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I think comparing the switch from gas to EV to internet/mobile phones is quite the stretch. There's nothing really new or different about an EV. The car market

I think comparing the switch from gas to EV to internet/mobile phones is quite the stretch. There's nothing really new or different about an EV. The car market isn't going to experience several orders of magnitude growth spurred by EVs. Most buyers will compare across engine types. So to answer your question >If you were a big auto company, what wouldn't you spend to not lose out on that wave I'd spend nothing until the EV I can produce is expected to have profit margins on the order of my other vehicles in that class, discounted at maybe 30-50% of the development cost. Note that brand recognition/green efforts/etc gets wrapped up into the profit margin calculation. The nail in the coffin here is that early movers get penalized unless they can effectively vertically integrate all the tech used for EVs (e.g. Tesla with their battery specialization). If you want to bet on the battery tech getting commoditized, its in your interest to wait as long as possible.

martythemaniak 8y ago
The problem with this view is that it assumes the EV/ICE differences are a simple swap, akin to moving from a I4 to a V6. The switch to an EV drivetrain has lead to a much more through redesign of cars and none of the first gen batteries-bolted-onto-existing-chasis type EVs were particularly good. That is, if you don't get on the EV wave early and just wait for cheap batteries, you will be years behind your competitors in producing a properly thought-out EV and will be facing some very tough times.
- ams6110 8y ago
  Apple would disagree. They were not first to market with music players, or mobile phones. They looked at what others did, saw their opening, and when they were ready they came in and absolutely dominated the market with products that had been designed with the benefit of knowing where others had made mistakes.
  - Brakenshire 8y ago
    That's what VW is attempting to do with the MEB platform.
  - r00fus 8y ago
    They monopsonized the supply chain with their decades of supply chain expertise. There was a lot of mechanics involved in releasing the iPod - e.g. 1.8" hard drive and later flash memory. Tesla is the Apple here, they're already vertically integrating.
    - cptskippy 8y ago
      The hard drive wasn't an Apple innovation. Neither was the battery tech. They brought the wheel interface and were willing to gamble that people would pay a premium for a bunch of very expensive components that resulted in a comparatively small player. The closest thing to an iPod at the time it launched was the Rio players which were flash based and had capacities in tens of megabytes or the Creative HDD players which were battery hogs the size of 2 CD players stacked on top.
      - prepend 8y ago
        Creative had the Nomad Jukebox [0] at 6GB. It used a larger drive and was about the size of a discman, not double. The battery was awesome and lasted all day. The iPod was more expensive, but they ended up with being able to both buy and rip music. The size helped using the new smaller drive. But they took off because of their music, I think. [0] https://en.wikipedia.org/wiki/Creative_NOMAD https://en.wikipedia.org/wiki/Creative_NOMAD
        cptskippy 8y ago
        The Nomad Jukebox is 1.5 inches thick, in 2001 most portable CD players were under an inch thick and there were a few competing for thinnest with the IO-Data HyperHyde being .55 inches thick. The battery in the Nomad at the time of the iPod launch was four standard AA cells, and you're right that they could last all day if you used Alkalines. You could use NiMH batteries but they were pretty awful; their main selling point in 2002ish was that they had no memory effect compared to NiCADs; not that they lasted as long as Alkalines. The iPod launched a full 2 years before the iTunes Music store. At launch you could not buy music for the iPod and it still sold like hotcakes. The iPod had a high capacity rechargeable battery, FireWire (400mbps) and could fit in the front pocket of a pair of jeans. The Nomad Jukebox was the closest thing at the time and it used four AA batteries, USB 1.1 (12mbs) and was praised for passing the jacket test (e.g. fitting in an oversized jacket pocket).
  - cptskippy 8y ago
    The iPod is decidedly and dramatically simpler than an automobile in every way. The hardest part of the iPod was a commodity part the purchased (e.g. HDD). What Apple did correctly was determine that the market would pay a lot more for an MP3 player if it was all around better than the competition. Then they kept up momentum by iterating and improving their design before the competition had a chance to respond. In the audio player market, MP3 Players had significant advantages over CDs and other mediums that drove rapid adoption and since Apple was best in class they quickly developed a monopoly. The Car market is very different, EVs do not have significant advantages over ICE and there is not rapid adoption so it's hard for a monopoly to develop. EVs currently have range-over-time limitations compared to ICE as well as much lower margins with much higher costs. Those limitations are being addressed but until they are, there's only so much makers can do to tempt buyers.
    - novaRom 8y ago
      >> EVs do not have significant advantages over ICE Disagree. Advantage 1: EV can be charged virtually everywhere with access to electricity (like parking lots), no gas stations, no gas transportation necessary. Advantage 2: low maintenance costs. Electrically powered engines are simpler with fewer mechanical elements Advantage 3: EVs are very quiet, so lower noise pollution Some disadvantages are short driving range and long recharge time.
      - roland35 8y ago
        A few of those advantages are limited somewhat: 1) Electricity access is plentiful but you need high power if you want to charge in a reasonable timeframe 2) There are fewer moving parts but there is one part that degrades every time you use it, the battery That said I really want to get a cheap used EV as my next car!
      - navigatesol 8y ago
        >no gas stations, no gas transportation necessary. In many parts of the world, being able to transport fuel to where it's needed is a huge advantage. We are a long way from a global electricity infrastructure.
  - Retric 8y ago
    The iPad won via software not hardware. More importantly it was keeping everything working from low level firmware to UI seamlessly. In cars software is far more than the infotainment system. Consider, to increase charge speeds Tesla reolized you should use battery power to heat the batteries as you drive to the charging station. Thinking just in terms of swapping a gas tank for batteries is not going to result in that kind of integration. Tesla is also looking to integrate super capacitors for regenerative breaking and peak acceleration. Again, that’s a step up from tossing a larger battery pack into a Prius and calling it a day.
  - leesec 8y ago
    Phones are a lot easier to manufacture than cars. There are so many more factors that need to get straightened out in the process.
  - scythe 8y ago
    Apple was the (second) mover in the currently-dominant space of smartphones with capacitive touch screens, which has also been their most profitable division (IIRC) for most of the past decade. (LG (Prada) beat them to it by a few months but botched the marketing and software.) To wit, Wikipedia's "multi-touch in popular culture" section is divided into "before 2007" and "after 2007": before 2007, multi-touch was the exclusive domain of futuristic sci-fi: https://en.wikipedia.org/wiki/Multi-touch#Popular_culture https://en.wikipedia.org/wiki/Multi-touch#Popular_culture
  - dv_dt 8y ago
    Tesla is already past the Apple point of releasing the iPod. Tesla basically recognized that a range of tech across the tech tree needed for EVs was sufficiently mature that they could produce a systemic leap in EV cars as a system (all while the individual elements of the system were sufficiently mature as to get to a better whole). Tesla cars are basically the iPhone, while the big automakers are scrambling a bit to make their iPhone clones.
- ghaff 8y ago
  A huge amount of the invention and development in the auto industry happens at the suppliers to the auto makers. It’s not like a car maker needs to start from scratch to design an EV.
  - Retric 8y ago
    Companies are not spending this money because they feel like it. EV drivetrains have a lot going for them. As battery prices drop and infrastructure improves they are only going to get more compelling over time. In 20 years their could be several suppliers ready to help any car company that survives that long. But, surviving to that point without a high quality EV is going to be difficult.
- Misdicorl 8y ago
  This seems totally backwards to me. New entrants get to learn from all the mistakes every other entrant has made without any of the costs. New car makers aren't at a 120 year disadvantage relative to Ford.
  - WalterBright 8y ago
    Waiting may mean you face a patent stockade.
- solarkraft 8y ago
  > and none of the first gen batteries-bolted-onto-existing-chasis type EVs were particularly good The e-Golf was very well received. It's designed for both propulsion systems. And why not? Sure, skateboard designs are better over all, but electric tech is flexible.
r00fus 8y ago
> I think comparing the switch from gas to EV to internet/mobile phones is quite the stretch. There's nothing really new or different about an EV. That's a bit hyperbolic. EVs dont require gas. This is a huge seismic shift in the way auto and oil industries were tied at the hip and probably why Tesla is able to disrupt so heavily. Un-swearing allegiance to Big Oil is the huge gamble. A working commodity market for things like batteries may or may not happen. You could get a vertical integrator (or several) who monopsonize the key parts. Then what? Gas cars will still be sold but the threat of legislation is huge. That market could dry up much faster than expected. The best bet wouldn't be to stay out of the market, but to dabble and know when to strike hard so you can edge out all your laggard competitors.
- Misdicorl 8y ago
  >> EVs dont require gas. This is a huge seismic shift Not really. >> Un-swearing allegiance to Big Oil is the huge gamble. This is silly. >> A working commodity market for things like batteries may or may not happen. You could get a vertical integrator (or several) who monopsonize the key parts. Then what? The batter market will be much larger than cars. I think vertical integration would be the surprise result
  - r00fus 8y ago
    Your dismissals have no case. My case is Tesla.
    - Misdicorl 8y ago
      Tesla only shows one of two things 1) Their profit margins are significantly lower than what traditional manufacturers are willing to sustain for the luxury car market 2) The traditional manufacturers were bad at calculating the profit margin of a luxury EV
      - dv_dt 8y ago
        Isn't this how competitive markets supposed to work? With entrants competing to offer lower prices to consumers?
michaelbuckbee 8y ago
Rephrasing the question somewhat: Who has the bigger advantage? The car company that spends the most and comes out first? Or The car company that waits and is the last to really move to PEV from ICE?
- Misdicorl 8y ago
  Almost certainly the answer will be somewhere in the middle. A company that can do the shift after most of the hard and expensive work in battery tech has been completed but before their brand is completely ruined and everyone thinks of them as dinosaurs.
dv_dt 8y ago
> I'd spend nothing until the EV I can produce is expected to have profit margins on the order of my other vehicles in that class I think posing the question as a ROI calculation misses context that going forward at some level of risk is how you get the data to model a much better profitability operating point. Until you produce a few models of EV yourself, how can you know your cost estimate is anywhere near accurate? Add in the uncertainty in the speed of drop in the cost of central components like the batteries and I suspect the uncertainty is sufficiently high to surround both sides of the threshhold where if you set up for a go, you don't know if it will be more or less profitable and the ICE equivalent. However, if you don't start now, and your competitors do start down the path, then you might end up with a ICE line of cars where your competitors are posting costs well below yours and eating your market share.
- Gibbon1 8y ago
  > I think posing the question as a ROI calculation Posing it as brain dead ROI calculation like an academic economist would just misses pretty much everything about bringing a new design to market and why companies do things. The conundrum is. You never make money on a new blue printed design. You make money reselling tweaks of old stuff. But the reality that you need to innovate or eventually go out of business. Never innovating and eventually going out of business is a valid strategy. That's basically the hedge fund strategy. But companies that aren't controlled by capitalists never do that because there is nothing in it for the people that run the company. Since that's VW they'll they chose to lose money innovating. So the company stays in business and they keep their jobs and status.
  - dv_dt 8y ago
    > But companies that aren't controlled by capitalists never do that I would say that there are a range of companies that are to different mixes of being ruled by accounting vs ruled by innovation. Ironically, I would say the companies most ruled by accounting are the ones with the best foundational resources to make targeted innovation bets (but don't because the ROI doesn't pencil out...).
  - Misdicorl 8y ago

martythemaniak 8y ago

The problem with this view is that it assumes the EV/ICE differences are a simple swap, akin to moving from a I4 to a V6. The switch to an EV drivetrain has lead to a much more through redesign of cars and none of the first gen batteries-bolted-onto-existing-chasis type EVs were particularly good. That is, if you don't get on the EV wave early and just wait for cheap batteries, you will be years behind your competitors in producing a properly thought-out EV and will be facing some very tough times.

ams6110 8y ago
Apple would disagree. They were not first to market with music players, or mobile phones. They looked at what others did, saw their opening, and when they were ready they came in and absolutely dominated the market with products that had been designed with the benefit of knowing where others had made mistakes.
- Brakenshire 8y ago
  That's what VW is attempting to do with the MEB platform.
- r00fus 8y ago
  They monopsonized the supply chain with their decades of supply chain expertise. There was a lot of mechanics involved in releasing the iPod - e.g. 1.8" hard drive and later flash memory. Tesla is the Apple here, they're already vertically integrating.
  - cptskippy 8y ago
    The hard drive wasn't an Apple innovation. Neither was the battery tech. They brought the wheel interface and were willing to gamble that people would pay a premium for a bunch of very expensive components that resulted in a comparatively small player. The closest thing to an iPod at the time it launched was the Rio players which were flash based and had capacities in tens of megabytes or the Creative HDD players which were battery hogs the size of 2 CD players stacked on top.
    - prepend 8y ago
      Creative had the Nomad Jukebox [0] at 6GB. It used a larger drive and was about the size of a discman, not double. The battery was awesome and lasted all day. The iPod was more expensive, but they ended up with being able to both buy and rip music. The size helped using the new smaller drive. But they took off because of their music, I think. [0] https://en.wikipedia.org/wiki/Creative_NOMAD https://en.wikipedia.org/wiki/Creative_NOMAD
      - cptskippy 8y ago
        The Nomad Jukebox is 1.5 inches thick, in 2001 most portable CD players were under an inch thick and there were a few competing for thinnest with the IO-Data HyperHyde being .55 inches thick. The battery in the Nomad at the time of the iPod launch was four standard AA cells, and you're right that they could last all day if you used Alkalines. You could use NiMH batteries but they were pretty awful; their main selling point in 2002ish was that they had no memory effect compared to NiCADs; not that they lasted as long as Alkalines. The iPod launched a full 2 years before the iTunes Music store. At launch you could not buy music for the iPod and it still sold like hotcakes. The iPod had a high capacity rechargeable battery, FireWire (400mbps) and could fit in the front pocket of a pair of jeans. The Nomad Jukebox was the closest thing at the time and it used four AA batteries, USB 1.1 (12mbs) and was praised for passing the jacket test (e.g. fitting in an oversized jacket pocket).
- cptskippy 8y ago
  The iPod is decidedly and dramatically simpler than an automobile in every way. The hardest part of the iPod was a commodity part the purchased (e.g. HDD). What Apple did correctly was determine that the market would pay a lot more for an MP3 player if it was all around better than the competition. Then they kept up momentum by iterating and improving their design before the competition had a chance to respond. In the audio player market, MP3 Players had significant advantages over CDs and other mediums that drove rapid adoption and since Apple was best in class they quickly developed a monopoly. The Car market is very different, EVs do not have significant advantages over ICE and there is not rapid adoption so it's hard for a monopoly to develop. EVs currently have range-over-time limitations compared to ICE as well as much lower margins with much higher costs. Those limitations are being addressed but until they are, there's only so much makers can do to tempt buyers.
  - novaRom 8y ago
    >> EVs do not have significant advantages over ICE Disagree. Advantage 1: EV can be charged virtually everywhere with access to electricity (like parking lots), no gas stations, no gas transportation necessary. Advantage 2: low maintenance costs. Electrically powered engines are simpler with fewer mechanical elements Advantage 3: EVs are very quiet, so lower noise pollution Some disadvantages are short driving range and long recharge time.
    - roland35 8y ago
      A few of those advantages are limited somewhat: 1) Electricity access is plentiful but you need high power if you want to charge in a reasonable timeframe 2) There are fewer moving parts but there is one part that degrades every time you use it, the battery That said I really want to get a cheap used EV as my next car!
    - navigatesol 8y ago
      >no gas stations, no gas transportation necessary. In many parts of the world, being able to transport fuel to where it's needed is a huge advantage. We are a long way from a global electricity infrastructure.
- Retric 8y ago
  The iPad won via software not hardware. More importantly it was keeping everything working from low level firmware to UI seamlessly. In cars software is far more than the infotainment system. Consider, to increase charge speeds Tesla reolized you should use battery power to heat the batteries as you drive to the charging station. Thinking just in terms of swapping a gas tank for batteries is not going to result in that kind of integration. Tesla is also looking to integrate super capacitors for regenerative breaking and peak acceleration. Again, that’s a step up from tossing a larger battery pack into a Prius and calling it a day.
- leesec 8y ago
  Phones are a lot easier to manufacture than cars. There are so many more factors that need to get straightened out in the process.
- scythe 8y ago
  Apple was the (second) mover in the currently-dominant space of smartphones with capacitive touch screens, which has also been their most profitable division (IIRC) for most of the past decade. (LG (Prada) beat them to it by a few months but botched the marketing and software.) To wit, Wikipedia's "multi-touch in popular culture" section is divided into "before 2007" and "after 2007": before 2007, multi-touch was the exclusive domain of futuristic sci-fi: https://en.wikipedia.org/wiki/Multi-touch#Popular_culture https://en.wikipedia.org/wiki/Multi-touch#Popular_culture
- dv_dt 8y ago
  Tesla is already past the Apple point of releasing the iPod. Tesla basically recognized that a range of tech across the tech tree needed for EVs was sufficiently mature that they could produce a systemic leap in EV cars as a system (all while the individual elements of the system were sufficiently mature as to get to a better whole). Tesla cars are basically the iPhone, while the big automakers are scrambling a bit to make their iPhone clones.
ghaff 8y ago
A huge amount of the invention and development in the auto industry happens at the suppliers to the auto makers. It’s not like a car maker needs to start from scratch to design an EV.
- Retric 8y ago
  Companies are not spending this money because they feel like it. EV drivetrains have a lot going for them. As battery prices drop and infrastructure improves they are only going to get more compelling over time. In 20 years their could be several suppliers ready to help any car company that survives that long. But, surviving to that point without a high quality EV is going to be difficult.
Misdicorl 8y ago
This seems totally backwards to me. New entrants get to learn from all the mistakes every other entrant has made without any of the costs. New car makers aren't at a 120 year disadvantage relative to Ford.
- WalterBright 8y ago
  Waiting may mean you face a patent stockade.
solarkraft 8y ago
> and none of the first gen batteries-bolted-onto-existing-chasis type EVs were particularly good The e-Golf was very well received. It's designed for both propulsion systems. And why not? Sure, skateboard designs are better over all, but electric tech is flexible.

r00fus 8y ago

> I think comparing the switch from gas to EV to internet/mobile phones is quite the stretch. There's nothing really new or different about an EV. That's a bit hyperbolic. EVs dont require gas. This is a huge seismic shift in the way auto and oil industries were tied at the hip and probably why Tesla is able to disrupt so heavily. Un-swearing allegiance to Big Oil is the huge gamble. A working commodity market for things like batteries may or may not happen. You could get a vertical integrator (or several) who monopsonize the key parts. Then what? Gas cars will still be sold but the threat of legislation is huge. That market could dry up much faster than expected. The best bet wouldn't be to stay out of the market, but to dabble and know when to strike hard so you can edge out all your laggard competitors.

Misdicorl 8y ago
>> EVs dont require gas. This is a huge seismic shift Not really. >> Un-swearing allegiance to Big Oil is the huge gamble. This is silly. >> A working commodity market for things like batteries may or may not happen. You could get a vertical integrator (or several) who monopsonize the key parts. Then what? The batter market will be much larger than cars. I think vertical integration would be the surprise result
- r00fus 8y ago
  Your dismissals have no case. My case is Tesla.
  - Misdicorl 8y ago
    Tesla only shows one of two things 1) Their profit margins are significantly lower than what traditional manufacturers are willing to sustain for the luxury car market 2) The traditional manufacturers were bad at calculating the profit margin of a luxury EV
    - dv_dt 8y ago
      Isn't this how competitive markets supposed to work? With entrants competing to offer lower prices to consumers?

michaelbuckbee 8y ago

Rephrasing the question somewhat: Who has the bigger advantage? The car company that spends the most and comes out first? Or The car company that waits and is the last to really move to PEV from ICE?

Misdicorl 8y ago
Almost certainly the answer will be somewhere in the middle. A company that can do the shift after most of the hard and expensive work in battery tech has been completed but before their brand is completely ruined and everyone thinks of them as dinosaurs.

dv_dt 8y ago

> I'd spend nothing until the EV I can produce is expected to have profit margins on the order of my other vehicles in that class I think posing the question as a ROI calculation misses context that going forward at some level of risk is how you get the data to model a much better profitability operating point. Until you produce a few models of EV yourself, how can you know your cost estimate is anywhere near accurate? Add in the uncertainty in the speed of drop in the cost of central components like the batteries and I suspect the uncertainty is sufficiently high to surround both sides of the threshhold where if you set up for a go, you don't know if it will be more or less profitable and the ICE equivalent. However, if you don't start now, and your competitors do start down the path, then you might end up with a ICE line of cars where your competitors are posting costs well below yours and eating your market share.

Gibbon1 8y ago
> I think posing the question as a ROI calculation Posing it as brain dead ROI calculation like an academic economist would just misses pretty much everything about bringing a new design to market and why companies do things. The conundrum is. You never make money on a new blue printed design. You make money reselling tweaks of old stuff. But the reality that you need to innovate or eventually go out of business. Never innovating and eventually going out of business is a valid strategy. That's basically the hedge fund strategy. But companies that aren't controlled by capitalists never do that because there is nothing in it for the people that run the company. Since that's VW they'll they chose to lose money innovating. So the company stays in business and they keep their jobs and status.
- dv_dt 8y ago
  > But companies that aren't controlled by capitalists never do that I would say that there are a range of companies that are to different mixes of being ruled by accounting vs ruled by innovation. Ironically, I would say the companies most ruled by accounting are the ones with the best foundational resources to make targeted innovation bets (but don't because the ROI doesn't pencil out...).
- Misdicorl 8y ago