Will your franchise win in the NEV wars? Part 6: Ford

This entry is part 6 of 9 in the series New Energy Vehicles

Whatever your business in the automotive supply chain – whether you’re a supplier, OEM or distributor – all motor industry businesses face some momentous business decisions linked to the transition to new energy vehicles (NEV’s). While manufacturers consider the existential threats arising from transition timing, investment, regulatory and technology issues, dealers too have threats to consider. NEV’s generate a much reduced after-market value chain, for example which will lower earnings for everyone. Both OEMs and dealers face the question of how NEV’s will be distributed – direct or via a dealer network. Tesla are pioneering direct distribution and, it would be surprising if every vehicle maker wasn’t assessing the same option. The twin threats of direct distribution and ever-reducing after market earnings are stark for dealers around the globe. This series of posts looks at the profitability of seven global car makers under three scenarios: slow, moderate and fast transition to EV’s. In each scenario five changes are made to forecast the impact on OEM volumes and profitability over the next thirty years. Read on through this series of posts if you’d like to know which OEMs are at the most risk and where their pressure points are.

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Will your franchise win in the NEV wars? Part 5: Volkswagen Group

This entry is part 5 of 9 in the series New Energy Vehicles

Whatever your business in the automotive supply chain – whether you’re a supplier, OEM or distributor – all motor industry businesses face some momentous business decisions linked to the transition to new energy vehicles (NEV’s). While manufacturers consider the existential threats arising from transition timing, investment, regulatory and technology issues, dealers too have threats to consider. NEV’s generate a much reduced after-market value chain, for example which will lower earnings for everyone. Both OEMs and dealers face the question of how NEV’s will be distributed – direct or via a dealer network. Tesla are pioneering direct distribution and, it would be surprising if every vehicle maker wasn’t assessing the same option. The twin threats of direct distribution and ever-reducing after market earnings are stark for dealers around the globe. This series of posts looks at the profitability of seven global car makers under three scenarios: slow, moderate and fast transition to EV’s. In each scenario five changes are made to forecast the impact on OEM volumes and profitability over the next thirty years. Read on through this series of posts if you’d like to know which OEMs are at the most risk and where their pressure points are.

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Will your franchise win in the NEV wars? Part 2: Seven global carmakers compared – Results.

This entry is part 2 of 9 in the series New Energy Vehicles

Whatever your business in the automotive supply chain – whether you’re a supplier, OEM or distributor – all motor industry businesses face some momentous business decisions linked to the transition to new energy vehicles (NEV’s). While manufacturers consider the existential threats arising from transition timing, investment, regulatory and technology issues, dealers too have threats to consider. NEV’s generate a much reduced after-market value chain, for example which will lower earnings for everyone. Both OEMs and dealers face the question of how NEV’s will be distributed – direct or via a dealer network. Tesla are pioneering direct distribution and, it would be surprising if every vehicle maker wasn’t assessing the same option. The twin threats of direct distribution and ever-reducing after market earnings are stark for dealers around the globe. This series of posts looks at the profitability of seven global car makers under three scenarios: slow, moderate and fast transition to EV’s. In each scenario five changes are made to forecast the impact on OEM volumes and profitability over the next thirty years. Read on through this series of posts if you;d like to know which OEMs are at the most risk and where their pressure points are.

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Part 2. Eden or New Jerusalem: The Roadmap

This entry is part 2 of 2 in the series Climate Emergency

Politicians are under pressure to speed up the transition to zero-emission vehicles and a carbon-free economy. Ardent climate activists want legislation enshrined to remove greenhouse gas emissions by 2025. Why not? The climate scientists say that, without these ambitious timelines, the world is committed to irreversible climate change. However, right they are, there are still substantial technical problems to be resolved to switch to a green economy without destroying the livelihoods of countless people. This post describes just a few of the efforts that governments, scientists and engineers have been working on for almost two decades. While research from centres in the EU, US, UK and China is described, there are hundreds more groups working to solve the technical problems posed by the ‘green revolution’. Sadly, science takes time as well as money. That’s why we don’t yet have a cure for cancer, which is a much smaller scale problem by comparison. Unfortunately, the world now has a surfeit of climate scientists who have been working on describing greenhouse gases for over 70 years ; it doesn’t have a surplus of electronics and technological geniuses who can solve it. Those who can are working on it. Moreover, the apparently neat solution of battery electric vehicles (BEV’s) may not be the ‘silver bullet’ that activists and politicians hope for. Engineers think that multiple solutions may be needed working in combination. We need ambitious targets, not reckless ones..and we need time to work on them.

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Part 1.Eden or New Jerusalem: Politicians, the motor industry and the climate emergency

This entry is part 1 of 2 in the series Climate Emergency

Politicians, climate scientists and activists, certain that they have special knowledge about the world that demands urgent, focused attention, turn to increasingly loud, scary, and simplistic solutions to the task of transitioning to a carbon-neutral economy to avoid further global warming. While they seek to re-engineer society to force broad changes in consumption and production patterns in the name of such meaningless slogans as “climate emergency” or”net-zero by 2025″, qualified engineers and scientists are solving the tough questions that will allow the world to actually make the changes required. Behind the noise, there is a clash of philosophies. On the one hand, there are those who wish to return to an-earlier, simpler life. They would like to convince the world to embrace a journey to a new version of the ‘Garden of Eden’. The scientists, engineers and managers have a very different destination in mind – a New Jerusalem, where sophisticated technical solutions master the global warming challenge. This first post draws distinctions between the two views. The second looks at the progress that the technologists have made and asks whether the politicians and activists have even taken a look.

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Who gives a dime? The impact of Electric Vehicles on Jobs in Auto makers and retailers

As politicians and activists, auto-makers and early-adopters, embrace electric vehicles as the key transport development of the early 21st century, few are concerned about the impact on jobs. Automotive is one of the world’s largest industries with 8MN-10MN employed directly and another 20MN-25MN in support roles. The outlook for these stable, high quality jobs is at best uncertain. Up to 1MN jobs may be lost in manufacturing and another 13MN in support jobs. Does anyone give a dime?!

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The ‘economics of the box’: prospects for the dealer business model

While there’s no immediate cause for alarm, the business conditions for car dealers – especially small independents – may get more difficult if new engine technologies and changing attitudes to car ownership become more widespread. The big consultancies and researchers expect electric car ownership to grow fast, if the technological, cost and infrastructure hurdles can be solved. If so, the immediate effect for car dealers will be a fall in after-sales revenue as electric cars substitute for conventional internal combustion engine ones. Electric cars generate around 25% of the service and parts revenue of conventional ones. Their expectation is that, by 2030, EV cars may become mainstream in cities and in some countries, such as China. Following closely on that forecast are two more. First, that urban dwellers may be willing to trade car ownership for mobility. Put simply, they continue the transition from ownership to leasing – which has already happened – and take the next step from leasing to on-demand mobility packages. Firms like Uber and Lyft are betting that change will happen, at least in cities and suburbs with high congestion and car ownership costs. So too are Peugeot, Renault, BMW, Audi and Mercedes-Benz. If that took place, the retail new car market would shrink even faster from the 2030’s onward. Second, there’s the much vaunted arrival of autonomous driving cars. Most experts expect this is thirty years away at least but they are all convinced that personal car ownership will cease to be mainstream if it does occur. The future for traditional car dealers who think that existing franchise protection laws and manufacturer’s investments in dealer networks will act as a bulwark to change and do not consider and assess these trends will not be bright.

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