> The car companies that have the supply chains, the know-how, and now the motivation to electrify
The car companies supply chains are set up for ICE, not EV. Likewise, their know-how is also for ICE, not EV. It's like saying Kodak was in a prime position to take advantage of the digital camera (which they invented), but it was actually the opposite - they'd spent decades optimizing around a separate core technology and couldn't change until it was too late.
I'm not a fan of Tesla for a myriad of reasons and I love cars. But the notion that traditional car companies can magically start cranking out profitable EVs (Tesla made most of their money from tax credits which are essentially gone now) is laughable.
> But the notion that traditional car companies can magically start cranking out profitable EVs (Tesla made most of their money from tax credits which are essentially gone now) is laughable.
That seems to be exactly what a lot of traditional car makers are doing though. Ford, Audi, BMW, VW, Hyundai, Renault, Nissan, Mazda all have or are adding EVs to their range, and that’s just off the top of my head. They seem to expect profits to reach similar levels to ICEs as well: https://europe.autonews.com/automakers/automakers-finally-se...
Similarly Honda have announced they’re going to phase out ICEs by 2030 (iirc). Toyota just announced around 10 billion dollars of investment to expanding battery production to 33x current levels and 5 billion in battery technology R&D.
Digital cameras destroyed Kodak’s business model of selling film. For car makers though selling EVs is essentially the same business model as selling ICEs. They sell cars not particular types of drive chain.
Tesla is now well established as a luxury car brand but I think smaller EV startups are about to be washed out by competition from traditional makers. Smaller traditional makers will likely struggle to make the investment required to make the transition though. There’s likely to be a period of industry consolidation.
> It's like saying Kodak was in a prime position to take advantage of the digital camera (which they invented), but it was actually the opposite - they'd spent decades optimizing around a separate core technology and couldn't change until it was too late.
Their problem is the same one as Kodak, but it's not that they're too optimized for the legacy technology. It's that they don't want to give up the cash cow.
Digital cameras don't need Kodak film. Electric cars don't need oil changes from the Chevy dealership.
GM absolutely can make electric cars. They don't want to, because that's the end of their service business. It's the end of people buying a new car because their old car won't pass emissions. It's the end of people spending $2500 to put a new transmission in their $8000 car.
All they get instead are battery replacements, but the cost of a battery replacement is mostly the cost of the battery, not the labor. And batteries are a fungible commodity, so they have to compete on price with Panasonic and LG and they won't get anything like the margins they currently get for engines and transmissions.
They don't want this so they drag their feet. In the meantime it's an opportunity for competitors to eat their lunch.
Whether they get on the ball in time to not become Kodak remains to be seen.
> Electric cars don't need oil changes from the Chevy dealership.
The car manufactures have nothing to lose from the loss of oil changes, only the independent dealers.
> It's the end of people buying a new car because their old car won't pass emissions. It's the end of people spending $2500 to put a new transmission in their $8000 car.
Most cars are replaced because the lease was up on the old one. Even way down the line, most places don't have emissions testing for old cars: the car is replaced because the parts wear out. Ever seen a car with 250k miles on it - don't use the door handle to close it, it will just break off more, just ignore the worn spot on the seats, the AC will work for another two weeks if I recharge it - the above is real from my last car - a small number of all the little things (and it still ran great)
Transmissions are generally rebuilt by a third party.
> All they get instead are battery replacements, but the cost of a battery replacement is mostly the cost of the battery, not the labor.
NO, the cost of the battery is they have the ability to replace it. Either you replace all the individual cells (if 18650 a lot of labor - and you need a new chargers for the new chemistry), or more likely the manufacture is keeping everything around to make it even though the car it went in is out of production. Either you are paying for labor, or paying for a battery assembly process for an obsolete car. Third parties might do this for popular cars, but you never know when you buy a car if that battery platform will be used enough for someone else to start production when you need it.
> Most cars are replaced because the lease was up on the old one.
From a bit of cursory research just now, only a quarter to a third of new cars in the last few years in the US have been leased rather than purchased, so I'm pretty sure this is not true. (Of the folks I know who've leased cars in the past, about half of them actually bought out their lease at the end, too, although obviously that's anecdotal.)
I think the rest of your comment's on point, I just think you're underestimating how many people treat cars closer to the way you apparently do. :) While this is again an anecdote, when I traded in a Mazda 3 after eight years, I was surprised at how many friends and acquaintances I talked to -- including other folks right here in Silicon Valley, making more money than I am to boot -- reacted to that as "only eight years?"
Someone who has built a company with complicated long logistical tails, deep R&D, high fashion and is looking for a recurring growth industry might think of a way to do that with cars.
$500/month from 10M drivers in the US would add at least another $1T to the APPL valuation.
The car manufactures have nothing to lose from the loss of oil changes, only the independent dealers.
The dealers' incentives are going to play some significant role in legacy EV sales. VW dealers were actively steering buyers away from VW's EVs. Also YouTuber "Tesla Economist" has been doing an informal survey by calling legacy auto dealerships and inquiring about EVs. Apparently, legacy auto dealers are now marking up EVs by $2000, $4000, in one case by $13000! (The Ford dealerships are steering callers towards EVs now, so at least Ford has that going for them.)
The loss of oil changes is going to have some not-insignificant effect on the auto servicing industry. Clearly!
EVs obey supply and demand, they only mark cars up if they can sell them that way.. they will of course steer people to what makes more money for them.
> The car manufactures have nothing to lose from the loss of oil changes, only the independent dealers
The dealers and the manufacturers are a symbiotic relationship.
If the service department stops being a cash cow, is the manufacturer supposed to give up more of their margin?
Because the dealers are independent just enough that if they decide to fold, the manufacturer can't just swoop in and keep everything running.
Right now people don't appreciate how happy the manufacturers are to sell the car to the dealer and take their money. If a car sits on the lot for a year it's not their problem (unless all of them do that is and there's no room)
Service departments and Finance departments are the two things that keep that relationship going. Right now part of the resistance to EVs from dealers is also likely the potential buyers.
You can guestimate EVs have a 10k premium over comparable ICE vehicles right now going based on a base Model 3 vs a Camry. The people who have money for that premium likely have better credit scores and can't be hit with extremely lucrative subprime rates.
Someone with an 800 credit score won't let them tack on a 3% finance reserve to their 1% loan, but someone with a 650 score being told their rate is 11% isn't going to question why it's so high...
Honestly this stuff is way more complicated than HN tends to assume. There are so many forces at play here that trying to make statements like "maybe tesla will make cars for all the other brands" is never going to be realistic.
> Transmissions are generally rebuilt by a third party.
This is an aside, but transmissions are often replaced by a dealer. Most places will not sell the average person on rebuilding their transmission lol, that sounds like a relic of yesteryear. Today a used replacement would be the middle ground offered for an out of warranty owner.
> This is an aside, but transmissions are often replaced by a dealer.
Really? I mean I know dealers do some transmission work, but everything I can tell says that transmissions generally will last far beyond the warranty.
By the time it is time to do something the car is on the 3rd owner. Very little of such work is done by the original dealer. (though in the case of some heavy trucks transmission wear is common enough that the dealer will automatically rebuild every single one they take in - but these are not the original manufacture dealers but an independent used dealer) Most will go to an independent transmission shop, even smaller dealers will take a car needing transmission work to an independent shop because that is specialty requiring training they don't give their mechanic.
Even at that, transmissions have enough non-wear parts that the manufacture will rebuild them in general. There is a reason when you buy a transmission from anyone there is a core charge: they send it back to be rebuilt.
Like most major components in cars these days if it fails early, it's likely a common manufacturer defect.
Nissan CVTs for example, are known to die multiple times before 100k. Nissan even bumped up the warranty to avoid a proper recall.
People are offering rebuilt transmissions, but like you said the average individual is at most going to use their transmission as a core for a rebuilt one that very specific places make.
The dealer isn't going to point them to a transmission shop (or take their car to one)
> The car manufactures have nothing to lose from the loss of oil changes, only the independent dealers.
The car manufacturers sell their cars through the dealers. If every time they make an EV, the dealerships don't order them and steer every customer away from buying them, that's just as much a problem for the car manufacturer.
> Most cars are replaced because the lease was up on the old one.
The leased car still goes to someone else who then needs to service it.
And if the old cars start lasting for 40 years instead of 15 then the value of just off lease cars goes down due to increased supply, which makes leasing more expensive to offset the loss of resale value, which makes fewer people buy new cars.
> Even way down the line, most places don't have emissions testing for old cars: the car is replaced because the parts wear out. Ever seen a car with 250k miles on it - don't use the door handle to close it, it will just break off more, just ignore the worn spot on the seats, the AC will work for another two weeks if I recharge it - the above is real from my last car - a small number of all the little things (and it still ran great)
Nobody replaces the door handle on an ICE car with 250,000 miles on it because they know the powertrain will give out in another 10,000 miles and then the car will be scrap.
But batteries don't work like transmissions. As they go bad they have 150 miles of range instead of 300. For many people that's enough and they'll drive the car that way another five years, and then it's worth replacing the door handle.
Meanwhile battery prices are falling like a rock. The lower they get, the older the car is before it has to be scrapped because a new battery is too expensive.
> Transmissions are generally rebuilt by a third party.
Transmissions can be rebuilt by a third party. That doesn't mean nobody goes to the dealer or buys a new transmission from the carmaker.
> NO, the cost of the battery is they have the ability to replace it. Either you replace all the individual cells (if 18650 a lot of labor - and you need a new chargers for the new chemistry), or more likely the manufacture is keeping everything around to make it even though the car it went in is out of production.
Carmakers have the incentive to standardize this. If every GM EV for twenty years has one of two or three different battery packs, people will be making those indefinitely.
Meanwhile the labor of replacing individual cells in old batteries will happen in countries with lower labor costs because it isn't labor that has to happen at the repair site.
The result is that remanufactured batteries could end up being very inexpensive.
> The car manufacturers sell their cars through the dealers. If every time they make an EV, the dealerships don't order them and steer every customer away from buying them, that's just as much a problem for the car manufacturer.
But that's not how cars are sold, at least not in the United States. Manufacturers don't leave it up to the dealers to decide what vehicles they can push and what vehicles they can steer customers away from.
Dealers get a vehicle allocation. Some of the allocated vehicles are cars that are easy to sell. Some of the allocated vehicles are cars that aren't easy to sell, but the manufacturer wants to push them. If the dealer wants to get more of the cars that are in demand allocated, they need to push the models the manufacturer wants them to push.
Do people realize how little of a modern car's complexity is the powertrain?
The eTron was built on a rework of the Audi platform that's in twelve ICEs before hosting it's first EV.
I mean, there's a reason the manufacturers will give you a 100k mile powertrain warranty, but won't cover a broken cup holder past 40k.
ICEs have been iterated to the point of boredom. Most engines today are 3rd or 4th generations of their original designs with emissions improvements and moderate power gains.
Making flexible platforms, having a supply chain that isn't so starved they're actually able to provide parts post-sale (current global woes notwithstanding), things like that's...
That's what make the notion that car manufacturers suddenly can't make cars just because the powertrain changed is what I find laughable.
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Actually, funnily enough people don't realize this has actually happened before.
1970 Clean Air act and the 1970 oil crises might as well have been a "reset" in powertrain development.
Many cars could no longer exist as they did, and manufacturers had to adjust to a completely new market, with new competition from efficient overseas competitors (who's efficient-focused powertrains previously had no place)
Sound familiar?
Some companies that were already floundering did fold. American Motors died off and Chrysler picked up the pieces.
But for the most part the industry adjusted and moved on. Because at the end of the day the powertrain is just that, the powertrain. It's supposed to be boring for the manufacturers because people will put up with a infotainment system that can't play video games when you're parked, but they won't put up with an engine that works when it wants to.
I've worked at a major automative company in a R&D org of 5k people. Nothing in our org was "set up for ICE", and none of the suppliers would have been specialized for that. Keep in mind that a motor is only one part of a car, and even if you add other drivetrain related parts (exhaust, transmission, etc) it might barely end up as 33% of a car.
Infotainment is pretty much independent of the engine (apart from some icons/visualizations/settings here and there), as are most driver assistance systems, safety systems, anti-theft, chassis, mirrors, lights, wheels, brakes, doors, trunks, etc.
Infotainment is pretty much independent of the engine (apart from some icons/visualizations/settings here and there), as are most driver assistance systems, safety systems, anti-theft, chassis, mirrors, lights, wheels, brakes, doors, trunks, etc.
From what little bit I know about testing of automotive systems, there is a vast warren of disconnected, diverse microcontrollers and separate communications busses in the typical ICE vehicle from several years back.
Tesla turned this all on its head. Just about every system with software in a Tesla vehicle can be upgraded by a car's central computer through an over the air update.
Exactly the situation you describe above is what some would naively term, "set up for ICE." It's set up for the legacy ICE world, where there were no over the air updates, and the car wasn't a computerized robot on wheels. This legacy can be seen in the failed updates coming out of GM and Ford. There have been reports of legacy auto updates requiring buyers to go back to the dealership, but then the dealers are afraid to apply the update, because they experienced "bricking" the vehicle.
Those developments are basically unrelated to ICE vs EV, at least from what I've seen. Car companies are working on that in ICE models too (and tried before they announced EVs). Car companies make EVs that don't have this kind of integration, and will continue to do so. Some probably have decided to align it and develop it in parallel for EV models only, or at least pretend to do so for marketing reasons, but it's not a fundamental property of either/or.
"Having" to do both now of course doesn't make life easier for car companies, many of them still struggle very much with this "software" thing, and it shows.
> Tesla turned this all on its head. Just about every system with software in a Tesla vehicle can be upgraded by a car's central computer through an over the air update.
They could do this with ICE couldn't they? What does that have to do with EV specifically? It seems it just adds to the lore of Tesla - The Tech Car
They could do this with ICE couldn't they? What does that have to do with EV specifically? It seems it just adds to the lore of Tesla - The Tech Car
Actually, ICE is quite significant in the degree of computerization Tesla can achieve. Since engine compartments can get very hot, ICE manufacturers have to use slower, specially hardened chips in such spaces. The Tesla cars, being EVs, don't need to do this. This results in more computing resources and less expensive components.
Granted, the other manufacturers could do this as well. But this should cause us to ask, why haven't they? Even GM and Ford haven't been able to achieve the kind of integration Tesla has. That warren of diverse microcontrollers and systems is associated with a warren of supplier relationships.
So, maybe it does have more to do with being "The Tech Car" -- but isn't that even more powerful and tied to the principle of disruption than just being electric?
Most of the car supply chains are the same for EV and ICE. Still the same radio, windows, seats, tires... Yes ICEs are complex but they are not the only complex part.
All Kodak shows is that it is possible to not use your prime position. Sometimes companies fail to transition, sometimes they don't. Only time will tell.
A EV is a much simpler device than a ICE - it's a battery and an electric motor, it's much simpler than mechanical power. Gone are oil pumps, transmissions, etc.
On top of all this, you can now route power through electrical wires, rather than needing an accessory belt to distribute mechanical power to the A/C, oil pump, power steering etc.
The electric car's tech advances are mostly in the battery technology (and vapourware "Level 5 automation in 2019"). Tesla will have a unique differentiator in battery tech and production, but it's not crazy to retool an existing ICE manufacturer to EVs.
Sandy Munroe did a disassembly of an EV motor oil pump just a few days ago. (In fairness, he also notes that one manufacturer has done away with this oil pump, and uses the heat pump instead.) Also, some EVs also have transmissions.
The car companies supply chains are set up for ICE, not EV. Likewise, their know-how is also for ICE, not EV. It's like saying Kodak was in a prime position to take advantage of the digital camera (which they invented), but it was actually the opposite - they'd spent decades optimizing around a separate core technology and couldn't change until it was too late.
I'm not a fan of Tesla for a myriad of reasons and I love cars. But the notion that traditional car companies can magically start cranking out profitable EVs (Tesla made most of their money from tax credits which are essentially gone now) is laughable.