The media still talk about the competition coming, well perhaps not quite as much as they used to,
and certainly less of the Tesla killers coming, well either way the supposed competition is
more or less here now. Anyway, this supposed competition were auto companies. The legacy
autos that have been making internal combustion for over 100 years or so. These companies know
what they are doing, and know how to make cars, or at least was the belief portrayed by the media.
It was assumed that because these companies are so good at making vehicles that take private
passengers from A to B, with internal combustion engines, then it would be assumed they can make
great vehicles just as much so, only using batteries too. So this competition is here,
yet Tesla's products have a longer waiting list than ever. And whenever we analyze anything,
about the legacy autos having any real chance at competing, you just can't ignore the fact,
that the incumbent auto makers just can't get enough battery supplies.
They give us these numbers, like GM saying 1 million EVs by 2025, and investing
$35 billion into EVs. But they will be offering 30 models, which is a lot more than Tesla.
But only 1 million sales total, and by 2025, and then it probably wont be by that date either. And
if they have to invest $35 billion into achieving just 1 million cars, then they clearly don't have
the slightest clue as to what they are doing. That is an insane amount of money. It will also be very
difficult recoup back especially if these products they are selling it don't make any profit.
Yea, that's one of the major reasons incumbent autos probably cant survive. Too many costs
that associated with their legacy systems that all suffer from heavy diseconomies of scale.
Ford is aiming for similar investments, of around $30 billion too. And likely with a similar number
cars GM are aiming for. In other words GM and Ford, which are obviously likely increasing these
investments for the potential tax credit too, will only have around 1 million EVs a year by 2025,
if everything goes well for them. Tesla will not be far off 1 million in 2021,
and the growth is exponential, especially with their 4680 batteries. Tesla would have possibly
surpassed 5 million cars a year by then. And GM and Ford aim to be fully electric by
2030 and 2035. Which means Tesla should be well above 20 million units by that stage. If half
of those units were for the US, then Tesla would have over a 50% share in total US auto sales.
Anyway, my point is, its going to be slow going for these auto companies due to the batteries.
And its going to be extra slow growing not being able to use the dry slurry technique,
or tab-less battery cells. The dry slurry techniques saves a lot of time, expense, and floor
space in the battery factories, and its better for the environment. Of course it saves in cost too.
And the tab-less design means that the jelly roll it creates curls into a roll and can be cut off
when the desired length has been reached, rather than having to start and stop it
each time if you are using tabs. The legacy autos are basically trying to catch up with Giga Nevada.
Except they haven't even reached the Model S level technology yet, let alone Model 3, or 4680s.
Anyway, this is why GM and Ford are only going to producing around a million EVs by
2025. And there isnt really anything they can do to hasten that time. I mean look how long
it took Tesla to reach a million cars a year, oh wait, Tesla still haven't even achieved that yet,
even with all the resources at their disposal. Sure Tesla has only recently become a
multi-100-billion dollar company, but before that it was floating around $50 billion for some time,
which isn't that small a company valuation either. Tesla was still valued more than Ford at the time,
despite doing very low annual units. In other words, Tesla had about the same valuation then,
as Ford does today, and it is still taking Tesla this long to reach one million units a year.
Yet somehow GM and Ford think that they can achieve that in 3 and half years. You can't simply
throw money at the problem and expect to catch up, it takes a long time. There is a natural growth.
Just as Warren Buffet says You can't produce a baby in one month
by getting nine women pregnant. Which I think is a completely apt sentiment to this scenario. Ok, so
Ford and GM are aiming to increase their rate of EV production at a much more rapid rate than Tesla
did. And maybe they can, I mean they already have tons of factories at the go, ready to produce.
Yup, this is true. Except remember, its about the batteries in the first place.
Now Tesla and Panasonic's giga Nevada was still larger than these new GM and Ford Factories.
Now this building was built 5 years ago now. Built, finished, complete, as in making batteries,
5 years ago, and Tesla are still not at 1 million cars a year. Yet somehow GM and Ford think that
just in 3.5 years, while their factories have not even completed construction yet,
that they will be able to manufacturer over one million EVs. Sorry, I had to mute my
mic there for a second there, until I stopped laughing. Look, I do not think this is going to
be possible. I think that all EV manufacturers are going to come to the same realization.
The incumbent autos seem to be following this direction, as its the only way they can
guarantee a working battery. And if they get the technology right, it wont be far off a model 3.
Well probably quite similar to what they are getting from a Ford Mach E. Which is probably good
enough for most drivers, except of course you dont have the charging network that Tesla offers, and
all the other associated Tesla extras. Ford should also work on getting their LFP technology sorted,
then they could at least become more affordable, but I think they would struggle to get over 200
miles of range. It's going to be a struggle. That's why they are stuck with NMC chemistry,
similar to what the giga Nevada 2170 is producing, they will still use cobalt too. At battery day
Tesla said they simply couldn't scale up to the masses, if they had to use giganevada and
2170 style battery factories. In other words, the legacy autos cant really scale up significantly.
And remember Tesla are also achieving what they have now with a lot of help from CATL,
Panasonic and LG Energy. The three largest battery manufacturers. Yet Tesla still haven't scaled to
one million units a year, not even 1/4 million in a quarter yet either. Yet without the help of all
these other battery suppliers, like Tesla has had, and their own larger battery facility, GM
and Ford think they can scale to a million units a year by 2025. Well perhaps battery
supply chains are better these days, and we have more engineers specializing in the industry too,
so perhaps there are some overall economies of scale occurring naturally
in the industry to facilitate GM and Fords EV ramp up. Equally whatever resources are available
have just become into even higher demand, implying that they may actually be harder
and more expensive to get a hold of, as suddenly every auto maker is seeking the same resources.
And of course this is just production numbers. They would equally like to hope that there is
enough demand for their EVs too. Unlike Tesla, the other auto companies do not sell every car they
make. So even if Ford did reach a production level of a million EV units a year, that doesn't even
guarantee that they will all sell. Ok, if they get a great tax credit, then I would say there
is a good chance they will sell, as they will be priced competitively against their ICE cars.
Except that means they have cannibalized their ICE industry as a result. Oh legacy autos, you
sure are in a mess. I really struggle to find any hope for your survival. But at the same time, I am
happy for us all to move on. Your days are surely numbered. Thanks for listening, please hit the
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