The automotive business…

is currently based on three major pillars.

1. assembly of parts and selling cars, where the margin is challenging

2. financial services, 70% of the German premium vehicles are leased, dream margin for paperwork

   and 

3. maintenance and service. A very important part of the revenue stream. 

With electrification maintenance and service will decrease between 30% (if we are optimistic with the numbers) up to 50% (if we are more realistic).

Does this come from the over engineering of German vehicles? Not really.

The ICE is more or less mature since 20yrs. We see just small tweaks, but as is, the ICE cannot really be improved that much anymore.

It is the main thing where OEMs have understanding and they were printing money with.

Shifting to EV, this core competence disappears. OEMs become completely IKEA, just assemblers. Electric motor comes off the shelf from, let’s say Bosch and the battery from South Korea or China.

With no clutch, gears or ICE, a fully EV has fewer moving parts, so they come with less ongoing maintenance costs. In fact, there are about 20 moving parts in an electric engine, compared to nearly 2000 in an ICE.

A threat to the existing biz model.

When you then take into consideration that ca 80% of the global vehicles are out of warranty. Means the owner/driver has to pay for maintenance, service, or parts when he repairs by himself. A car that does not break is bad for profits. A sustainable car, robust, designed for longevity… will not exist.

Plus we can sell you the same crap every three years and call it facelift.

This is as well one reason why SUPs building cars struggle to become profitable. They do not have the network of dealerships and services.

So of course the established brands do not really rush into EV. Or more precise: affordable EVs.

Marketing BS like from Audi:

– You see it. You drive it.You fall in love with it. It’s quite a science.

– Exit the ordinary.

– Never follow.

– Truth in engineering.

BMW:

– Sheer Driving Pleasure

– The ultimate driving machine.

– Stop Dreaming. Start Driving.

– Drive with your heart.

Or Merc:

– The love never fades – Unlike any other.

– Legendary. Unlike any other.

– Occasion. Unlike any other.

This manipulation is ongoing, maybe similar to tobacco industry.

Be cool, drive this and that. ..As long smoke (emissions) come out of it.

The next threat is already on the horizon. Autonomous driving L4&5.

Currently the average car stands 95% its time and is rotting. It’s not a bug, it’s a feature.

With real AD the stand around time would be minimized to 70%, the household would not need two, three or more vehicles. Tennants could share vehicles. Mobility becomes infrastructure.

BUT OEMs would sell far less, vehicles would become built on the purpose. Real Mobility as a Service.

Do you still wonder why we will not see this (soon)?