March 22nd, 2020 by Maarten Vinkhuyzen
Travelling widens your view of the world. These last few months, in the midst of auto industry conferences and travel, I have suddenly been encountering situations in the auto world that really open my eyes.
On that topic, I must admit that I am shocked by the level of ignorance of the automotive industry. The industry press, automotive press, and financial press that follow the auto industry is locked in an echo chamber that is really isolated from the outside world.
The concept of an echo chamber is well known to many of us, but of course not something we succumb to. Here at the lavish penthouse gardens on top of CleanTechnica World Headquarters, where we are entertained by the wisdom of our Zen Master Steve Hanley, we have a wide view of the world beneath us. Being this privileged, we sometimes forget that the people tolling away at the offices of their corporations down below lack this open understanding of the world. Sometimes we have to descend to another plane to discover this.
What I encountered that opened my eyes to the automotive industry’s illogical echo chamber were three automotive press events. First, there was Renault’s press preview for the cancelled Geneva International Motor Show in Paris. That was followed by the presentation of the 2020 European Car of the Year. Last but not least was the press conference call with Carlos Tavares, CEO of Peugeot. It dawned on me from listening to or reading about these that, counter to what some may believe, we at CleanTechnica Towers are not the only ones living in an echo chamber.
The three eye-openers
Treating the 2030 vision of a shapeshifting concept car, aptly named MORPHOZ, as the most important news from Renault this year, those journos and managers made me think they were dreaming, safe in the arms of Morpheus. It seemed they were not aware of the way the car market was shifting away from what they knew, shifting into a completely new electric world.
Last year’s and this year’s European Car of the Year election made clear that nostalgia for “the real cars” from half a century ago is strong. Learning how to drive these modern electric contraptions is too hard for a portion of the old guard.
Rounding out the wonder, it appears Carlos Tavares thinks he’s still in a different era. His perspective will be corrected by the market in a few months. He did make some right moves — he just didn’t seem to know it. He thought PSA’s new models were for the benefit of some Greenie Addicts. (Does he think they have infiltrated the EU Council and EU Commission as well as the EU Parliament?) PSA needs to sell about 1.5 million fully electric vehicles (BEVs) by 2025 to avoid EU penalties for the CAFE mandate. Despite what Tavares might think, PSA will have no problem reaching that number.
Echo chamber’s financial press corner
The financial press is concerned about investments for new technologies and their influence on profits. They aren’t concerned about coming restructuring, coming because of economic headwinds beside the new technologies. They make no connection between shrinking sales of fossil fuel vehicles (FFV) and growing sales of fully electric vehicles (BEV). Any urgency to be ready for the coming transition is nowhere in sight. The debt positions and the stranded assets on the balance sheets are not mentioned.
The future R&D costs they see are more for autonomy and connected services than the transition to electric driving. It is as if a century ago the development of carbide lamps for coaches was as important as those newly stinking automobiles.
The financial press expects that the speed of the transition will be dictated by the speed at which the OEMs make the new technology available to the market — just like they did with turbos, the introduction of dual-clutch transmissions, and now with (mild) hybrids to lower emissions. They can guide the market’s demand with their communications and advertising.
Echo chamber’s auto press corner
Automotive journalists are a bunch of car nerds. MPVs were trucks, not for luxury use. They were made ridiculous as soccer-mom-shopping-carts until nobody wanted to be found dead within a mile of them. Now we have the SUV/CUV class of cars that are nearly as functional as the despised MPVs and are all the rage. The BEV is getting the same treatment as the MPV, only this time with a different result.
Real cars are low, sleek, fast, have a distinctive sound, rear-wheel drive, manual transmission, and are preferably two-seaters. The skill set and use cases of most drivers are better served with roomy, silent, front-wheel-drive family cars, with cargo space for a lot of luggage to take on weekends and holidays.
Electric cars are dutifully reviewed, and are clearly of no interest to most of them. We saw the surreal results in the last two European Car of the Year elections. In the eyes of many car nerds, that includes the public of car journalists — electric cars are just not real cars. These car writers miss all the fun they have had with another era of cars. They miss the smells, the sounds of revving engines, the vibrations when the engines are at full power.
Echo chamber’s automotive industry corner
The managers of the automotive industry, both from the OEMs and their tier 1, 2, 3, 4, 5 suppliers, know everything about their neck of the woods and are informed by the rest of the automotive industry by the Sunday editions of their local press. An excellent overview of the discussions and opinions in this part of the echo chamber can be found in the yearly KPMG Global Automotive Executive Survey (GAES). That’s a collection of the thoughts of about a thousand managers from all the automotive walks of life.
It is a fascinating view into this part of the echo chamber. As an example, in the 2019 survey that was conducted in 2018, the guess for 2020 powertrain distribution was 18% HFCEV, 21% BEV, 21% PHEV, and 40% ICE with a total volume of 98,53 million. In 2040, the four parts are expected to be about equal with a total production of 134,27 million. I think these 2020 numbers are a mixture of uninformed and not thinking about the real market. Only 44% of the managers are from production companies, the other 56% from IT, financing, regulatory, and other connected parts of the automotive ecosystem.
Fuel cell electric mobility was thought to be the most important topic in 2018, followed by connectivity and digitalization in #2 and battery electric mobility in #3. In 2019, it was connectivity and digitalization at #1, battery electric mobility at #2, and fuel cell electric mobility at #3. While there is the realization that other powertrain technologies are getting a place at the table, there is no notion of a transition of the market from fossil fuel vehicles to fully electric vehicles. It is like adding another energy source to the mix of gasoline, diesel, LPG, CNG, biodiesel, and ethanol to them.
The transition from internal combustion to battery electric is not even on the list of topics. It is not perceived as disruptive as the transition from horse and carriage to automobiles. What is the main topic of thought at CleanTechnica and other EV-nerd websites is only a niche topic at the borders of conscience for the automotive managers. See the results on page 12 of this report.
With this realization, it becomes more understandable that the top brass of the legacy OEM world are a bit out of touch with the world of electric transport and the coming transition.
- Hyundai management thinks that 80,000 BEVs in 2020 are enough to make it the market leader in Europe, while it is actually unlikely that they get a place at the podium with that number. That is only 1.5% of their sales, a totally niche market.
- Renault is looking at hydrogen as a viable alternative for battery electric vehicles. Carlos Ghosn kept telling them that fool cells were not the solution, but he is no longer standing in the way.
- PSA is only selling BEVs to “Green Addicts.” This comment will become a classic, like Sergio Marchionne’s “Please don’t buy our EV. We lose too much on every sale.”
- BMW listened well to the common sense in the echo chamber. 85% of the cars it sells in 2030 will have a tailpipe, and only 30% a plug.
- Nissan is pivoting back to the Japanese doctrine of a hydrogen economy. It is looking how to shed that last vestige of the Ghosn area, the Nissan Leaf. New BEVs will only be compliance cars for Europe and China.
Preaching to the choir
We at CleanTechnica, InsideEVs, Teslarati, Green Car Reports, Charged EV, and dozens of other blogs and online publications are preaching to the choir. We are a refuge where EV nerds can find like-minded souls. While we think we see the future clearly, and in case of doubt can play the latest Tony Seba presentation, the rest of the world, something like 99%, is completely unaware of what is coming.
How can we reach out to those who are unaware? The EV press officers and EV program managers at the legacy carmakers do read CleanTechnica. However, that doesn’t diminish the problem inside their organizations. Any suggestions for helping them out are welcome.
Top photo © Jos Olijve
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