The perfect storm is here. A rare combination of circumstances is conspiring to make conditions excruciatingly difficult for the automotive establishment.
Turning these tankers was always going to be a tough task, but in increasingly turbulent waters, it is not inconceivable that we will witness some sinking – or at the least listing – ships.
No-one should want that to happen, but the writing was on the wall with Tesla’s emergence – especially with the surge of interest in the Model 3 in 2017 – that a sea change was incoming.
If a rising tide lifts all ships, then it was the rising interest in electric vehicles that has seen other OEMs like Hyundai and KIA rise to the occasion.
Even so, for the Korean challengers, and for other progressive car companies, the switch to electric has not been plain sailing, relying as it does on developing supply chains from scratch.
However, the global pandemic and the conflict in Ukraine has shown the weaknesses of not having all your hatches battened down when a storm arrives.
If Tesla, with its vertically integrated business model, is struggling to match supply with demand (and is considering getting into the mining game), then what of those that are in the early stages of electric car manufacturing?
You only have to look at the lead times for most electric vehicles to see that there is a problem. A problem that is only likely to deepen. And if consumers start delaying car purchases to wait for a pure EV, what then?
And this of course ignores the ten ton elephant in the room: China.
If legacy automakers can’t offer more affordable electric cars, smaller electric cars, or even enough electric cars, then the swarm of Chinese start-ups will happily eat their lunch.
Outside of the ‘electric car bubble’ this might sound fanciful, but let’s reflect on the reality.
In 2021, China manufactured ~2.9 million battery electric vehicles, while Tesla, the undisputed leading brand worldwide made around one third of that.
Since it set its mind to it in 2009, China has been stealthily perfecting the process of sourcing the materials and manufacturing ‘new energy vehicles’.
Even more importantly than making high quality electric cars, from a supply chain perspective it has positioned itself that centre of the spider’s web, and is ready to capitalise on its foresight.
Perhaps, the harnessing of familiar western brands like MG has obscured the fact that their successfully received MG5 and MG ZS are in fact owned by SAIC and made in China.
Meanwhile, Geely has very successfully spun the impressive Polestar 2 out of its acquisition of Volvo, and as owners of Lotus, Zeekr and Lynk & Co, we suspect they have barely begun.
What’s more, Tesla’s first Chinese Gigafactory – yes, more are planned – should be the most alarming development of all for the old guard. It’s not just China’s domestic market that they are after, but its proximity to those increasingly ‘precious’ materials.
All of this has been hiding in plain sight of course, but it is very literally the tip of the iceberg. An iceberg which might just sink some of the big tankers mentioned earlier.
At Fully Charged LIVE UK, we recently welcomed the Ora Cat, a reasonably priced electric car, made by Great Wall Motors in…. well, you get the picture.
Not only was that car popular with visitors, but it was also the manufacturer that the UK’s Secretary of State for Transport made sure he visited.
Excitingly, we will be welcoming XPeng to Fully Charged LIVE Europe in Amsterdam this Friday, Saturday and Sunday, and again we are expecting crowds will come to see the P5 and P7 in person.
Furthermore, we know that whether its XPeng or Great Wall Motors, Geely or Nio, Chinese carmakers are looking at the Fully Charged LIVE events in North America, the UK, Europe and Australia as a ‘beachhead’ into international markets.
The word ‘beachhead’ is of course loaded; conjuring as it does images of D-Day or other invasions. I should say this is of course a commercial incursion, not a conflict, but it does strike me that some carmakers seem unaware of the ‘war’ that is about to be waged.
While those that are still digging in and reinforcing their positions remain vulnerable, there are several others (you can name them no doubt) that are marooned in the no-man’s land between engines and electric.
Now of the companies mentioned, there’s one big omission here, and that’s a company that’s in a joint venture with Toyota, which goes by the name of BYD.
With its tentacles in commercial vehicles, passenger vehicles and as a manufacturer of batteries, it really doesn’t need Toyota. It just needs its customers.
While the latter expends considerable amounts of energy holding back a tsunami-sized tide, BYD and others bide their time as they build the foundations of a new empire.
You can see XPeng at FullyCharged.LIVE/EU/ at the RAI Amsterdam on the 20th-22nd May. Stay tuned to see which brands sign up to our other Fully Charged LIVE events around the world in the coming 18 months.