AAH #681 – Peak Auto And The Problems That Presents
Feb 9, 2024
auto_awesome
Industry analysts Michael Robinet, David Welch, and Tu Le join host John McElroy to discuss the challenges and strategies in the electric vehicle industry, the improvements needed in charging infrastructure, the potential of plug-in hybrid electric vehicles (PHEVs), and the impact of financial decisions on GM and the Chinese automotive market.
Ford has developed a low-cost EV platform to address their struggles with building profitable sedans and small cars.
Software integration issues and the need for reliable charging infrastructure are challenges in the transition to EVs.
The development of autonomous vehicles and robo-taxi services presents opportunities and challenges, with factors such as insurance costs and consumer acceptance playing crucial roles.
Deep dives
Ford's Secret Skunk Works Developing Low-Cost EV Platform
During an analyst's talk, Jim Farley revealed Ford's secret skunk works project, which has developed an all-new low-cost EV platform. This platform aims to address Ford's historical struggle with building, selling, and marketing profitable sedans and small cars. Farley referred to it as the best EV engineering team in the world, suggesting that Ford has assembled top talent from around the globe. The success of this project hinges on achieving profitability within 12 months of launch, which would be a significant achievement for Ford in the EV market.
Challenges Faced by Automakers in EV Transition
The transition to EVs poses challenges for automakers, including software integration issues and the need to build reliable and scalable charging infrastructure. While automakers strive to develop their own software, the shortage of software engineering expertise and the complexity of in-vehicle communication systems remain obstacles. Additionally, the availability and reliability of charging stations, both along highways and at destinations, are major concerns for EV adoption. The need for increased scale, improved battery technology, and reduced capital costs are critical factors in achieving profitability in the EV market.
Robo-Taxi Market Outlook and Concerns
The development of autonomous vehicles and robo-taxi services presents both opportunities and challenges. Despite the potential for significantly reducing accidents and saving lives, the business model and profitability of robo-taxi companies remain uncertain. Insurance costs, data security, software reliability, and consumer acceptance all play vital roles in determining the success of robo-taxi services. The ability of automakers to offer seamless user experiences, leverage services revenue, and demonstrate profitability will be crucial in gaining a competitive edge. The race between US and Chinese companies in the autonomous vehicle space adds additional complexity to the market dynamics.
Challenges with EVs and Software Integration
The podcast episode delves into the challenges faced by electric vehicle (EV) manufacturers, particularly in relation to software integration. It highlights the importance of a closed system approach, as seen in Apple's technology, which seamlessly connects Apple devices and services. On the other hand, companies like Microsoft and Dell face difficulties when it comes to troubleshooting errors in their software, which involves different parties and ecosystems. The episode emphasizes that the bugs and issues arising from software integration in EVs can be particularly complex and disruptive, especially when dealing with third-party suppliers and untested systems.
Warranty Concerns and Costs of EV Repair
Another key point discussed in the podcast is the impact of repair costs and warranty accruals on electric vehicle manufacturers. The episode highlights the initial misconception that EVs would be cheaper to repair, attributing this belief to the immaturity of the EV supply chain. In reality, repairs for EVs can be more expensive due to limited availability of parts, higher repair costs, and challenges in charging infrastructure. The podcast also mentions the issues faced by rental car companies like Hertz, which underestimated repair costs and struggled to find appropriate charging infrastructure for their electric vehicle fleets. The podcast suggests that these challenges highlight the need for a period of adjustment and improvement in the EV industry.
TOPIC: With the EV slowdown, PHEVs could look more attractive PANEL: Michael Robinet, S and P Global; David Welch, Bloomberg; Tu Le, Sino Auto Insights; John McElroy, Autoline.tv
Remember Everything You Learn from Podcasts
Save insights instantly, chat with episodes, and build lasting knowledge - all powered by AI.
