- 2018-11-01
Tesla Model 3 shock wave German auto giant
On August 13, foreign media reported that Tesla completed its first bond financing with an issuance scale of US$1.8 billion and an interest rate of 5.3%. The funds obtained from the bond will be used for Model 3 production. US credit rating agency Moody's said that after the bond issuance, Tesla will have enough cash to speed up Model 3 production. But by 2019, Tesla will also face challenges from competitors, partly because Tesla lacks substantial know-how that cannot be replicated.
The new Tesla Model 3 has a lot of demand; the question is whether Elon Musk can meet all the demand. BMW and Daimler have the opposite problem: they are both good at making diesel cars, but who wants diesel cars?
After decades of successfully using the engineering marvel of perfect design to dominate the global luxury car market, German automakers are facing their "iPhone moment." Like the previous BlackBerry and Nokia, they met an American company that sold devices that had both superior technology and elegant appearance.
Executives from BMW, Daimler and Volkswagen recently attended the "Diesel Summit" with ministers in Berlin to discuss how to mitigate the technological disaster brought about by the auto industry itself. They may not have to worry about it: diesel cars are dying, the only question is how long it will take them.
The Tesla Model 3, priced at 35,000 US dollars, robbed Germany of the iconic industry. The US auto industry has never constituted real competition in the luxury car sector: Cadillac is not Mercedes. But Musk is eager to accept the challenge that Detroit has long evaded: more than 400,000 people have already booked his invention, and Tesla Model 3 began production in the bay across from Silicon Valley last month.
Tesla’s founders tend to over-promise and like to be pushy, but fate is on his side. He recently started selling his first mass-produced car, and there is no better time than now. Not only is Volkswagen still mired in the scandal of illegally using software to cover diesel exhaust emissions, but the antitrust agency has also asked whether the five major German automakers Investigate by forming a purchasing alliance.
"Der Spiegel" (Der Spiegel) disclosed the investigation of the 5 German auto giants, which shows the consensus culture of cooperation between German companies, suppliers, research institutions and the government. Although it has produced enviable results, just like the "keiretsu" tradition of Japanese companies, standard setting may be reduced to collusion.
The question is, why did they gather at the conference table in the first place? For example, automakers may reduce the size of chemical tanks used to limit nitric oxide emissions from diesel engines, thus violating the law, even though BMW denies doing so. But why do we need to agree on common components?
The answer is that manufacturing a car with an internal combustion engine is an extremely complex task, and car manufacturers rely on an intricate network of suppliers. This is especially true when they need to use technology to reduce emissions from diesel engines. Any method of simplifying and reducing costs is a godsend for traditional automakers.
From this perspective, Tesla has a fundamental advantage. An electric car is easier to manufacture than a diesel locomotive because it has far fewer components: Musk said that the Tesla Model 3 has 6,000 to 7,000 components, while Goldman Sachs estimates that traditional cars have 30,000 components.
Musk therefore has little reason to join the Parts Purchasing Alliance, even if he wants to join. Tesla is still learning how to produce cars on a large scale—car production is hindered by battery shortages—and Musk predicts that Tesla faces a “six-month manufacturing problem” of increasing production to meet Tesla's Model 3 orders. However, his assembly business is cleaner and simpler in nature.
Musk has also worked hard to make assembly easier, personally manufacturing the most important parts-Tesla has built huge battery factories in Nevada and Panasonic, and plans to build battery factories in other places. He hopes to further integrate, allowing customers to install solar roofs to charge the electric car batteries in the house.
Tesla's more integrated strategy than other automakers is the same as Apple, which develops its own mobile phone chips and designs its own software. Another similarity is the way the two companies use technological change-for Tesla, the change is from internal combustion to electric, for Apple, the change is from 2G to mobile broadband when the iPhone was launched in 2007.
Facts may prove that car manufacturers are better able to adapt to technological changes than Nokia and BlackBerry. They have accelerated the development of electric vehicles, such as General Motors (General Motors) launched Chevrolet Bolt (Chevrolet Bolt). But the Tesla Model 3 is designed to attract buyers of luxury cars, not of popular brands such as Chevrolet. BMW, Audi and Daimler are now in a painful and vulnerable situation.
Before the Volkswagen diesel exhaust scandal broke out, more than half of the cars sold in Western Europe were diesel cars, and the proportion of diesel cars in high-fuel-guzzling luxury cars was even higher. As European cities crack down on pollution, and those companies that exceed emission levels during actual driving face fines, sales have begun to decline. The "Diesel Summit" in Germany is completely useless to change this situation.
German automakers will look for other engines, including plug-in hybrid engines and electric engines, which BMW expects to account for 15%-25% of its sales by 2025. But their aura has faded, and their competitor, Tesla, has no such legal liability and technical baggage.
For the bosses of BMW and Daimler, life is becoming more and more complicated, and for Musk, life is becoming more and more simple. In this industry, simplicity is very valuable.