The car lives the most important moment in its history. And the industry is at risk of stagnation

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Building a car is not easy. I think we can all agree on this. In fact, it’s so problematic that the industry is at an impasse. Traditional brands are fighting hard to become “something else”. The new ones that want to gain a foothold lose money by the bucketload. And the technology companies seek to get into the sector, studying different possibilities.

The reference. 19 years after its launch, Tesla has managed to become one of the benchmark brands in the sector. It is, of course, in the electrical market, but also in the complete picture. And it is because it is the automobile company with higher stock market valuation and the one that is expected to grow the most.

This year’s financial results are giving great news, but along the way, Tesla has been burning money for almost two decades, accumulating losses and basing its growth on one hope: to have the most advanced electric cars in the world when the market begins to explode. And they have succeeded, not without significant ups and downs and having opened other financing channels along the way, such as bitcoin.

complicated beginnings. Along the way, Tesla began its journey with the Tesla Roadster, an electric convertible, two-seater, of very low production and that left the company with significant losses. In fact, Daimler and the US Department of Energy saved the company from bankruptcy.

In 2010, the company entered into a partnership with Toyota, who bought part of the company in exchange for helping them develop an electric Toyota TAV4 for the Japanese market. A new way of business to stop the burning of banknotes. The Tesla Model S, however, blows up in 2012. They begin large-scale manufacturing, and yet it has taken another decade to get huge profits.

The danger of being late. The difference between Tesla and its competitors is that it saw an untapped market when no one was paying attention to it. He set the alarm clock and arrived at the train station well in advance, where he has survived until the appropriate train has passed. The problem for emerging brands is that they have woken up late, they have run to catch the train and that train may already have passed.

When Tesla started manufacturing on a large scale it had an advantage, it was fighting against itself. Companies like Lucid Air, Rivian or Fisker have to follow the same path as Elon Musk’s firm. With one difference, they now have to fight against Tesla, against the emerging Asian market and against traditional brands.

As highlighted in Bloomberg, this has a problem: investors lose confidence. Tesla has managed to keep the flame of hope alive, but the brands mentioned above are beginning to lose stock market support at the worst time, with the broken supply chain and with the large manufacturers burning bills at a forced march to adapt to European regulations in the medium term .

there is no good way. In the analysis that Chris Bryant develops in Bloomberg, hint that there is no good way. Betting on large volumes of cars is synonymous with assuming losses of billions of euros or dollars in the first years of life. Betting on small productions alleviates this problem but forces the price of the product to rise, adjust profit margins and makes it difficult to obtain the necessary investment.

At the moment, it is estimated that Rivian will lose 6,500 million dollars this year, that in 2027 it will have accumulated 30,000 million dollars in losses and that it will not make a profit until 2028. Along the way, the electric car firm has raised prices and found itself with a strong opposition of customers who have been waiting for their cars for months.

At the same time, between January and June of this year, Lucid Air burned 1.5 billion euros. At that time they barely manufactured 1,400 vehicles. Arrival has preferred the model of niche manufacturing. The problem is that this year it will manufacture just 20 cars, instead of the 600 forecast, which has caused it to lose 95% of the market value it had in 2020.

The electric car is growing more than ever in Spain, and despite everything it does not exceed 5% of sales

The danger: make yourself. You can have the know-how to have the best car on the market, but building vehicles on a large scale and making profits is something that has to be done in the very long term. Rivian is trying to offset its losses after reaching a agreement with mercedes to produce electric vans. Dyson scrapped the idea of ​​building the car itself after seeing the huge amount of loss that was coming his way.

Polestar, a new firm although associated with Volvo, is still making losses despite manufacturing at a good pace and sharing facilities with the Swedish firm. Here, the traditional firms have an advantage, since the production lines already have them, it is up to them, yes, to adapt them to the new electric vehicles.

The risk of reinventing yourself. Although they already have production lines, traditional brands face an abyss in the long run. Autonomous driving poses important challenges to the development of its future models. In fact, Honda has already teamed up with Sony to move forward in this regard. The rest separate divisions, like Ford, or consider doing so, as Renault. Or they try to reconvert to a software company and don’t become a commodity.

The problem is that, as Tesla saw in his day, companies like Google, Apple or Xiaomi seem to have the goal of completely autonomous robotaxis. Capsules that will not require human intervention and that will work at the convenience of the route requested by the customer. For now, the traditional brands are doing well by selling smaller volumes of vehicles. It will be necessary to see how long they can maintain this strategy or if they manage to be relevant in the long term.

Building a car is not easy. I think we can all agree on this. In fact, it’s so problematic that…

Building a car is not easy. I think we can all agree on this. In fact, it’s so problematic that…

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