This is a bit of a forecast. However, it is something that I believe is easy to see.
Few can dispute the electric vehicle race is on. Well, for many of the legacy automakers, they are stuck at the starting line. This is going to pose a major challenge to them as we enter the later parts of this decade.
That is why I am forewarning everyone. By the end of the decade, we will see the United States Government bail out both Ford and General Motors. These companies are completely blind to what is taking place.
At the core of this: Tesla.
It is going to force many of the legacy automakers into bankruptcy. This is something that is clear as day.
The Lessons From Amazon
Amazon did not force the United States Government to bail out major retailers. That does not mean that it did not kick the snot out of them because it did. The only reason there was no bailouts is because retailer workers are not unionized and the jobs are not considered "essential" by politicians. The auto industry is known for making the political establishment aware of how many people it employs.
Nevertheless, the destruction that we saw from Amazon is being repeated in the automobile industry. For many this is not so clear. However, most where not aware what Amazon was up to in the early 2010s. This included many who were making decisions in the retail industry.
Here was something that was basically ignored:
That chart sums up the damage that Amazon was able to inflict. The shift to retail sales happened on an exponential scale. While it appeared to be not much of a threat. after a decade of continuous growth, the industry realized what was happening. For most, it was too late.
A similar thing is happening in the automotive industry. Many feel that Tesla, while doing well, is not much of a threat. After all, the legacy automakers were making cars for well over 100 years. Once they shift their focus, it is all over for Tesla (the competition argument).
This is not a smart outlook to take.
Here is Tesla's sales showing a similar path that Amazon followed:
Do not be deceived into thinking Tesla is nearing the end of its growth stage. Instead, understand it is just beginning.
VW Holds "Crisis Meeting"
One of the largest automobile companies in the world is Volkswagon. The German auto conglomerate sells more vehicles per year than any other entity. Yet it held a "Crisis Meeting" over Tesla.
What was at the core of this meeting? Tesla ability to manufacture cars. It seems the one hundred year head start that some of these companies have on Tesla was not an advantage.
One of those is Volkswagen, which held a “crisis meeting” last week with 120 of the top managers to discuss the incoming competition from Giga Berlin, which was described as “brutal.”
During the meeting, hosted by VW CEO Herbert Diess and brand boss Ralf Brandstätter, the company revealed Tesla has set a new standard, able to build a Model 3 in just 10 hours.
That is more than three times as fast as VW can build their ID.3 electric hatchback. (via Business Insider)
Simply put, Tesla's manufacturing expertise is so much further ahead of VW that they can produce a vehicle in 1/3 the time it takes VW to completely their EV. No wonder the executives at VW came in on the weekend for a crisis meeting.
Of course, give VW credit, they are awake at least. General Motors and Ford, the two US automakers are mostly asleep.
While the CEO of GM is out espousing how they will lead the EV revolution (Tesla is already doing that), their goal, after spending $35 billion, is to produce 1 million EVs by 2026. Tesla will likely double that figure in 2022.
Ford, meanwhile, is making a few smart decisions regarding EVs. They are going to open up a couple of plants. They rolled out the electric version of the F-150. The problem is they are not going to produce meaningful numbers until the middle of the decade.
Tesla will be rolling out its Crybertuck at the end of 2022, with scaling taking place in 2023. This is going to really affect the F-150 market as a few hundred thousand Crybertrucks hit the streets.
Then we have Toyota who is presently using its political muscle to try and get governments to slow down the EV race since they are not even in it. Their bet on hydrogen did not seem to pay off when the rest of the world was moving towards electric.
20 Million Vehicles
Elon Musk stated the goal by 2030 is for Tesla to be producing 20 million EVs per year. That would make it the largest automaker in the world, by volume.
Many scoff at this notion. However, during the recent shareholder meeting, Musk reaffirmed that the company should be able to increase its production volume by at least 50% annually for the foreseeable future.
After selling 500K vehicles in 2020, the company already sold 620K through the first three quarters of 2021. That is a 25% increase, with still a quarter to go. Most estimates place the total yearly deliveries between 850K-900K. That works out to a jump of 70%-80% for this year.
Next year will see the scaling of two new factories, both making the Model Y. With the incredible pace that the Model Y line in China scaled, VW has every right to be worried. There is a chance that Berlin (as well as Austin) scale at a faster pace due to advancements in the manufacturing process.
This is no surprise since Musk stated long ago that Tesla is going to focus upon the "machines that build the machines".
So while Tesla keeps expanding, General Motors and Ford move closer to their bailout. At the end of last quarter, General Motors has $111 billion in debt. Ford, for its part, had $148 billion. And this is before they invest tens of billions to produce electric cars.
Ultimately, the United States Government is going to have to choose between letting the non-Tesla US automakers fail or bail them out.
Based upon history, we know how this is going to end up.
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