There is an interesting story about companies and success that is as old as it is true. The most recent example involves the automotive industry and battery electric vehicles (BEVs). When you come to compare the story to what is happening now, you notice the similarities pretty quickly. Interestingly, it seems that the automotive executives either didn't know the story or couldn't compare it to what they were writing.
Here’s the story: A man started a business right after he got married. He and his wife created a small store that thrived by selling good quality products at fair prices. This helped this couple become successful, expanding the store into a larger facility and eventually into multiple locations, employing several workers. Their only son also benefited from this by attending solid private schools and enrolling in a reputable university, where he studied business administration.
When he graduated, his parents told him he should run the business, which he happily agreed to. Claiming that the economy was in a massive downturn, he laid off several employees, which caused the quality of customer service to decline. He also began buying cheaper goods, which allowed the stores to have a larger profit margin, but only initially. Eventually, the company had to sell its stores and return to the small one his parents had started. Surprised, his father told him, “We really are in a massive downturn!”
Photo: Volkswagen
Let's focus now on the automotive industry. It is one of the most complex and competitive industries in the world, perfected for over a hundred years. It was doing pretty well until someone told them that they should only sell BEVs. Many brands have started selling some models or even committed to go pure BEV by 2030 or a little later. Currently, most of them are losing money on their Electric vehicle divisions. Companies that have noticed the problem have said they should be more flexible with their electrification plans. Those that haven’t are blaming customers for not buying the right products. Aren’t the similarities obvious? Yet, few must have noticed them. If they had, they wouldn’t have produced compliant cars as if their lives depended on them.
The truth is that they were convinced that this was exactly the case, and many people still push this narrative to convince those who are still not convinced. Just read the news and you will see BEV advocates saying that those who take a more cautious approach to BEVs could die off soon, lose competitiveness, or have idle factories… You name it. Ford announced it would not produce a three-row electric car Off-roadand people are already saying that it “could put them in trouble” if other automakers learned how to make money with BEVs. The problem is that so far, so few companies have said they have, and it’s hard to believe even one of them.
However, the list of risks and threats to the survival of these companies that BEV proponents have created is long. There is always a sad fate for those brands that want to be more flexible about their electrification plans. They are told that they should burn these ideas and go electric right away, or they will miss the boat! They won't know how to build electric cars! If they don't learn it right away, they will go bankrupt! These threats have gained more traction when they come from politicians elected with “green” promises with no idea of how the real world works. These are the same people who shut down nuclear power plants to buy gas from Russia, the same people who try to convince you to rely on public transportation even in places where it doesn't work properly or at all. You know them well.
Photo: Library of Congress
These guys have been vilifying personal transportation and blaming cars for rising global temperatures as if they were the only source of carbon dioxide and that gas were the only cause of global warming. Automakers know that oil is a limited resource and have been researching alternatives for decades. Electric cars were one of the first options before Charles Kettering invented the electric starter in 1912. Even when they disappeared, they tried to come back every time the battery industry encountered some advancement. The first alkaline fuel cell was introduced in 1932. In other words, the auto industry knows how urgent it is for them to come up with an alternative to the internal combustion engine (ICE). They know that the electric motor makes much more sense. If they haven’t adopted it widely so far, it’s because we haven’t figured out a way to properly power these electric motors. Forcing automakers to do so will either kill them or limit cars to those who can afford to pay whatever the cost.
After the first decade of modern BEVs, what we can see are cars that will have to replace the battery pack if they want to continue to operate. Used cars are depreciating assets. This is not a problem for early adopters, who keep their cars for a maximum of two years and are always looking for the next gadget on the market. These are not the guys who helped build the auto industry as we know it. At best, they are the ones who helped get it started. It was Henry Ford and his decision to raise wages that helped create the conditions in which the auto industry thrived. Without people able to afford mass-produced vehicles and willing to buy used ones, these cars would still be exclusive to the rich and powerful.
Instead of an educated child who thinks he knows more than his parents, the modern fairy tale features climate activists and politicians who think they know what the auto industry should be selling. Worse, they accuse the industry of doing everything it can to perpetuate the combustion engine, if not killing the electric car. What if the industry is just trying to find an economically viable way to sell cars powered by batteries or fuel cells? Who would bet on something with a limited time frame if they had better, more sustainable options to sell? It makes no sense.
Photo: YASA
If we continue down this path, we will see more and more governments trying to attract car companies by any means at their disposal. It doesn't matter if they are under dictatorships: as long as they produce vehicles locally, they will also receive local names. After attracting these industries, these governments will tell them what to produce and sell. They simply forgot to convince customers of this. Let me correct: they tried to seduce them with tax incentives. When these incentives are reduced or cut, people go back to having options other than BEVs, even if not purely ICE vehicles. They are at least hybrids because no one likes to burn money on gas. Customers also hate owning vehicles that depreciate as quickly as BEVs.
Will automakers realize that they don’t have to sell BEVs to survive, or will they just believe that there is a huge crisis and that they can’t do anything? Will politicians let them decide what to sell? Will they let customers choose what to buy? From what we can see nowadays, we will probably have to update our old stories. I wonder if using more explicit characters will finally make people understand them?