Is Tesla Going to Become Our Future?
Martin Jančo, CEO of M2M Solutions, comments on the newest developments in the automotive industry:
The most recent developments around electric cars have changed the long-standing status quo in the business, with Tesla becoming a new leader in the automotive industry.
Let me begin with some standard market value indicators:
As incredible as it may seem, Tesla is the world's largest car manufacturer by market value, despite the fact that it manufactured and sold only 367,500 cars in the last year.
Certainly, there may be an adjustment making Tesla move down to the second place, but I think if a drop is to occur, it will be for a short time.
Tesla is poised to make an escape from the peloton for the following reasons:
It has a gigafactory in China where the batteries for the Tesla Model 3 are produced. The second phase has just been accomplished, which is a completely new building for the production of the Model Y.
The Model Y is an affordable 7-seat SUV starting at USD 53,000 in the US (505 km range, 0-100 kph in 5.1 s, 4x4 drive). The production has been launched in the United States, followed by China. The interest in this model is expected to be more than doubled in comparison with the Model 3.
The Tesla's manufacturing plant in Germany should begin producing the Model Y in the summer of 2021. Germany was a great move that will enable Tesla to tackle quality problems once and for all. I suppose it will affect other Tesla's plants in Europe. A smaller factory to be built in the UK is already a topic of discussions.
Million-Mile Battery – later this year, Chinese CATL and Tesla should present the outcome of their joint battery research. This is a power pack that should last 1,609,034 kilometres (6,000 charges), which is a big leap from the present day's 200,000 to 250,000 kilometres. The battery is even cheaper to manufacture per kW than the current one, and is also more environment friendly.
Autopilot – in this case, I cannot even imagine what the impact will be if Tesla pulls this one off. Car-sharing is certainly a candidate for another revolution.
Semi is coming up this year (pre-orders), mass production is planned for early 2021. China is tasked with developing the Tesla's Model 2 – ID3's direct competitor priced under 25,000 dollars. The production launch is planned for 2022.
It is a very aggressive policy of Tesla to start producing cars that last 5 times longer than today's cars (EVs deliver these options, since electric cars have significantly fewer moving mechanical parts). This will lead to rapid market expansion over time, because these cars will last much longer. Theoretically, the production capacity can be 5 times lower than that of competitors. This is really going to expedite the overall transition to EVs, as low-priced second-hand cars will be available in excellent condition. I assume that the entire industry will have to adapt, which is not going to be easy at all, not to mention the impacts on sales statistics and market size.
Tesla is not just an automaker, though. The car is only one part of an ecosystem offered by the company. Indeed, Tesla sells:
Batteries for homes, factories and even entire regions (Australia, islands) that reduce reliance on the power grid in combination with solar panels, and also address the currently imaginary problem of EV charging.
Solar panels and especially their own invention of a solar roof. It is a combination of roofing with solar panels. The roof itself generates electric power. There is no need to buy roofing separately and then install solar panels, this is a two-in-one product. The price may be much higher because of that, but the product is still worth it. The manufacturer's warranty is 25 years. Who would not want to have solar panels with a 25-year warranty? These panels are produced at full capacity in Tesla's another Gigafactory in Buffalo in the United States. The company has applied for EU certification, so you will be able to place your order in a while. They look amazing.
Finally, now that we have our own production of electric power and a battery to store electricity, we only need a car.
I know it is not very positive information, but I believe it is good to know the reality, only then one can take advantage of the opportunities being offered.
What I mean is mainly software development for cars in Slovakia. Here is a great study about us and the way we can save the automotive industry in Europe and help especially the Germans with software.
The opportunities for the entire industry are in software and in selling information, and the car is expected to become a new mobile phone.
The entire automotive industry has been in spasm for decades, looking for a recipe to make the car sexy again, to use it for making a statement like in the US in the 1970s, when owning a car was the first thing every teenager craved. The European automakers have endeavoured to address the situation mainly through the options to configure one's own car, believing this would bring more personalisation and customisation of a car for the buyer, making it different from other people's cars.
In my opinion, this has failed and entailed a lot of disadvantages. The Japanese, who did not take this route, are winning. They deliver better quality and the vehicles are cheaper in the highest trim levels because they are not fully configurable, but usually available in 3 versions only (basic, mid, full).
For European carmakers is difficult to produce high quality quickly and cheaply when every car on the production line is different. Moreover, the Bible (the Toyota Production System) is written for the Japanese style, and they do things in a different way than we do. We have a map of London in our hands, but we are in Paris, which makes it quite difficult to find our way around.
Tesla is sexy and there will others as soon as a car is more than a mobile phone. Indeed, people love their mobile phones. In addition, the current possibilities allow to produce the same car and pretty much limit its software functions, which can be then offered through the screen to the owner at a discount. This is money on the way. There is even much more that is possible, to develop something afterwards and offer it to customers who bought a car a long time ago and who will just use a contactless card to add a new feature that will be loaded without having to go to a service shop. These are some great opportunities that are opening up. Nevertheless, automakers must change, otherwise they will end up like telecommunications companies that have failed to embrace the arrival of IoT (and associated services) and primarily have sold SIM cards so far.
I believe that things will go well for Europe, but we need to follow Tesla's example, and meekly see how they do it. Pride is a terrible thing when one realises that Tesla disclosed its patents on the Internet for public use as early as in 2014, which have been provably studied only by the Chinese and Koreans. We have lost at least four years while everything has been on the Web.