VW, Toyota and GM are dead. You just don’t realize it yet

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You are witnessing history folks. Things don’t change quickly in real life. Much of history is people watching paint dry. When you are older, you can say that you were there when all petrol automakers cratered. When the new blood arose with vicious consequences.

vwgolf

This article is about those consequences. Not about the specifics of the Tesla Model 3. How cool it is. How fast. How handsome. How it’s better than amy high end gas car on the market. It’s better than any car made by any manufacturer in the world. And I’m including million dollar super cars in this calculation.

Automakers were simply caught with their pants down on this one. Years of ripping off consumers has slowly worn away their ability to think. To reason. To realize that a startup could come and wipe them off the map.

Well that time is now. Or at least it’s started. I predict right here, right now that almost all car companies are toast. It’s audacious. Outrageous. I’m telling you what no one else is. Traditional automakers are crumbling. And there is no saving them. They are simply too lost and befuddled and have too much vested interest in the old way. Let’s look at the competition.

VW: Until recently the worlds largest car company. Corrupt to the core. Sold 11,000,000 cars worldwide that pollute up to 40x the legal amount. They simply lost their edge and threw a Hail Mary hoping no one would find out. Well we did. And this formerly awesome company is over. No one wants a VW. They might take one if it was super cheap. That’s who’s looking at new VW’s now. Bargain hunters, K-Mart shoppers, Blue Light Special.

What does VW mark stand for now? It stands for cheating. It stands for polluting. It stands for global warming. Who wants that in their driveway? What kind of salesmen would want to be seen driving to an appointment with one? Advertising pollution, cheating and utter disregard for others.

Would you drive a car that said, Enron on it? One back and front? Inside? Would you be seen driving to Enron dealerships? Nope. A car is a personal thing: a source of pride and this train left the station.

People are downright embarrassed to be seen in a VW of any type. TDI drivers get mocked at red lights. Interviewee’s park down the street. Guys avoid taking a girl on a first date in a VW. Why lower your chances? She’s probably pro-nature and loves animals. You look like a polluting oaf. Why take chances? If there were a place people could dump VW’s for scrap metal, I guarantee people would stop by to at least ask the price. It’s like having a Martin Shkreli model car.

I can tell you this with assurance. A very good friend of mine is utterly embarrassed to be seen in his TDI. He parks far away. Walks further. Can’t wait to get rid of it and is buying a Model 3.

VW’s problems come with within and without. Reminds me of that old joke, “I’d piss on his grave but the line was too long”. Everyone is suing VW. Car owners suing corporate. Car dealerships suing HQ. Governments champing at the bit to sue. Air quality groups suing VW. And finally the US government is now going to sue VW using RICO laws. RICO is a word you usually only hear on a Sopranos episode. It’s reserved for the lowest scum on earth. And will be used against VW. And they brought it upon themselves.

VW scandal is so bad that the “German Quality”  and “German Engineering” brands are badly damaged. Germans are embarrassed. They are changing their sales pitches. I’ve seen it with my own eyes. When before they would say with pride, “German Engineering!” now they talk about tests, results, facts. Gone is the strong conviction emotional pitch. It’s painful to watch. They didn’t cause it. As we’ve seen with many things in this scandal. It sucks. And it’s worse than what is being reported. Very painful indeed. No folks, VW is so over that in the end, the Germans themselves will dig the grave and backup the earth mover to bury it.

toyota execs apologizing
If you make cars people want, you don’t need to apologize

Next up: Toyota!
With Toyota, think Betamax and VHS. Except it’s even worse because VHS is superior in this case. Allow me to explain. If you don’t remember this epic duel of technologies, I’ll boil it down. Sony had Betamax. It was better. It had few moving parts. The audio was better. The video was better. The size of both tape and machine were smaller. It was more reliable, by far. I sold them in university as my job was working in Leo’s Stereo from 84-88.

Anyway I won’t go too long on this but Beta was better. But VHS killed Beta. Sony was so sure they would win, they didn’t share, they didn’t play nice. They wanted the whole cake. The entire industry. And they were sure they would get it. National had the VHS and it sucked. But they were more cool about things. Shared technology freely. Let anyone make a VHS. (like Tesla, open sourcing their technology for example).

Sony had the lead, they had the technology, they had the dealers, they had the cool factor but they lost it all. And it’s been downhill ever since. Sony is a shell of a company now. There was no reckoning in the halls of Sony. No mass firings of Beta guys. It was just swept under the rug. They never really got it. Still don’t as far as I know.

Ok so Toyota is Beta. Toyota is confident that fuel cells are superior. They have the power of gas. In fact, far as I know, they drive exactly like their petrol counterparts. Which is what consumers want right? Uhh no. Consumers want the Model 3. And they want Ludicrous Mode

Ask yourself, do you want a highly explosive, tightly packed, explosive gas canister in the car with your family? Do you want to end up like the Hindenburg?

It costs more petroleum to make than just burning the petroleum. It is not energy-dense, so has a short driving range so it must be so highly compressed that the small hydrogen molecule (nature’s smallest molecule / atom) simply permeates the storage vessel and leaks away while causing metal embrittlement. And, because of the increasing pressure, it takes forever to fill the last 10% of your tank. (credit Tom Preble)

Parking a Toyota FCV Fuel Cell Mirai

Ok, so a highly pressurized canister of hydrogen is not the safest things to have in a moving vehicle. What about in a new “Safe Hydrogen” station in your neighborhood? Would you like the massive helium station next to your house? School? Business? Would you worry that maybe, just maybe, someone might try to blow it up?

What about those hundreds of thousands of trucks roaming around delivering hydrogen? Does that make you feel any better? Uhh lemme think about that one. Thousands of huge, mobile, poorly guarded explosive canisters driving the streets? Just what we need Toyota. And the fact that there are now no filling stations and the car costs something like $140,000 to make and looks like a can of beans with botulism. Anyway, they look terrible. And not in a good way. And it’s because of the complicated internals so can’t be avoided. And that sucks.

beans
The original Toyota FCV

Until the Model 3 launched, this was all theoretical. Which would be better electric or hydrogen? Which would win? Oh how exciting. Well it’s over folks. And electric won. I applaud Toyota and was kind of hoping they would pull a rabbit out of the hat. If not just for competition’s sake. And they did. But the rabbit sucked and we will move on now.

Toyota does have $20 billion cash so it’s possible they will make something consumers want to buy. But there’s no guarantee and if history is any guide, Japanese companies having boatloads of cash does not necessarily lead to anything productive. Look back at the bubble when Japanese companies were flush with cash. Where did it all go? Also, Toyota has one big thing against it. The are an engineering company? That’s good right? Except for when the engineers like playing with hydrogen and consumers are want electric. See How Toyota Squandered its Lead in Electric Vehicles for a play by play.

Next up GM:
GM was surprisingly adept. They came out with the Volt. half gas, half electric. Not bad looking. Not really cool either simply because of the necessity of designing the thing with a gas engine, transmission, drive train. But they did alright. It looks kind of just below average in coolness. And that’s pretty good for something with that many moving parts… so we get on to reliability.

Today’s pop quiz about the number
of moving parts and reliability! Get ready kids. This is going to be difficult. Take your Tim Ferris approved ‘smart drugs”

One this side of the ring, you have an electric motor. It has only one moving part, the rotor. The electric vehicle requires less periodic maintenance and is more reliable. How often do you take your blender to the shop for a tune up? Sorry I might be giving away hints. I apologize. Really. I feel awful. Ok, let’s move on to gas…like the Volt.

A petrol-powered car requires a wide range of maintenance, from frequent oil changes, filter replacements, periodic tune ups, and exhaust system repairs, to the less frequent component replacement, such as the water pump, fuel pump, alternator, etc. You know about this right? We’ve all been there. At the shop. And you know how honest car garages are right? So you can’t wait to get down there so he can tell you, “your tranny is shot” and he’s not talking about lady boys. No sir. He’s talking about cold hard cash transferring from your account to his.

One more hint, why doesn’t Tesla have huge garages to fix the cars? Why do they sell in malls? With no mechanics present..hmm chew on that one for awhile. And, before you say it, I will. Tesla did have some issues with reliability. But luckily they were cheap to fix. You guessed it, because the car was electric. “Tesla can get away with reliability issues because they are cheaper than ones related to a combustion engine” Edmunds (Edmunds is the most popular car comparison site)

So the Volt, although was reasonably cool and a nice try in my opinion. But it was conceived in an era before the discovery of graphene. And recent advances in batteries. So in a nutshell, GM and all other car companies (except for BYD) are betting the farm that there will be no real battery improvements significant enough to make electric vehicles go…well like the Model 3. Doh!

GM now has the Bolt which is a true electric car. It’s pretty decent looking on paper. The Bolt reminds me of a Microsoft phone. Looks good. Specs are alright. Not bad. Like a Microsoft phone but consumers by and large yawned. Why? Because they don’t get that consumers want sexy cars now! Frumpy Prius, Volt/Bolt are out. Model 3, sleek, sexy hot are in.

I’ve been saying for years that I would never build a car company dependent on someone not inventing a better battery. And that is what gas car companies are doing folks. They are betting the farm on no one making a better battery. Or a lighter frame like the Gordon Murray Design announce ‘iSTREAM® CARBON So gasoline and hydrogen car companies are being squeezed from both ends. Better batteries (Tesla is rumoured to be working on a 500 mile range graphene battery) and lighter frames. Either will help electric but both will decimate the competition.

Tesla blindsided the auto industry and now Apple and Baidu and maybe Google are making cars. Apple Titan project is predicted to have a consumer car in 4 years. And like the iPhone, automakers will simply have to wait to see what it is. They can’t even start studying and preparing. And making a car has a very long lead time. I’m not saying this will happen, but if Apple’s car is groundbreaking, automakers will give Apple a 3-4 year window till the can react. It’s not like a phone where you can just pump one out. Cars are slow. And automakers have nothing to go on. This simply have no idea what Apple is doing. And they are hoping it won’t be too good. But, as we know, Apple is careful about entering new markets but when they do, it tends to be good.

So I’ll digress to one other factor. Car dealerships suck. Everyone hates them. They are not tech savvy. They are filled with scumbags; they have ripped off everyone reading this at least once. Am I right? And they give us a sinking feeling. That feeling likely occurs because we know it will happen again. So we buy cars at Costco!

So car companies have backed themselves into a corner. Decades of bad behavior have caught up with them. Their dealerships, by extension them, are poorly regulated, in bad locations, are not transparent and just plain suck. Basically the way traditional car companies operate is to give you a car, then throw you to the wolves (dealerships). Awful after sales service. And this will come to haunt them. It’s baggage up and coming electric car companies Tesla, Baidu, Google, Apple and BYD (you might not have heard of BYD the electric car company from China but you might know their biggest investor, Warren Buffet) simply don’t have.

Imagine if you bought something at Tiffany’s but the shop that sold it wouldn’t help you when you had a problem. You had to go to the Tiffany Dealerships. Dark, full of rough characters, holding heavy wrenches.. Relics of a time when the consumer had no power. And electric will erase them from history. And we will live happily ever after. The end

PS: And while we are on the PSS’s. Lets consider a few other things that suck about petrol cars. How about the fact that people die every year from carbon monoxide poisoning. And I don’t mean long term dead. I mean kissing your girlfriend in the car, leaving the heater running dead. And I mean freezing cold weather in Minnesota and sitting in your car with engine running dead. Electric cars do not kill people sitting in them. And cannot be used for suicide. So those cars found running in the Japanese countryside every year with people committing suicide will not be happening. And maybe, just maybe, taking away a popular suicide methodology will lower death rates. I for one, think it will. Giving people a chance to think about it. Some fresh air to breath. That’s all most people need. Also carbon monoxide death is painless. So many people choose it as they are afraid of pain. Another reason to carry on. And give life a chance!

PSS: So gas sucks, smells, burns, has to be stored, runs out, ruins the environment. Gas powered cars have too many moving parts, break down, (breaking down sucks. Do you want your daughter breaking down in a gas car at night?) are expensive to fix, their complex internals cause the designs to suck. (many of these things we never noticed before because we had no options). Car dealerships suck. The whole buying process sucks. We all have bad experiences with gas cars, their dealerships, reliability etc but we never imagined we’d have a choice. But to people and especially entrepreneurs and investors we need to wake up.

This is a seminal time. Things are changing and will never be the same again. And most people don’t really realize what’s going on. For those few who are aware, can handle the implications, the benefits are clear to see. I hope this has been eye opening. I apologize for not being a car guy but no one else put all the pieces together, or at least the pieces I saw, so I tried to. Grammar isn’t perfect. Maybe even a fact or two misplaced but I hope this adds value and understanding to this important topic that affects us all. today and in the future. If you read till now and enjoyed this, please like and share on Facebook. Thank you very much 🙂 Any feedback please send to [email protected] I will add Facebook comments to this blog soon. Thanks for taking the time to read!

 

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