VW – The Future

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andrewparker
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Post by andrewparker »

https://fullycharged.show/blog/volkswagen-quo-vadis/

An interesting perspective. Not sure I agree with all of it, and it’s clearly written by someone who is very pro-Tesla.
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Smitten
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Post by Smitten »

Looking at his Linked-in and the number of "liked" items straight out of the Tesla PR machine as well as the time he has spent in Tesla's company around the world I would say he is a fully paid up member of the Tesla fan boy club! Interesting article but somewhat one sided. Agree that the traditional automotive industry has been slow to switch to BEV's but you only have to see the sheer number of new EV's on the road now to realise that going forward there is going to be a lot more choice and Tesla are not going to have it all their own way. When I bought my ICE in April 2018 the choice of EV was Tesla Model S/Model X, Nissan Leaf or Renault Zoe. That was pretty much it. Now the sleeping giants have awoken there is a huge choice as evidenced at my local Sainsbury "free" chargers this morning. Multiple ID3s, ID4s, a Tesla Model 3, Kia EV6, Renault Zoe, Jaguar iPace, Audi eTron and lots of others. There are lots of people out there that want a BMW or an Audi and not a Tesla. I think this silent majority will wake up to EVs in the next few years and the competition benefits us all and makes all the manufacturers raise their game.
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Post by G43FAN »

OMG VW Sales shrank during 2020 and 2021, he's hit the nail on the head there, I can't imagine any other reason for it...
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Post by Deleted User 192 »

I recognise his name from previous articles seen elsewhere - he always beats up VW and is pro Tesla.
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Utumno
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Post by Utumno »

Yes a Tesla puff piece, but the basic thrust isn’t wrong.

VW is going to be increasingly disrupted unless they get their shit together. As are many other legacy manufacturers.
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rikimaru
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Post by rikimaru »

Utumno wrote: Mon Jan 03, 2022 5:16 pm Yes a Tesla puff piece, but the basic thrust isn’t wrong.

VW is going to be increasingly disrupted unless they get their shit together. As are many other legacy manufacturers.
Out of curiosity, what do you want VW to be doing more of/less of?
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Post by MattgID3 »

I like Tesla's but it's clear that the ev sales over 2021 have been hit by covid and the chip shortage, whist tesla have managed to meet demand (more or less) VW to name but one of many have struggled to meet the same demand. For many company car drivers the model 3 has been the best option due to faster turnaround. As the big manufacturers get a grip on orders and chips this year Tesla's march into Europe won't be nearly as straight forward as the article suggests. The French and German governments will never allow their big car manufacturers to be wiped out by tesla.
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EVOWNER101
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Post by EVOWNER101 »

VW Group screwed up big time over COVID. They just simply shut down their parts supply processes and instead of just delaying delivery of orders or keeping on with deliveries of important critical items, they cancelled the contracts. Tesla and a few other manufacturers in other industries, who perhaps new better or we’re just lucky, maintained deliveries and stockpiled or ask suppliers to hold deliveries. Paying stocking charges where asked. VW Group is big and has proven pretty resilient in the past. Will they do better or worse than Tesla or any other manufacturer in this sector in the future, no one really knows. Like all predictions that is all this article is, regardless of whether it is supported by good data or not. There are lies, damn lies and statistics as the very old saying goes. If the so called experts from the last two years have proven anything, that saying is as valid today as it always has been throughout history.
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Utumno
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Post by Utumno »

rikimaru wrote: Mon Jan 03, 2022 7:49 pm
Utumno wrote: Mon Jan 03, 2022 5:16 pm Yes a Tesla puff piece, but the basic thrust isn’t wrong.

VW is going to be increasingly disrupted unless they get their shit together. As are many other legacy manufacturers.
Out of curiosity, what do you want VW to be doing more of/less of?
Sorry @rikimaru, I inadvertently blanked your question.

In short, I'd like to see VW invest more heavily and visibly in vertically integrating software and hardware solutions. Putting aside Tesla's ability to disrupt car production, one of their biggest abilities in my opinion is to develop and own the software and hardware integrations and then be able to flex those in an agile manner.

This specific ability means innovation can happen within the typical lifespan of a vehicle design, because you can refresh that design more often when you can iterate quickly on the components and software interactions. VW, again to the best of my knowledge, is still an "assembler of vehicle components" rather than a "vehicle manufacturer".

Let me give you a link to look at from Continental : https://www.continental-tyres.co.uk/car ... electronic

And let me quote briefly from that page :
You can easily install the apps and services of your choice in the car, just as you would on a smartphone. Security loopholes can be remotely patched, and soon it will even be possible to install new driving functions without the car having to visit the workshop – everything will be done wirelessly via the mobile communications network or WiFi.

For you, this means the car stays up to date even years after it was purchased. High-performance computers also make costly product recalls due to software errors a thing of the past.
Sounds great doesn't it? I'd like VW to actually deliver on the promises their OEM made to them, and to us, on a piece of commodity hardware that Conti are pitching to any manufacturer. How will VW compete when the hardware and software is commoditised ?

Compare this with a quick overview of Tesla's AI hardware and software ambitions, which are vertically integrated when deployed into a vehicle's features

https://www.tesla.com/en_GB/AI

It's the same approach being demonstrated by Apple (and Google, and Facebook, and Samsung, and any number of other highly successful companies), year-on-year, in owning as much of the vertical integration between hardware and software as is possible, while playing to VW's native strengths in assembly and automotive development. What I see is more old thinking, lack of agility, and thinking that flinging 10,000 CARIAD engineers at "software" problems will resolve anything.

But that's just my 2 cents :-)
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Post by Uphamid3 »

Hopefully VW will learn from any mistakes they have made in several areas recently and will rebound stronger and more innovative than ever. But just because they are one of the industry's largest and most successful legacy manufacturers, doesn't guarantee them a bright future, or indeed, any future at all necessarily.
One only has to look at Kodak for example, leaders and pioneers in imaging technology in both consumer and commercial markets for decades. Knowing the imaging market 'inside out', they should have been THE prime company to pioneer the new way forward. Instead, they hesitated, made few half-hearted forays into the brave new digital world, and were then overtaken by a tsunami of competition due to the pace of change. The company was flying in the 1990s, and bankrupt by 2012.
Hopefully VW will become agile enough to move into the electric world successfully. I think they will.
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Post by andrewparker »

2021 sales demonstrate Tesla's dominance where UK BEV sales are concerned. Still only know one person who has parted with their own money for one though.

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Post by soupdragon »

I see that guy Alex posting on twitter an awful lot and while he makes some interesting points from time to time, he also spouts an equal amount of rubbish

Tesla builds cars in 10 hrs v 30 hrs for VW for example, and he calls that 200% lower productivity. That isn’t necessarily true. It’s all about the cost per hour, rather than the time taken when looking at productivity metrics

If I have a team of 10 builders making me an extension and they do it in 2 weeks, versus 2 guys doing it in 6 weeks, the cost per hour is cheaper if I take longer and use less resources. Now Alex might point to profit margins of Tesla which may or may not back up his point – but its pure guesswork at this point without having access to the underlying business KPI’s

Tesla and VW have very different business models and while it looks like Tesla are doing great right now, they are only now entering that 1m cars per annum which is still a relatively low number. The question Alex (and Tesla investors need to ask themselves) is that at what point to Tesla start sacrificing profit margin to continue growth?

VW group, Toyota group for example – they can touch nearly every postcode/zip code on the planet. That kind of scale costs money – lots of money. Tesla simply don’t have that customer reach right now

Car dealers are retailers at the end of the day, and if you go look at the world’s biggest players in retail – profit margins are single digit %. Walmart (worlds biggest retailer) makes more money at high scale/low profit margin than any of its competitors because retail outlets cost a lot of money to run but when you can touch every zip code in the US, the high volume wins every time versus high margin/low volume

Tesco/Ocado is an interesting view of high tech new disruptor, versus the large incumbent (Tesco) So much money piled into Ocado with its new tech, sophisticated robots etc, but where has it got them to? They are struggling to scale. Simple reason behind that is that before online shopping really even took off, Tesco could touch virtually every postcode in the UK. Ocado came in all singing all dancing with their new business model but the realisation is starting to dawn that touching every postcode in the UK cost lots and lots of money.

Since Tesco full year results in April 2021, Tesco share price is up 30%. Ocado share price peaked in Feb 2021, and has since lost 44% of its value. Investors have realised how this story pans out. Scale is expensive, especially when you are David trying to tackle Goliath.

Tesla business model will only take them so far with customers. ‘Customer reach’ will vary by area and for Tesla to grow into their lofty share valuation, they will need to sell multiple millions of cars per year – every single year. They are a long way away from that.

The Ford F Series pick up truck is a collection of different models, all combined, they sell just over 1m per year. The next best selling cars globally are all under 1m cars per year. Things like Toyota Rav 4, the corolla, the VW golf – hugely popular but none of them sell 1m per year. In fact, if you look at the top 25 vehicles sold worldwide, there is only 1 ‘premium’ car in the top 25- it’s the Mercedes C class, scraping in at 24th place

The big mistake Tesla investors are making, is doing what you call a ‘top down’ forecast. They take the trend (growth per annum) and trend that out multiple years. 0.9m last year, 1.6m next year, 2.5m the year after and so on. Same for the profit margin – keep that high margin consistent across the expansion. I’ve already touched on that re: customer reach, and touching every postcode/zip code and how expensive that is – but lets look at sales volume forecast on its own for a minute.

There is a thing in business called market saturation points. Let me give an example. If I invent on OLED TV that isn’t 4k, but is actually 16k resolution, 65 inches for half the price of a high end Panasonic OLED 4k TV – its going to be a hit, right? Damn right it will be a hit – more than twice as good for half the price – people will buy these up. So when I look at what market I can sell into, I’m going to make a big seller. However – despite making a brilliant TV, some people just won’t buy them, as they simply can’t afford them. Its still half the price of a high end Panasonic, but some people simply can’t afford to spend over £1,000 on a TV. Its as simple as that.

And this is the big mistake Tesla investors are making. There are zero premium cars that sell over 1m annually, and in the top 25 cars sold worldwide, only the Mercedes C Class premium car makes it into the top 25. So how do Tesla sell 10m cars per year in the future? 20 models selling 0.5m per year? 10 models selling 2m a year (which means having 10 cars that are twice as successful as the world leading car, the Ford F Series truck)

Tesla currently have 2 high volume cars, and there are getting to the point of needing a refresh. How on Earth do they get to 10m cars, and how on Earth do they find a way to make the general car buying public more wealthy, so that they stop buying Corollas, Golfs, Rav 4’s etc and suddenly find a lot of spare cash to go buy Tesla’s? That is beyond Tesla control unfortunately. Families have budgets to work to.

The sales forecast should be ‘bottom up’ rather than ‘top down’. You can’t just assume people will continue to buy cars at the same increased rate every year without considering how much money customers actually have to spend. Because when you do a bottom up forecast of cars in the Tesla price range (BMW, Mercedes, Lexus) along with EV adoption increasing annually, at a push, Tesla can maybe get to 2m cars per year before they hit market saturation point. That saturation point can only move higher if the car buying public somehow become wealthier than they currently are. Like the TV example, it doesn’t matter how good it is, if people can’t afford it, they can’t afford it – a harsh reality.

Tesla have the ability to reduce their profit margin to make their car more affordable, and that’s a way of increasing sales. But if they cut their margin in half to make their cars more affordable, then they need to sell twice as many cars just to stand still. So what you might find is that it’s easier for Tesla to stay in the high margin/low volume area, rather than the low margin/high volume as it would take an incredible effort just to ‘stand still’. And reducing profit margin would blow out the top down forecast of consistent profit margins for the years ahead anyway. The share price will drop significantly in either scenario regardless.

It’s a sad realisation that’s coming to Tesla investors. Probably not until 2023/2024 as there is still plenty of mileage left in the Tesla ‘story’. But that’s all it is – a story based on top down forecasting methods that is fundamentally flawed. Elon Musk can hind behind 2 new factories in Germany and USA for a little while and can claim about ‘ramping up’ issues, which will be the story over the next couple of years. I called out Twitters most popular Tesla financial analyst on twitter a while back (Gary Black) and I used his own personal forecast model (top down) and converted it to a ‘bottom up’ forecast which exposed him as the charlatan he is. I took his Tesla market share forecast, along with his global EV adoption forecast, overlayed it against global car sales by segment (SUV, city car, small car, saloon etc etc) and his 2025 forecast Tesla sales fell apart straight away, even before customer affordability was brought into the equation.

As for Alex – you would do well to ignore him. I can’t believe fully charged show give him the time of day for his nonsense. He talks about Cathie Wood the fund manager…dear me, go look at her $ARKK performance – its an absolute car crash of failures and her No1 holding, Tesla, hasn’t even failed (yet)

And don’t get me started on full self driving vision only system that Alex thinks is round the corner for feature complete, and that Tesla is leading the way. Tesla has backed itself into a corner by taking payment for it and trying to make it work for cars that don’t have the necessary hardware. Elon either needs to eat humble pie and start bringing in proper autonomous hardware, or just give customers their money back. We know how imperfect our human vision is, and even a $10k professional camera isn’t as good as the human eye. Dynamic range being the biggest issue. If the human eye struggles with high contrast, and is at least 3 x times better than a very expensive camera, then how on earth will Tesla get by with 8 x cheap cameras? We have little tricks we can use to improve our vision in high contrast scenarios (sun visors, sunglasses) but unless Elon straps a few automated ND filters (aka a set of automated Raybans attached for each camera) then he’s simply flogging a dead horse.

I say all this as a business analyst (day job) and an amateur photography, home cinema enthusiast. I’m a distinguished member on AV forums in the UK and also spent a lot of time on the American AV Science forum where lots of other members and I conducted lots of experiments learning a lot about light, lenses, video technology with input from many industry experts. When you are spending several £k on single high grade glass lens (which are still flawed) you get to understand that cheap cameras in Tesla cars will never deliver full self driving. Barrel distortion, chromatic aberration, ghosting, camera flare…this list goes on.

In photography, you can take a still image and ‘fix’ some of these errors using software. But just one single frame from a photo takes up a fair amount of compute/processing to fix the errors…..doing 60 frames per second in video?? That would be incredible. In fact, to give an idea of the level of difficulty to correct lens distortions on the fly – it would actually be easier to solve FSD than it would to solve those camera issues that Tesla have lumbered themselves with. When you add both difficulties together, FSD itself along with lens errors – along with the inherent lack of dynamic range that is physically impossible to overcome, you get to the ‘this is just not possible’ stage.

Have you ever been blinded at night on a dark road with a car coming the other way? Just remember, your eyes are actually seeing at least 3-4 x better than any camera can. Does anyone think these cars are going to drive themselves when they can’t even ‘see’ properly?
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IDontknow
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Post by IDontknow »

An interesting read - thanks soupdragon
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