Asymcar 20: Iconic Design

JoyThroughWork

We consider Uber’s street smarts, “cash on the hood” driver acquisition tactics and their ability to operate over the top, that is above local regulations and norms.

The proposed elimination of diesel cars in Paris and London ignites a side trip through today’s regulatory labyrinth.

Horace reflects on a recent Tesla test drive while evaluating innovation on jobs to be done, form factor design, production methods and their business model.

Jim considers Sandy Munro’s recent BMW i3 teardown, which lead him to conclude that “this car makes money”. Might BMW have leaped ahead of Tesla while pumping out 500,000 traditional 3 series this year?

We close with news that Porsche has once again rejected an “entry level” sports car project. This, despite their growing SUV and large car portfolio.

29mb mp3 about 60 minutes.

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Notes:

The Future of Cars Looks Very Different: Forget Power and Symbolism, Auto Are Becoming Communication and Utility Tools.

will be paid solely by a percentage of revocation reinstatement fees collected pursuant to this program

Herb Chambers, Auto Dealer Extraordinaire, Will Never Retire.

Possible changes to Europe’s diesel landscape.

Ford’s cap on lifetime service costs.

Porsche’s “baby boxster” project cancelled.

## Correction: Jim mentioned in the podcast that the Uber driver paid $10.00/month. It was $10.00/week.

  • Larry

    I listened with great interest to this podcast only to discover a complete misunderstanding of the disruptive potential of Tesla Motors. Instead, Horace chose to focus on all aspects of the Telsa business model he considered to not be disruptive, i.e. production methods, design of the car’s shape, and materials used. Not one minute was devoted to the single most disruptive aspect of the car, which is using electricity instead of gasoline. Electrical drive is superior in every way to ICE engines with the important exception of range. The Model S is the first and only production electric sedan to address this vital issue. That is what gives it disruptive potential.

    Since I have been driving a Model S for over a year (not just one test drive), I can state the car is vastly better as a commuter car than an ICE car. With overnight charging, there is no waiting at gas pumps and there is full range every morning. So the only remaining advantage the ICE cars have is on long trips. Given the gasoline refueling infrastructure has a decades long head start, I believe the commentators belittlement of the Supercharger network as niche misses the point. With electric cars, there doesn’t have to be specialized “filing stations” to handle the volatile liquid gasoline. A charging station can be put anywhere the car can go. The “filing station” model itself will be disrupted. Cost of long trips will be absorbed into the purchase of the car, again disruptive to established filing station model. The cost of transportation will become invisible to the consumer of the electric car. Again, the commentators failed to grasp the disruptive effect of “free” v. price per gallon or litre of gas.

    • http://www.asymco.com Horace Dediu

      What do you mean by disruptive potential?

    • Brant Arthur

      I think Tesla’s advantage is that they don’t make gas cars. I’m interested to look more into how BMW is trying to disrupt itself by setting up “Project i” within a gas car company and investing up to $2 Billion in the separate group. How will they keep the anti-bodies from setting in? Are they succeeding?

      More reading:
      http://www.cnet.com/news/bmw-i3-declassified-why-the-bavarian-motor-works-little-ev-has-big-potential/
      http://blog.caranddriver.com/a-glimpse-inside-bmws-i-electric-project/

      • http://www.asymco.com Horace Dediu

        An advantage must be asymmetric to be successful against entrenched incumbents. Since technical innovation can be (and almost always is) copied, the asymmetries which lead to successful entry are business model innovations; i.e. making money in different ways. Ways that incumbents reject.

        The question with Tesla has always been what is it about their business model that cannot be duplicated? The only answer I’ve been able to find is the dealer relationship model. It remains to be seen whether this is both necessary and sufficient.

        I will repeat this point: no powertrain innovation has resulted in a disruption in the industry. Nor has any other technological component (tires, materials, fuels, driver aids) offered sustainable advantage to an entrant. The only major shifts in profitability were from production systems (Ford, GM and Toyota). But even those became universally adopted over a span of decades. Tesla uses a Toyota production system.

      • http://www.asymco.com Horace Dediu

        I am preparing data to discuss the timing question, which is probably the only relevant question with respect to change in the industry. So far it seems that even hybrid power train technology will take another 20 years to reach 30% penetration. Pure electric cars are far slower adoptions and on a century-long adoption cycle.

        • Brant Arthur

          I agree with your focus on timing. I’m interested if there are successful ways that governments can shorten this adoption cycle. California has been offering incentives for zero emission vehicles for a while now ($2,500 for EVs) and that may even ramp up following the state’s first year of collecting Cap and Trade money from transportation ($832 million will be reinvested in California through the 2015 budget and will continue at similar rates annually). Other government/states are likely to follow

          From what I’ve read, incentives like these have kept Tesla afloat. There is also the requirement that 15% of vehicles sold in CA by 2025 be ZEV and this seems to be motivating many manufacturers to bring solutions to market. I’m curious if there’s data that might point to this being an effective plan or if there’s another option out there (particularly if your goals are climate related or simply to have transportation without the environmental externalities of fossil fuels).

          • Eugene

            Would it be reasonable to say the “unique” aspect of Mr. Musk’s work was attempting to apply the Toyota method across complementing industries? Is it possible to create a competing energy and transportation platform that uses solar and batteries?

            I imagine they can drive the cost of batteries downward through massive scale (Gigafactory) and extending the serviceable life of their battery packs into grid tied storage for solar customers. Who knows whether Solar City or their customers can store excess kWh in their packs and resell during more advantageous rate tiers? Could their network of solar customers become a distributed energy grid?

          • http://www.asymco.com Horace Dediu

            The grid is not free. The costs associated with maintaining the grid and the transmission losses that go along with it are huge. If Musk is interested in being an energy disruptor then he needs to establish a parallel network. He cannot rely on the goodwill of those who built and maintain a grid that has an asymmetric business model.

        • Rodrigo Fernandes Moreira

          Horace, in the “The Innovators Manifesto”, by Michael Raynor, there is some information about disruptive innovation timing.

    • Walt French

      @Larry wrote, “Electrical drive is superior in every way to ICE engines with the important exception of range.”

      So, capital cost of batteries is insignificant?

      I’m enthused about the tech. But I regularly drive only a few miles a week (and share a Prius w my wife for longer trips). That means the range is no issue for my commute but also that I gain all-electric’s advantages only over 4K miles per year, making the up-front cost very high in terms of dollars per ton of avoided carbon.

      My case may not be that usual but we haven’t really seen a big-enough technical advance to shift most consumers’ optimal choices.

      • http://www.asymco.com Horace Dediu

        For all its superiority, ‘electrical drive’ has been a market failure for at least 110 years. It was available on the market before the ICE.

  • Brant Arthur

    Loved the latest episode and thought back to it when reading that Nissan plans a more typical design for the next version of the Leaf. My test audience for design is my mother, who thinks the Tesla is the most beautiful car ever but would not buy an i3. I’d go for an i3 over the Tesla, but can’t afford either one at this point in my life. Here’s the quote on Nissan design:

    Nissan explained that making the Leaf stand out visually was necessary a few years ago because EVs were still few and far between on American roads. Four years later an eccentric design is no longer a must and the next Leaf will feature a more conventional front-end inspired by Nissan’s latest design language. It will retain the current model’s hatchback configuration and boast a floating roof thanks to blacked out door pillars.

    Designers credit Tesla for proving EVs don’t need to be characterized by an atypical design.

    “The current Leaf is aiming too much [for] an EV-like appearance. Tesla doesn’t look EV at all. The Tesla S just looks nice, very sporty, sleek, but very authentic,” explained Mamoru Aoki, Nissan brand’s global design chief, in an earlier interview with trade journal Automotive News.

    Read more: http://www.leftlanenews.com/nissan-leaf-2017.html#ixzz3NJtyz4sP

  • Bruce_Mc

    Uber’s goal: turn a corrupt, antiquated, inefficient, exploitive business into a corrupt, modern, efficient, exploitive one. I don’t believe anybody at Uber wants to make the world significantly better for drivers or for passengers. They just want to replace the old boss with a new boss. This will require short term improvements for drivers and passengers, but once they have displaced taxis the improvements can and will be removed.

    Las Vegas has a monorail transit system that connects the casinos to each other. The monorail does not go to the airport, because the taxicab companies were able to exert enough political pressure to stop it. I suggest that if Uber had already disrupted taxis there, they would fight just as hard to keep the monorail out of the airport.

    Public and private transportation is a complex subject, but I think Uber is as much part of the problem as part of the solution.

    • http://www.asymco.com Horace Dediu

      Business models are not designed to make the world a better place. They are designed to make money. Whether the world becomes better or not is entirely in the eye of the beholder.

      • Bruce_Mc

        Yes, there are many ways to run a profitable business. And profit is a much easier to quantify than public good, no question about that. However, “standards organizations,” with metrics that measure corporate impact on society in general do exist, just as organizations that try to rate and rank the behavior of governments towards their citizens exist.

        Putting all that aside and getting back to Uber, Ben Thompson theorizes that the market Uber serves is a winner take all market.

        http://stratechery.com/2014/uber-fights/

        I suggest that, after Uber or some other company has won a particular area, there will be little incentive to make riders or drivers happy, much like the current situation with taxis.

        Here in California we had a pretty bad experience with deregulation of the price of electricity. “Surge pricing” and extra wear and tear on electrical generation facilities led to ending the deregulation. I don’t think Uber is the new Enron. But there are parallels.