Sometime back this blog reported that electric cars would
soon be replacing conventional models in sales popularity. Gas stations would
close shop. Older cars would evaporate, simply on the basis of comparative cost
of opertation. A humming, pollution-free land of wonder was just around the
corner.
Insert crow into mouth. Chew. Actually what’s been happening
is that cars themselves are disappearing in favor of the even less economical
Carry All. What the hell is a Carry All? It’s the blanket term for an enclosed
bed truck, which covers the SUV, minivan and Nissan Cube. That’s what people
are buying. Terms such as ‘SUV’ or ‘Durango’ or ‘Jeep’ or ‘Suburban’ are just
descriptors of trim level, and not very accurate at that. We’re all buying
little freaking trucks. It was Hudson which introduced the step-down slide in and
sit car over 50 years ago. Today we have gone back to step up vehicles. And
none of them are electric.
But wait! There are electric cars. There’s the Nissan Leaf and the Tesla and….
There are also red headed left handers, too. And electric cars are about as
common. If one is generous, a claim
could be made that electric cars are replaying the adoption rate of the cell
phone. No one had one. Doctors, lawyers and bigwigs had them. Then… wait a
decade… everyone has one. Even by that scheme the electric car is well past
due. I fear that it is time for me to admit defeat.
Allow me to wax moronic explaining my odious predictive
failure. The cell phone analogy is
entirely wrong. Cell phones did not replace anything. They were an entirely new
idea. They replaced the pay phone—the phone no one owns—and perhaps the pager.
But it’s not so much an evolution of the phone as it is a grafted extension of
the phone system. At its core the cell phone is a hybrid of the walkie talkie
and the telephone. It’s a walkie talkie that calls into the phone system. By
contrast, the telephone is something that is wired to your house or wired to a
wall and then transmits via wire to other wired receivers. Adopting the cell
phone did not require someone to come into your home and yank all the wires out
of your walls and then issue you a new receiver with all new parts. Instead,
they just hung enough antennas and then made the anchors (the cell phones)
cheaper and cheaper. And today the only communication system wired into your
house is the internet, usually concurrent with Cable Television. Yes, today no
one uses the telephone, now called a land line. But this isn’t because it’s
been yanked out. Cars are different.
Cars are car part containers. No matter what brand or model,
your car is 90% alike to all other cars. For any car system, there are all of
maybe three variations. The spark plugs in your 1978 Delta 88 are identical to
the ones in your 2017 Honda Civic. Ditto the nuts and bolts and glass and radio
and pads and shocks and catalytic converter. What variation there is can be
attributed to size constraints. The gear box of your F-150 is a bit different
than the one in your Smart For Two. The greatest differences are in the body--a
vast idiosyncratic package for your collection of largely non-unique components--and
in the transmission, the mechanical force system, which needs to be custom
configured specifically or you will go flopping down the road as opposed to
rolling. It’s a tailored suit and a
fancy set of shoes thrown over very similar interior bits.
There are two approaches to building an electric car.
Approach One (Techno Salvage): invent only the systems that you need to,
specifically the engine and the fuel container. The engine is a bunch of
electric stuff and can be distributed. You’re not carrying fuel anymore. You
just have to make room for batteries. Approach Two (Rainbow Gold): Reinvent
everything. Build the car around the constraints of the electrical drive
system. Both approaches suck equally. Two
factors have limited the electric car’s development thus far. First, electric
cars, no matter how they are configured, are not 90 % alike to other cars. Many
electric cars are not 90% alike to other electric cars. They are more different
than other manufactured items. If plumbing were at a similar stage of
standardization, only the rich would crap indoors. Second, and most
importantly…
Elon Musk is an idiot.
He’s an idiot who can land a spent rocket engine back on its
mooring. He’s an idiot who can plausibly
dig a hole to China. He’s an idiot who can successfully design and market a
home use flamethrower. (I had the idea first. Really.) He can will a lot of
things into being. Without a doubt he is one of the most successful dreamers in
the world today. The auto industry is a pile of manure and does not deserve
Elon Musk. And the sooner he figures that out the better all humanity is going
to be.
When it comes to the electric car, Musk’s Tesla is clearly
the pick of the litter. Of the three
electric car start-ups from a decade ago, his is the only one to have produced
a car that functions. Second place goes to the group who produced a car that
did not function. Third place is from a group which did not produce a car. So
Musk is Peggy Flemming in an Olympics in which the two other contestants did
not skate.
Musk has followed the accepted historic pattern. Entice
investors. Don’t use your own money. Start with a bling car to stir up
interest. Once the bling thing is generally perfected, strip it down to a mass
production archetype and then scale up manufacturing of the affordable model.
Everyone from Columbia to Henry Ford did it this way. Ford’s first car wasn’t
the Model T, it was the Cadillac. Once that car was perfected, Ford used what
he learned and made the Model T. (Very long story short.) GM’s founding makes
were Buick and Cadillac and then they scaled down to Chevrolet and Pontiac and
other plebian makes. Although following in their footsteps so far, Musk has
missed two steps which will inevitably be his automotive undoing.
Historical Missed
Step One: R&D is something you buy. It is not something you do. Innovation
is a thing that happens in someone’s garage in the middle of the night. Or it
takes place in a university. It cannot be willed into being through spread
sheets and benchmarks and project management. It is a creative process with a
high failure rate. You hand the successful innovators dump trucks worth of
cash. The failures you don’t have to pay.
This goes to the basics of knowing what business you are in.
At some point Musk decided that he was a battery manufacturer. This is like
owning a monopoly on helium when your aim is to find a use for balloons. Auto
manufacturers are in the business of screwing together auto parts and putting
such under a nice canopy. They are not in the business of inventing auto parts.
Traditionally most auto innovations came from either other basic industries
(inevitably exploiting university research) or from auto racing. (Traditionally
most innovations come from someone employed in R&D at another auto firm who
has been working on a side project on his own in his own garage. He comes to
you with an innovation that he could not get green lighted at his employer and
is now handing off to you the ready to go perfected product for one large lump
sum.) In short, the time to go into the electric car business is AFTER the battery
technology is perfected, not before.
Musk has also decided to reinvent the way cars are sold. That
part of the process is actually NOT BROKEN. The whole make cars, ship them to
dealers, dealers hit up banks and send you money cycle works. Dealers will also
fix your cars and sell your parts. It keeps you in coin and makes life happy
for customers. Musk’s system of build them and set them in a lot and then take
pot luck ties up a lot of cash. And his custom of using salaried auto hikers to
do the customer’s tax and regs and physically drive the car to the buyer’s home
has efficiencies only a pizza delivery service can appreciate. How does one buy
a Tesla in the first place? As opposed to having dealerships, which would lend
some visibility to his product, Musk puts the burden of making the purchase and
arranging financing on the customer. With predictable results. *
Musk’s answer to the cash flow issue is to float bonds and
then scramble to pay for them. And to seemingly blow weed prior to investor
conference calls. Not that the process of business itself is all that high and
exalted, but if you fail at it, you fail.
Musk isn’t the con man Tucker was. His car works and can be
produced. It’s everything else he’s screwed up, much to the detriment of the electric
car field. Failures such as this are
common, since…
Historical Missed
Step Two: The Auto Industry is a Mausoleum for Money. Major Auto
Manufacturers are Vulture Capitalist Creations. What do Ransom Olds, Henry
Ford, David Buick and Walter Chrysler have in common? They were all kicked out
of firms that they founded. Not necessarily the firms they are known for, but
they were all booted at one time or another. None of the existing Big Three
American auto makers is the result of a successful start-up. All of them are
cobbled together remains of failed or amalgamated firms. General Motors is an
amalgamation of several HUNDRED former manufacturers. Chrysler is what remains
of Maxwell, which itself was culled from the wreckage of United Motors, an entity
spawned from the failed Bicycle Trust monopoly. Jeep is what is left of
Overland, a failed parts client of GM. Jeep was obtained through merger with
American Motors, an amalgamation of Nash and Hudson. Hyundai was a program to
provide reliable cars to shipyard workers. It was only after merging with KIA
that Hyundia obtained drive system technology needed to sustain themselves as
an actual exporter. The list of firms which are lumbering husks of other firms
runs on and on, with no sunshine seen for start-ups.
It could be argued that Ford is a successful start-up. Ford
took a payoff from the original Henry Ford Motor Company (which became Cadillac
and then General Motors), took his staff and their experience and went to start
a new firm. That firm, Detroit
Automobile Company, failed within a year. The firm we now know as Ford is
itself a recapitalization. (“Recapitalization” is a big word for screwing the
original investors and making off with the assets.) Like all auto companies,
Ford diversified (in one instance funding Dodge) and amalgamated (taking over
Lincoln Motors). Ford and Musk are both visionaries of a type, although Ford’s
vision had less to do with emergent technology than it did guidance to a
specific price point, expanding the reach of the car to the average citizen. Like
Musk, Ford had his run-ins with Wall Street and government naysayers. At one
point the government threatened to turn over control of Ford to Nash Motors.
Musk has gotten into as much trouble as he is likely to—which is to say that
Tesla is irrelevant and not worth the government’s lead to shoot. In the end, Ford was not quite a vulture, but was vulture
enough to muddle through. And in the end, I think Tesla is what a vulture eats.
I do still believe that the electric car will be a big
thing. Just not anytime soon. And it won’t be coming from Elon Musk, who will
be long gone to his orbital habitat to blow weed to his heart’s content by the
time we get an electric car under $20,000.00. Musk’s flame out has undoubtedly
discouraged others from jumping into the electric car fray. But the global auto
industry has other issues.
There is a 40% global production overcapacity in the auto
industry. Sounds ominous. Many cryptic and dire things can be plausibly
extrapolated from just this factoid. In fact, the industry as a whole ponders
this daily. It’s the auto industry’s version of Zen meditation.
What does this factoid boil down to? Remember I told you
that modern auto companies are mostly vulture capitalist creations. (There is
another factor that I will explain later.) Each firm has inherited a lot of
stuff, generally for pennies on the dollar of their actual value. And they are
not using 40% of it. If they actually
needed this stuff, it would cost them a fortune to buy it. So they are sitting
on it, even though they don’t need it. And they make payments to maintain it.
If this sounds silly, then you obviously do not own a storage locker. The auto
industry rents lots of storage lockers, figuratively speaking, crammed to the
gills with stuff which is highly valuable only to the auto industry. No one wants to give up their horde. The way
the game has been played thus far is to acquire additional hordes when a
competitor goes out of business.
Sort of. That game has actually been over for a little
while. It can only be played within national borders. The game is over here in
America, since there are only two players left. GM and Ford cannot amalgamate.
They can only eat foreign car companies, but that capacity is limited by the
other factor that I hinted at. Bluntly, many car companies are Government
Sponsored Enterprises. Germany has two major car companies, BMW and VW. VW is
essentially a jobs program. If Hyundai isn’t an actual bodily appendage of the
South Korean government, it certainly qualifies as a condom. Fiat is the crown
jewels of Italy, having amalgamated all of its civilian and sports car lines.
Japan’s many auto makers are situated somewhat similar to those in the US circa
1950, but their government’s cradle to grave welfare state is not factored into
their export’s prices. They are effectively jobs programs also. It’s the same
story everywhere. The upswing of this is that the market is littered with
irrational actors.
I’m not saying that this is bad. And it’s not unique to the
auto industry. It just means that they are not glass eyed utilitarians. They
are beholding to labor unions and social factors and humanity in general. Many
are the civilian putz-facing ends of national military industrial complexes. Again,
this does not make them bad, but it does make their behavior a tad
unpredictable. The good news, from an electric car perspective, is that zero
emissions is an agreed on goal. The bad news is, electric cars are not the highest
priority. There are three priorities ahead of it, one of which is a distraction
and one of which is a chimera.
Distraction: Waiting
for Godot. China has a billion potential auto buyers. The minute, the second,
the microsecond, China swings those doors open all global production
overcapacity evaporates. Or at least mine does as I carve out my unfair share
of this virgin and prosperous market. Heh heh heh. Wrong, round eye! Wrong,
rising sun bastard! Wrong, fish and chips, frog eating, kraut eating eurosimpleton!
The Glorious People’s Republic which is rising to consume all the Earth will
make its own damn cars. China’s people are not your customers. They are China’s
customers. Mother Mao Funny Money stays home. If there is one thing that we can
take away from decades’ worth of economic engagement with the People’s Republic
of Chinese Earth it’s is that they are a giant leech black hole squatting on
the face of global capitalism. If allowed to, the Chinese may sell us
cars—replicas of western cars, really—but they will largely drive their own
cars—also replicas of western cars, really. The Chinese may eventually even
have electric cars, provided we make the batteries easy enough for them to
copy. So Godot is a no go.
Chimera: Sometime
some time ago all of the great IT minds migrated away from dull science fiction
science to the heady Wall Street fairyland of the Hedge Fund. There they toiled
away, night and day, on computers which would make NASA blush, plugging in
predictive programs which would guide the already well to do in becoming even
more so. The behavior being predicted was binary in nature, buy or sell. And
after many decades of continual development involving some of the best paid
mathematicians and theoretical programming architects on Earth, the net
cumulative result of these efforts HAVE ZERO EFFICACY. Given this, what makes anyone think that we
can program a car to drive itself?
Wait! We have autonomous drones which fly and shoot missiles
and kill people. No, we do not. The drones that kill people are radio
controlled. They have human operators. We do have autonomous munitions, which
react well to sensors and can read maps to hit stationary targets. In theory,
we could have flying killer robots any day now, but that’s not the benchmark
that we are attempting to have parity with. Both flying and killing are
comparatively easy. A flying killer robot does not have to stop behind the
school bus which is halted at the railroad tracks even though no train is
coming.
Wait! Computer models are getting better all the time. We
now predict the weather with near flawless accuracy. While this may be true, I
remind you of the collective failures at predicting the stock market. The
weather follow’s God’s rules—and God is pretty consistent. Driving is the weather,
plus human psychology, plus physics in random ratios changing by the second.
It’s easy enough for a 16 year old to be passably good at, but beyond the
capacity of a machine which adds in groupings of two no matter how kryptonian
its sensor array may be nor majestic its branch routines.
Wait! There already ARE self-driving cars! What are you
blathering about? Long answer short: they’re not safe. The only way to make them workable is to
designate “auto-pilot” only lanes. If we go down that route, we might as well
just have an effective mass transportation system and dispense with cars
altogether.
Look, I’m probably going to have to hang up another ‘I was
wrong’ sign here. But I cannot help but feel that we are all being sold a load
of crud. The first delusion is that the self-driving cars are for us consumers--that
we will all be entitled to flop down in our buggies one day muttering “home,
James” and be mystically whisked off while we enjoy nappy time. As fun as that
sounds, we are not the market. Nor are they attempting to put the Ubers under.
It’s the truck drivers that they are out to un-employ. Mark my words, once it
becomes obvious that robo-trucks are a hazard to the highways, the trucking
firms are going to demand “auto-pilot only” lanes. (And they will ask that the
robot delivery trucks be allowed to operate at night in urban areas.) This is
all a not very high tech scheme to avoid paying rednecks as well as claim
ownership of the public way. I say we nip this in the bud. If you want to send
freight across the country largely unattended there’s a thing called the
choo-choo. But if you are using the roads that were made for us, for our
enjoyment, for our personal transportation, and are sending corporate farm hog
sludge from Amarillo to Providence, then we demand that you hire a redneck to
guide it. **
A factoid frequently pitched by the computer car people goes
“Did you know that the average car is only in operation 2 % of the time?” As if
the entire auto thing wasn’t massively wasteful in and of itself. The pitch
then goes on to postulate “Imagine a world where an operating car could simply
be summoned to your door as needed? When not in use the car moves to places
where it is likely to be summoned. In such a future, no one would need personal
cars at all.” Imagine a world where your wife summons an automated car at 3:00
AM only to find the podmobile’s faux leather bucket seats encrusted in vomit.
Imagine a world where your wife has done her grocery shopping and decides to
leave such in the podmobile until someone gets home to hike them in. Wait! She
can’t! Imagine a world where at a high volume time of day your wife has to
share a podmobile with someone who smells. Or because of the communal nature of
podmobiles, she is not allowed to stow stuff for future use, rearrange her
face, fart, sing off key or do any of the other personal Zen things the
dickless are so fond of. We can’t get women to use mass transportation as it
is. By what fit of Imagineering is this going to work? Until you can reprogram
women, this is a non-starter.
What appears to be in it for the car companies is a belief
that these roving automatic car fleets will need to be replaced on a consistently
short-cycle basis. As it stands, the average current car is lasting in excess
of a decade. Not surprisingly concurrent with this phenomena, car payments are
now extending well past their traditional three year horizon. I don’t know how
great these cars are, but few people are prone to give up on something they are
still making payments on. And once you’re through paying on something for five
to seven years, most folks are content to drive it into the ground. Beyond
stockpiles of crud, this is where the rest of the 40% overcapacity is coming
from. People are just holding onto cars longer.
Lost in this is Ford’s original idea of making cars
affordable. Given the constant median wage in the United States, an affordable
car would be from $12,000 to 16,000. If you look around, you will find that
there are few if any new cars at that price. There are a number of reasons for
this all of which boil down to (A) the car manufacturer needs to make $2000 per
unit just to send you a box and (B) the retailer needs to make $1000 just to
sell you a box. You can also add in about $5000 worth of mandated crud on each
car. That’s $8,000 out the door to give you about a ton of nothing. Any further
things, such as a door handle, are going to cost you more. The next big auto
innovation, whatever it might be, will address this issue, but for the moment
the entire industry is stuck.
Right now selling you a hybrid or electric vehicle is a
dicey proposition. Both have systems which may not last the life of the
payments. Both require replenishments costing thousands of dollars at the five
to seven year mark. This is not a design for a happy customer.
Which brings us to the electric car’s final impediment, the
last auto industry distraction. In order to stay in business the auto makers
have to sell cars people want to buy. Largely these are the aforementioned
Carry Alls in their various plumage. The industry makes good money on these
things even though they are entirely a technological and environmental dead
end. It’s good money now, but it is just
treading water. The industry as a whole is going to have to pick a future and
then go there.
*Tesla’s claim is that they are manufacturing vehicles which
they have already sold. In short, everything off of their assembly line already
has a buyer.
**The Interstates were not really made “for us” although
interconnecting roads were. Prior to the rise of the automobile, the roads in
America did not connect. It was the auto industry, and us the consumers, who
pushed to put through connecting and improved roads. The interstate system,
which is where a lot of the freight travels, was dreamed up by Eisenhower as a
military necessity. Like the internet, it just happens to have civilian
applications. It was felt that the interstates would encourage intra-American
tourism, mostly via car. They were NEVER intended as freightways and the trucks
should not have been allowed on them. We have railroads.
Note: Our Grand Opening for the WDMA site had been delayed a
bit. We hope to have the front page redesign done relatively soon.
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