6 ms·

I've pointed this out in other discussions, but might as well point it out again. One of the problems that VW is about to encounter is that its interests as a

by btilly 8y ago

I've pointed this out in other discussions, but might as well point it out again. One of the problems that VW is about to encounter is that its interests as a manufacturer run directly opposite to its dealers' interests. VW wants to start selling pure electric cars because that is where the market is going. However any VW dealer who convinces a customer to buy an ICE car has also sold themselves good odds of a future revenue stream maintaining that car. However if they sell an electric car they are going to see that car less often. Therefore VW can make electric cars, but its dealers will try to not sell them. This opens up an opportunity for new brands because people in the market for electric cars are likely to try to buy electric cars similar to the ones that they see on the road. Which means that shiny Tesla, those glorified golf carts you sometimes see, and all of the up and coming electric car brands in China and India that would love to break into Western markets. The history of disruptive innovation suggests that the end result is likely to be that people switch to new companies and most existing car companies will go out of business. So far everything about the transition to electric has followed the usual course (including established companies publicly announcing that they are switching technologies because they know where the future is), so there is no reason to believe that the result will be different this time.

derefr 8y ago
> people switch to new companies and most existing car companies will go out of business You mean, "and most existing car companies get bought out by the now-larger new companies", no? A manufacturing base and logistics supply chain, at fire-sale prices, is nothing any sensible public company would hesitate to acquire. And, given that they'd be acquiring the company's IP (e.g. its brand) along with the assembly lines, why not rename themselves to the more well-known name? I fully expect that in 2050 we'll still have a company called Ford pumping out cars. They'll just be pumping out the "Ford Model Y" under Tesla [now Ford] ownership, or the "Ford Qin" under BYD Auto [now Ford] ownership.
- btilly 8y ago
  You mean, "and most existing car companies get bought out by the now-larger new companies", no? Very much no. There is nothing unique that the existing companies own that up and coming companies desire. It is very much the opposite. It is easier to invent new stuff than it is to winnow out the hidden assumptions in what exists already. Some of the companies that are part of existing supply chains may successfully make the transition. A tire is a tire no matter what the engine looks like. But there is no reason for someone who is beating Ford in the market to want to pay Ford what Ford imagines its existing investments in obsolete technology are worth.
  - derefr 8y ago
    > to want to pay Ford what Ford imagines its existing investments in obsolete technology are worth. Why would they do that? I didn't mean to suggest a regular acquisition (i.e. company X buys out company Y's outstanding shares to become the majority shareholder); I meant to suggest that these companies will likely enter Chapter 11 Bankruptcy, followed by an acquisition by a PE firm that parts the company out and sells its assets to other firms, where the brand of the old company is one of those assets, and the assembly lines are another, and the same company might want to acquire both, or just one. Keep in mind, also, that when you buy a factory, you aren't buying the technology that runs the factory. You'd strip that out and replace it. No, you're buying the real estate, the buildings themselves, the central location close to shipping. (Which might not even be legally allowed to exist due to current zoning laws for the region, but is only grandfathered in or uniquely lobbied in to "protect local jobs.") And you're buying the pre-established arrangements with logistics providers (ports, over-land carriers, etc.) to get cars from that factory to destination cities; and the pre-established arrangements with suppliers to get regularly-scheduled shipments of raw materials like aluminum alloys, thermoplastics, minerals and lacquers to mix paint from, etc. to the factory. It's the same reason that, say, Target wanted to acquire Zellers in Canada. There was nothing of value in any given Zellers store or warehouse; what was valuable was the real-estate and the logistics pipeline connecting the stores to the warehouses. (Target failed in Canada, but that was because they began leasing the real estate long before they were ready to begin operating the stores, just to ensure nobody else jumped on the deal. So they started with a giant debt from months of paying rent.)
- slededit 8y ago
  The Ford family has 40% voting rights regardless of how many common shares are sold. No buyer would ever accept that - and the family would never give up their preferred shares. Your scenario may happen with another car company, but not Ford. They would have to go bankrupt first.
pkulak 8y ago
> Therefore VW can make electric cars, but its dealers will try to not sell them. I think Audi sees this coming just as much as you do. I reserved the E-Tron a few months ago and my local dealer had _no_ idea what was going on. They told me they would be able to order one for me next year, even as I was making the order directly with Audi USA online. When I put my dealer's address in as a the pick-up location, the dealer emailed me the next day legitimately surprised to see the car added to their order system. Audi seems to have no plans to stock any of these at dealers, but instead ship them out as they are configured directly by customers, very much like Tesla does it.
- rconti 8y ago
  I think that's just VAG being confused. I "ordered" a Golf R in 2015 and the delivery estimate was "sometime in the next 3 months" until literally the day it showed up at the dealer.
  - RickJWagner 8y ago
    Nice pick! Golf R was on my short list last year. (I went with a used Lexus IS F, finally.)
- janesvilleseo 8y ago
  It may be that they are preferring not to stock them at dealers precisely because the dealer has no motivation to sell it. I believe this has happened to other models with other brands, but it’s escapimg me at the moment which ones. However a quick search pulls this up. https://www.digitaltrends.com/cool-tech/dealerships-dismiss-electric-vehicles/ https://www.digitaltrends.com/cool-tech/dealerships-dismiss-...
outworlder 8y ago
> However if they sell an electric car they are going to see that car less often. This is something many people don't get. There are far, far less parts (moving ones even) in EVs. Things like spark plugs(and the cables), fuel injectors, filters, alternators, fuel pumps, the myriad of belts and pulleys, valves. They don't even have a crankshaft. Or a clutch. Or much of a transmission for that matter. Power steering is generally electric too (no fluid or pumps there either), as is climate control. Even radiators are not usually present (maybe in the batteries, used far less often, mostly when charging). It does have a bunch more electronics, all solid state. Even the normal lead acid 12v battery they all have lasts longer, as there is no starter motor to pull lots of amps at once (they are also more gently topped off). Parts that cannot exist cannot fail, and cannot be charged. Were not for the battery degradation ghost, people would be switching in droves already. But they are familiar with laptop batteries, and they think car batteries degrade the same way. If the day comes where you can just drive to an autozone or the like, give them your old battery and drive off with a new one at a reasonable price, that's when things will suddenly shift.
- toomuchtodo 8y ago
  The brakes on an EV will last the life of the vehicle due to aggressive regeneration (even our Camry Hybrid, with almost 100k miles on it when it was totaled by a negligent driver, was still on the factory pads). Also, the brake system can be electrically actuated instead of with a hydraulic system. The 12v battery on Tesla vehicles is actually a deep cycle Li-ion battery in a traditional form factor (not lead acid); it's used for low voltage loads, and charged from the high voltage traction battery. There is a shock ahead for the entire automotive supply chain. It is important we manage the human impact appropriately.
  - outworlder 8y ago
    Good point. The Leaf also has oversized brake pads for when there is no regenerative breaking (battery is close to full).
  - amelius 8y ago
    > It is important we manage the human impact appropriately. And the chances of that actually happening?
pacificmint 8y ago
> However if they sell an electric car they are going to see that car less often. That's of course a direct result of the current (imo broken) model where the dealers depend mostly on maintenance revenue. That means they make more money every time the product they sold you fails in some way. This sets up conflicting incentives for car manufacturers as well, where their revenue, or that of their partners, would go down if the car becomes too reliable. I believe Tesla had at some point stated that they wanted service to not be a profit center for them, which as a customer is something I'd really appreciate.
justtopost 8y ago
This is a fallacy. Most car failures are not the engine. Evs still have brakes, suspension, electronics, steering, and all manner of plastic bits to wear out and fail. I would like to see any independent assessment showing evs have any better maint cost after the 7year honeymoon period all cars have with minimal repairs..
- Forbo 8y ago
  Brakes certainly last longer due to regenerative braking. While there are still many parts that will need service, there are significantly fewer than a comparable ICE vehicle.
- btilly 8y ago
  The engine isn't the only component of this. ICE car maintenance is often required due to things like needed oil changes, broken timing belts, transmission failures, and other things that do not exist in EVs. When it comes to the fiddly electronic bits, ICE cars actually have more of those. For example if your mechanic tells you that your Mass Air Flow Sensor needs replacing, you're about to have a bad day. But that part doesn't exist in an EV because it doesn't need to regulate the flow of air to the engine. Some parts that both have also fail less on an EV. For example out of your list, the brakes get approximately 1/3 of the use because most braking is done through regenerative braking. I am aware of one part that fails more. EV tires need more frequent replacement because EVs generate more torque, particularly at low speeds. While drivers love the fast pickup, your tires don't. As for independent assessments, attempts like https://www.sciencedirect.com/science/article/pii/S030626191731526X?via%3Dihub https://www.sciencedirect.com/science/article/pii/S030626191... have been made. Maintenance was less. By enough in some locations to make the actual total cost of ownership less. As real world data accumulates, more and better comparisons will be made. But given the principles of what is involved, it is pretty clear which way the long-term comparison is going to wind up going once electric technology matures and construction costs come down. (The biggest component of which is that batteries are still on their long-term 7% per year cost reduction.)
  - PuffinBlue 8y ago
megaman8 8y ago
> However any VW dealer who convinces a customer to buy an ICE car has also sold themselves good odds of a future revenue stream maintaining that car. I don't know about you, but I never ever ever get my car serviced at a dealership unless it's either under warranty or a factory recall (free).
- brewdad 8y ago
  Perhaps another reason why VW has lengthened their US warranty to 6yrs/72k miles. Certainly Dieselgate forced their hand but there may also be some appeasement to dealers since many new car buyers do the same as you.
Shivetya 8y ago
its not only going to hit the dealer network its going to hit the production side as well. the battery and motors for EVs are much easier to automate production of and in the end are less complex on the side of motor and transmission that those types of plants will go away. Yeah dealers will take a hit but all that unionized manufacturing force will take a severe one as well. dealers are going to have transform somewhat but after seeing the issues with Tesla its not like we don't have a place for dealers (I love my TM3 but damn if some people aren't trapped in repair hell). With EV and the eventuality of self driving cars they could become depots for rentals and such. plus once EVs hit the roads in numbers there is always something to fix, service, or repair. finally. working for a parts supplier I a wondering where my company will be in forty years
sxates 8y ago
As a counter-example, I registered interest in the Jaguar i-Pace and someone from my local dealer immediately called me about it. They let me know when they'd have demo models to drive, and followed up with me several times. I ended up ordering a Tesla, but the Jag dealer was definitely out to sell some EVs!
- sizzle 8y ago
  Good to hear. What made you go with the Tesla?
  - sxates 8y ago
    Lots to like about the Jag, but the Model 3 is cheaper with more range, and comes with other benefits like super chargers and constant updates to the car's software.
rv-de 8y ago
Maybe that's why they fill electric cars to the brim with fancy technology - more breaking points. I'd like an electric car with a battery and that's it - no autonomous driving, no integrated navigation, no intelligent interior climate control - just a battery, a wheel, accelerator pedal and breaks ... :)
gwbas1c 8y ago
That only applies in the US, outside of the US, the car companies own the dealership.

by btilly 8y ago

derefr 8y ago

> people switch to new companies and most existing car companies will go out of business You mean, "and most existing car companies get bought out by the now-larger new companies", no? A manufacturing base and logistics supply chain, at fire-sale prices, is nothing any sensible public company would hesitate to acquire. And, given that they'd be acquiring the company's IP (e.g. its brand) along with the assembly lines, why not rename themselves to the more well-known name? I fully expect that in 2050 we'll still have a company called Ford pumping out cars. They'll just be pumping out the "Ford Model Y" under Tesla [now Ford] ownership, or the "Ford Qin" under BYD Auto [now Ford] ownership.

btilly 8y ago
You mean, "and most existing car companies get bought out by the now-larger new companies", no? Very much no. There is nothing unique that the existing companies own that up and coming companies desire. It is very much the opposite. It is easier to invent new stuff than it is to winnow out the hidden assumptions in what exists already. Some of the companies that are part of existing supply chains may successfully make the transition. A tire is a tire no matter what the engine looks like. But there is no reason for someone who is beating Ford in the market to want to pay Ford what Ford imagines its existing investments in obsolete technology are worth.
- derefr 8y ago
  > to want to pay Ford what Ford imagines its existing investments in obsolete technology are worth. Why would they do that? I didn't mean to suggest a regular acquisition (i.e. company X buys out company Y's outstanding shares to become the majority shareholder); I meant to suggest that these companies will likely enter Chapter 11 Bankruptcy, followed by an acquisition by a PE firm that parts the company out and sells its assets to other firms, where the brand of the old company is one of those assets, and the assembly lines are another, and the same company might want to acquire both, or just one. Keep in mind, also, that when you buy a factory, you aren't buying the technology that runs the factory. You'd strip that out and replace it. No, you're buying the real estate, the buildings themselves, the central location close to shipping. (Which might not even be legally allowed to exist due to current zoning laws for the region, but is only grandfathered in or uniquely lobbied in to "protect local jobs.") And you're buying the pre-established arrangements with logistics providers (ports, over-land carriers, etc.) to get cars from that factory to destination cities; and the pre-established arrangements with suppliers to get regularly-scheduled shipments of raw materials like aluminum alloys, thermoplastics, minerals and lacquers to mix paint from, etc. to the factory. It's the same reason that, say, Target wanted to acquire Zellers in Canada. There was nothing of value in any given Zellers store or warehouse; what was valuable was the real-estate and the logistics pipeline connecting the stores to the warehouses. (Target failed in Canada, but that was because they began leasing the real estate long before they were ready to begin operating the stores, just to ensure nobody else jumped on the deal. So they started with a giant debt from months of paying rent.)
slededit 8y ago
The Ford family has 40% voting rights regardless of how many common shares are sold. No buyer would ever accept that - and the family would never give up their preferred shares. Your scenario may happen with another car company, but not Ford. They would have to go bankrupt first.

pkulak 8y ago

> Therefore VW can make electric cars, but its dealers will try to not sell them. I think Audi sees this coming just as much as you do. I reserved the E-Tron a few months ago and my local dealer had _no_ idea what was going on. They told me they would be able to order one for me next year, even as I was making the order directly with Audi USA online. When I put my dealer's address in as a the pick-up location, the dealer emailed me the next day legitimately surprised to see the car added to their order system. Audi seems to have no plans to stock any of these at dealers, but instead ship them out as they are configured directly by customers, very much like Tesla does it.

rconti 8y ago
I think that's just VAG being confused. I "ordered" a Golf R in 2015 and the delivery estimate was "sometime in the next 3 months" until literally the day it showed up at the dealer.
- RickJWagner 8y ago
  Nice pick! Golf R was on my short list last year. (I went with a used Lexus IS F, finally.)
janesvilleseo 8y ago
It may be that they are preferring not to stock them at dealers precisely because the dealer has no motivation to sell it. I believe this has happened to other models with other brands, but it’s escapimg me at the moment which ones. However a quick search pulls this up. https://www.digitaltrends.com/cool-tech/dealerships-dismiss-electric-vehicles/ https://www.digitaltrends.com/cool-tech/dealerships-dismiss-...

outworlder 8y ago

> However if they sell an electric car they are going to see that car less often. This is something many people don't get. There are far, far less parts (moving ones even) in EVs. Things like spark plugs(and the cables), fuel injectors, filters, alternators, fuel pumps, the myriad of belts and pulleys, valves. They don't even have a crankshaft. Or a clutch. Or much of a transmission for that matter. Power steering is generally electric too (no fluid or pumps there either), as is climate control. Even radiators are not usually present (maybe in the batteries, used far less often, mostly when charging). It does have a bunch more electronics, all solid state. Even the normal lead acid 12v battery they all have lasts longer, as there is no starter motor to pull lots of amps at once (they are also more gently topped off). Parts that cannot exist cannot fail, and cannot be charged. Were not for the battery degradation ghost, people would be switching in droves already. But they are familiar with laptop batteries, and they think car batteries degrade the same way. If the day comes where you can just drive to an autozone or the like, give them your old battery and drive off with a new one at a reasonable price, that's when things will suddenly shift.

toomuchtodo 8y ago
The brakes on an EV will last the life of the vehicle due to aggressive regeneration (even our Camry Hybrid, with almost 100k miles on it when it was totaled by a negligent driver, was still on the factory pads). Also, the brake system can be electrically actuated instead of with a hydraulic system. The 12v battery on Tesla vehicles is actually a deep cycle Li-ion battery in a traditional form factor (not lead acid); it's used for low voltage loads, and charged from the high voltage traction battery. There is a shock ahead for the entire automotive supply chain. It is important we manage the human impact appropriately.
- outworlder 8y ago
  Good point. The Leaf also has oversized brake pads for when there is no regenerative breaking (battery is close to full).
- amelius 8y ago
  > It is important we manage the human impact appropriately. And the chances of that actually happening?

pacificmint 8y ago

> However if they sell an electric car they are going to see that car less often. That's of course a direct result of the current (imo broken) model where the dealers depend mostly on maintenance revenue. That means they make more money every time the product they sold you fails in some way. This sets up conflicting incentives for car manufacturers as well, where their revenue, or that of their partners, would go down if the car becomes too reliable. I believe Tesla had at some point stated that they wanted service to not be a profit center for them, which as a customer is something I'd really appreciate.

justtopost 8y ago

This is a fallacy. Most car failures are not the engine. Evs still have brakes, suspension, electronics, steering, and all manner of plastic bits to wear out and fail. I would like to see any independent assessment showing evs have any better maint cost after the 7year honeymoon period all cars have with minimal repairs..

Forbo 8y ago
Brakes certainly last longer due to regenerative braking. While there are still many parts that will need service, there are significantly fewer than a comparable ICE vehicle.
btilly 8y ago
The engine isn't the only component of this. ICE car maintenance is often required due to things like needed oil changes, broken timing belts, transmission failures, and other things that do not exist in EVs. When it comes to the fiddly electronic bits, ICE cars actually have more of those. For example if your mechanic tells you that your Mass Air Flow Sensor needs replacing, you're about to have a bad day. But that part doesn't exist in an EV because it doesn't need to regulate the flow of air to the engine. Some parts that both have also fail less on an EV. For example out of your list, the brakes get approximately 1/3 of the use because most braking is done through regenerative braking. I am aware of one part that fails more. EV tires need more frequent replacement because EVs generate more torque, particularly at low speeds. While drivers love the fast pickup, your tires don't. As for independent assessments, attempts like https://www.sciencedirect.com/science/article/pii/S030626191731526X?via%3Dihub https://www.sciencedirect.com/science/article/pii/S030626191... have been made. Maintenance was less. By enough in some locations to make the actual total cost of ownership less. As real world data accumulates, more and better comparisons will be made. But given the principles of what is involved, it is pretty clear which way the long-term comparison is going to wind up going once electric technology matures and construction costs come down. (The biggest component of which is that batteries are still on their long-term 7% per year cost reduction.)
- PuffinBlue 8y ago

megaman8 8y ago

> However any VW dealer who convinces a customer to buy an ICE car has also sold themselves good odds of a future revenue stream maintaining that car. I don't know about you, but I never ever ever get my car serviced at a dealership unless it's either under warranty or a factory recall (free).

brewdad 8y ago
Perhaps another reason why VW has lengthened their US warranty to 6yrs/72k miles. Certainly Dieselgate forced their hand but there may also be some appeasement to dealers since many new car buyers do the same as you.

Shivetya 8y ago

its not only going to hit the dealer network its going to hit the production side as well. the battery and motors for EVs are much easier to automate production of and in the end are less complex on the side of motor and transmission that those types of plants will go away. Yeah dealers will take a hit but all that unionized manufacturing force will take a severe one as well. dealers are going to have transform somewhat but after seeing the issues with Tesla its not like we don't have a place for dealers (I love my TM3 but damn if some people aren't trapped in repair hell). With EV and the eventuality of self driving cars they could become depots for rentals and such. plus once EVs hit the roads in numbers there is always something to fix, service, or repair. finally. working for a parts supplier I a wondering where my company will be in forty years

sxates 8y ago

As a counter-example, I registered interest in the Jaguar i-Pace and someone from my local dealer immediately called me about it. They let me know when they'd have demo models to drive, and followed up with me several times. I ended up ordering a Tesla, but the Jag dealer was definitely out to sell some EVs!

sizzle 8y ago
Good to hear. What made you go with the Tesla?
- sxates 8y ago
  Lots to like about the Jag, but the Model 3 is cheaper with more range, and comes with other benefits like super chargers and constant updates to the car's software.

rv-de 8y ago

Maybe that's why they fill electric cars to the brim with fancy technology - more breaking points. I'd like an electric car with a battery and that's it - no autonomous driving, no integrated navigation, no intelligent interior climate control - just a battery, a wheel, accelerator pedal and breaks ... :)

gwbas1c 8y ago

That only applies in the US, outside of the US, the car companies own the dealership.