to get a lot lighter. People won't mind a 1 hour charge if it can go 500+ miles. There would be less demand on public charging spots as well.
 
Infrastructure is the big issue in the UK. Zap Map tells me my nearest charging point is 8 miles away...

Until a majority of the driving population can reliably charge at any time they need to, manufacturers will still offer ICE/hybrid cars.
 
Was chatting to someone at work about this, and they raised the question of what will happen when tax revenue from diesel/petrol begins to decrease? Will this tax be raised above inflation to sustain the total amount generated? Will the same happen with VED (this has already begun really)?
 
Nasher said:
For commuting maybe, but what if you want to go on holiday to Scotland?

We really need some completely new battery tech for EVs to replace ICE cars. It needs to get a lot lighter. People won't mind a 1 hour charge if it can go 500+ miles. There would be less demand on public charging spots as well.
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Like I said current range is fine for the majority of journeys not all journeys. The odd road trip the length of the country is the exception, most of the time people are commuting to work, going to the shops, travelling to local places. Even relatively long commutes are within current EV range. People just need places to charge them when they get where they are going.
 
This blog I saw last year (US centric but applies to UK too) sums up the predicament most OEMs face. There is a major disruption coming to their business both from electrification and from autonomous vehicles and many are unprepared for the challenges. Many know my views on autonomous vehicles: simply put, the technology will be ready before the regulatory environment is ready to accept it (see my post on insurance company resistance in the "autonomous vehice" thread on Overclockers. Electrification is a second "whammy" for many OEMs:

"
Transport is the next industry to be digitised and almost all vehicle makers are unprepared. Electric Vehicles (EVs) and autonomy could reduce overall USA transport spending by 65% which needs to be supplemented with digital services by players wishing to survive. Sensor data is the one area where vehicle makers have an edge and hence, is critical to their future. They must control this asset or face becoming sitting ducks for those that would reduce them to handsets on wheels.

  • Digital differentiation. Transport is ripe for disruption. Furthermore, there is a real possibility that demand for vehicle shipments falls substantially over the next 10-15 years. Embracing digital, controlling sensor data combined with a completely new way of thinking is required by vehicle makers wishing to survive for the long-term.
  • Sensor data will be the new vehicular currency. Digital Life services from smartphones will become ubiquitous and unlikely to offer value for vehicle makers. However, sensor data is unique, required for autonomy and critically, they still have a lock on access to it. Sensor data is the opportunity for vehicle makers to avoid severe disruption.
  • The infotainment unit could become the most important part of the vehicle as it is where all the sensor data can be accessed in one place. Furthermore, it is the main digital interface with the user meaning that the digital user experience will be defined here.
  • The gatekeepers. Despite the threat, the fact that OEMs are the gatekeepers to sensor data will give them a seat at the table as well as the opportunity to differentiate. How they execute on this is likely to define who survives and who does not.
  • Monetisation. Digital Life (smartphone only) in the vehicle could be worth $112 per user per year in USA or $32.1bn in revenues. The use of sensor data could drive that figure higher. Potential substantial falls in both the radio advertising ($17.7bn) market and transportation ($2.6tn) market provide a plentiful source for spending on new digital services.
  • EVs and autonomy have the capacity to cause substantial declines in both vehicle shipments and transport spending as a whole. Manual EVs could reduce cost per mile to $0.40 per mile from $0.88 where it is today. Autonomy promises to reduce this still further to $0.29 per mile. There is huge economic incentive for consumers to switch to EVs which together with autonomy, could cause a 44% reduction in USA vehicle shipments.
  • Sitting ducks. While vehicle makers are aware of the threat, many are in denial and few have any real idea how to address it. Most are easy targets for those that would reduce them to handsets on wheels."
 
ci_newman said:
This is a subject my friends and I have all been discussing recently, however really there is no clear answer.

But I dont think it will take 40+ years for some manufacturers. Recall that 2040 will see the banning of new cars with an ICE completely.

Personally, I think 5-10years before all of the mainstream manufacturers have a broad range of EV, as you said with maybe lower models having an ICE for the last 10years before the ban is introduced.
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The blog is considering ICE as anything that isn't BEV, so including PHEV. I agree though, the number of fully ICE vehicles sold in Europe and North America in 10-20 years is going to be reduced considerably, with PHEV being the technology that takes up a lot of that, into 2040 and quite possibly beyond for a lot of models.

I think realistically in 10-20 years we will have a market not dissimilar to the current one, where most models will have a variety of engines to choose from depending on price point and convenience. Just as we have the option of petrol or diesel (and engine size) now, we will have the option of BEV, PHEV and possibly mild hybrid as well in some models - along with a gradually decreasing amount of fully ICE vehicles. You choose what fits your needs best. There will of course be some manufacturers that are 100% BEV (such as Tesla and spinoff companies) but most manufacturers won’t be exclusive.

Kenai said:
Another big consideration is the markets they operate in. The UK is pushing gently for transition but could absolutely not sustain electric only for a significant portion of the population in the next 5 years. We're a small country anyway though, look to the middle east, India, China, Brazil etc. Are they wanting these cars and how will that impact the strategies of more global manufacturers?

Tesla operate in a convenient niche at the moment, they can sell expensive cars to people who happen to be in the position to use an electric car and that model is working for them. I don't think BMW, VW, Merc etc are overly concerned about Tesla leaving them behind, more so each other.
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Agreed. In many countries around the world EV is just not practical, and won’t be for at least the next few decades (as a majority propulsion method anyway). Many African countries and places with instability are going to be the last to transition, and manufacturers are still going to be making vehicles for those markets. In fact many have different engines already for some markets, ones that don’t have the same emissions controls making them easier to maintain, especially prevelant in Africa.

There’s also whole segments of the market in Developed countries that will hold back full implementation of BEV. Jaguar (using an example in the blog) will have little issue going full BEV, but Land Rover will need to be producting ICE and mild hybrid engines well into the next half of the century (unless there’s a fundamental change in charging tech - I.e massively more efficient solar, or they transition to something like hydrogen). The same with many proper 4x4 manufacturers like Toyota (Hulux, LandCruiser), Nissan (Patrol) and the myriad of manufacturers that produce pickups used in locations where you can’t just “plug in” overnight.

India doesn’t appear to be doing much right now but China is actually on the forefront of electrification of its fleet. They have introduced pretty strict emissions controls and are leading the way in EV adoption, with a much larger availability of electric vehicles than most of the rest of the world.

https://www.weforum.org/agenda/2018/05/china-surge-electric-vehicle-sales/
 
What I want to know is how they expect all the millions of people who live on busy residential streets London in particular to charge there cars at home? I’ve already seen on other forums people complaining to councils about neighbours having there plug and wire going from the house straight across the pavement that people walk on. Its a health and safety nightmare as people are just going to trip over them and once scumbags smell a claim they will all be doing it.
 
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