How does auto manufacturing survive?

and people think stealing cats is a big issue, wait until the thieves figure out how to steal a whole battery pack or the power inverter (or whatever its called under the front engine bay)

 

I know the source of this is BLS but I'm questioning what's all in this graph. According to the graph, inflation is at 30% which I do not believe is correct. I think a better representation of what you're trying to say is what the current margin is per the average new vehicle.

To the original post, yes mfg's are going to feel the hit. They're not going to measure how much is sold because they know that the more they produce, the more they sell. It's how much they can deliver (ship)

 

The cost of new cars is up 60% since 2012 while general inflation went up 30%. Percentage of change is the Y axis and time is X.

 

They could easily own their own garages for service, supported by the manufacturer with parts etc, trained by the manufacturer create a manufacturer supported maintenance facilities ownership opportunities for those that want to do that. I dare say that the service might actually be better and possibly less expensive as well. I am sure there are quite a few dealer service centers staffed with techs and service writers that would welcome not having to work with the dealer side of the house screaming down their necks to increase profits for the dealerships. Some of them might just want to own their own manufacturer service center.

As many have said, dealerships make all their money on service...that does not lend itself to competitive service rates and pricing. Manufactures would make money on both ends, and it would no longer be a one sided profit game. So competitive pricing on service or included service could become a thing.

 

If anything, inflation is over 30%.

Don't believe official numbers. Just look around you.

 

Had not thought of it this way. Makes perfect sense

 

Subjective

Didn't see that it was percentage of change. The graph made it look like just pure percentage. Makes a little bit more sense now.

 

Particularly since everyone is making crap nowadays, plenty of service opportunities.

 

another hidden cost of ev -- https://www.autoblog.com/2023/03/20/ev-battery-packs-insurers-junk-entire-car/

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LONDON/DETROIT — For many electric vehicles, there is no way to repair or assess even slightly damaged battery packs after accidents, forcing insurance companies to write off cars with few miles — leading to higher premiums and undercutting gains from going electric.

And now those battery packs are piling up in scrapyards in some countries, a previously unreported and expensive gap in what was supposed to be a "circular economy."

"We're buying electric cars for sustainability reasons," said Matthew Avery, research director at automotive risk intelligence company Thatcham Research. "But an EV isn't very sustainable if you've got to throw the battery away after a minor collision."

Battery packs can cost tens of thousands of dollars and represent up to 50% of an EV's price tag, often making it uneconomical to replace them.

While some automakers such as Ford and General Motors said they have made battery packs easier to repair, Tesla has taken the opposite tack with its Texas-built Model Y, whose new structural battery pack has been described by experts as having "zero repairability."

Tesla did not respond to a request for comment.

A Reuters search of EV salvage sales in the U.S. and Europe shows a large portion of low-mileage Teslas, but also models from Nissan, Hyundai, Stellantis, BMW, Renault and others.

"A Tesla structural battery pack is going straight to the grinder," Sandy Munro said. The pack in a Tesla Model Y has "zero repairability."

EVs constitute only a fraction of vehicles on the road, making industry-wide data hard to come by, but the trend of low-mileage zero-emission cars being written off with minor damage is growing. Tesla's decision to make battery packs "structural" - part of the car's body - has allowed it to cut production costs but risks pushing those costs back to consumers and insurers.

Tesla has not referred to any problems with insurers writing off its vehicles. But in January CEO Elon Musk said premiums from third-party insurance companies "in some cases were unreasonably high."

Unless Tesla and other carmakers produce more easily repairable battery packs and provide third-party access to battery cell data, already-high insurance premiums will keep rising as EV sales grow and more low-mileage cars get scrapped after collisions, insurers and industry experts said.

"The number of cases is going to increase, so the handling of batteries is a crucial point," said Christoph Lauterwasser, managing director of the Allianz Center for Technology, a research institute owned by Allianz.

Lauterwasser noted EV battery production emits far more CO2 than fossil-fuel models, meaning EVs must be driven for thousands of miles before they offset those extra emissions.

"If you throw away the vehicle at an early stage, you've lost pretty much all advantage in terms of CO2 emissions," he said.

Most carmakers said their battery packs are repairable, though few seem willing to share access to battery data. Insurers, leasing companies and car repair shops are already fighting with carmakers in the EU over access to lucrative connected-car data.

Lauterwasser said access to EV battery data is part of that fight. Allianz has seen scratched battery packs where the cells inside are likely undamaged, but without diagnostic data it has to write off those vehicles.

Ford and GM tout their newer, more repairable packs. But the new, large 4680 cells in the Model Y made at Tesla's Austin, Texas, plant, are glued into a pack that forms part of the car's structure and cannot be easily removed or replaced, experts said.

In January, Tesla's Musk said the carmaker has been making design and software changes to its vehicles to lower repair costs and insurance premiums.

The company also offers its own insurance product in a dozen U.S. states to Tesla owners at lower rates.

Insurers and industry experts also note that EVs, because they are loaded with all the latest safety features, so far have had fewer accidents than traditional cars.

'Straight to the grinder'
Sandy Munro, head of Michigan-based Munro & Associates, which tears down vehicles and advises automakers on how to improve them, said the Model Y battery pack has "zero repairability."

"A Tesla structural battery pack is going straight to the grinder," Munro said.

EV battery problems also expose a hole in the green "circular economy" touted by carmakers.

At Synetiq, the UK's largest salvage company, head of operations Michael Hill said over the last 12 months the number of EVs in the isolation bay – where they must be checked to avoid fire risk - at the firm's Doncaster yard has soared, from perhaps a dozen every three days to up to 20 per day.

A replacement battery for a Tesla Model 3 can cost up to $20,000, for a vehicle that retails at around $43,000 but depreciates quickly over time.

"We've seen a really big shift and it's across all manufacturers," Hill said.

The UK currently has no EV battery recycling facilities, so Synetiq has to remove the batteries from written-off cars and store them in containers. Hill estimated at least 95% of the cells in the hundreds of EV battery packs - and thousands of hybrid battery packs - Synetiq has stored at Doncaster are undamaged and should be reused.

It already costs more to insure most EVs than traditional cars.

According to online brokerage Policygenius, the average U.S. monthly EV insurance payment in 2023 is $206, 27% more than for a combustion-engine model.

According to Bankrate, an online publisher of financial content, U.S. insurers know that "if even a minor accident results in damage to the battery pack ... the cost to replace this key component may exceed $15,000."

A replacement battery for a Tesla Model 3 can cost up to $20,000, for a vehicle that retails at around $43,000 but depreciates quickly over time.

Andy Keane, UK commercial motor product manager at French insurer AXA, said expensive replacement batteries "may sometimes make replacing a battery unfeasible."

There are a growing number of repair shops specializing in repairing EVs and replacing batteries. In Phoenix, Arizona, Gruber Motor Co has mostly focused on replacing batteries in older Tesla models.

But insurers cannot access Tesla's battery data, so they have taken a cautious approach, owner Peter Gruber said.

"An insurance company is not going to take that risk because they're facing a lawsuit later on if something happens with that vehicle and they did not total it," he said.

'Pain points'
The British government is funding research into EV insurance "pain points" led by Thatcham, Synetiq and insurer LV=.

Recently adopted EU battery regulations do not specifically address battery repairs, but they did ask the European Commission to encourage standards to "facilitate maintenance, repair and repurposing," a commission source said.

Insurers said they know how to fix the problem — make batteries in smaller sections, or modules, that are simpler to fix, and open diagnostics data to third parties to determine battery cell health.

Individual U.S. insurers declined to comment.

But Tony Cotto, director of auto and underwriting policy at the National Association of Mutual Insurance Companies, said "consumer access to vehicle-generated data will further enhance driver safety and policyholders' satisfaction ... by facilitating the entire repair process."

Lack of access to critical diagnostic data was raised in mid-March in a class action filed against Tesla in U.S. District Court in California.

Insurers said failure to act will cost consumers.

EV battery damage makes up just a few percent of Allianz's motor insurance claims, but 8% of claims costs in Germany, Lauterwasser said. Germany's insurers pool data on vehicle claims data and adjust premium rates annually.

"If the cost for a certain model gets higher it will raise premium levels because the rating goes up," Lauterwasser said.

 

Low inventory costs, high demand allowing dealers to add "packages" that are already marked up buzz lightyear style (eg floor mats, sill protectors, bed liners for a $3k package price) and the dealer can tell you to pound sand if you dont want it because he's got a list 20 people deep that will pay it just so they can have a truck/vehicle. Sucks to be in the market now.

 

the problem is finding the dealers not playing that game. 80-90% are in the markup business, its the hard part finding the 10% that are not. luckily for me i have a dealer that is doing msrp about 100 miles away but my local dealer is doing 5-7% off but his allocation fulfillment is abysmal. it took 10 months to get mine.

but on the flip side, my local dealer pretty much has any truck coming in sold already.

i had mine processed in 2 business days and out the door driving away.

 

This is where the dreaded ADM comes into play. In business you either sell a lot at low margin, or sell a few at high margin. Considering most dealers are barely getting inventory, yet selling everything they have almost as soon as it’s allocated, at whatever price they want, I really can’t blame them. They’d be fools not to do this. Low margins and discounts are only necessary when you and everyone else has plenty to sell.

For vehicles (and a lot of other things) competition is based on availability, not price at the moment. If you have something everyone wants, that they can’t get anywhere else, and you don’t have many to sell, why wouldn’t you make as much as you can on that sell? It sucks for the buyer, but there’s no reason to get mad at them for doing it.

That said, I didn’t pay a markup on mine, and got it the same day I decided I wanted to get it. You just have to look for the right situation and be willing to walk away.

 

I work in the industry and while supply is starting to recovery. Demand is still absolutely crazy. Dealers are pre-selling 50%+ of cars. If you are looking at hot in demand cars your going to see a higher number than even that

 

Basic economics theories at play here:

- There are only so many consumers you can reach. Demand has limits - you will never convert the market 100% to your product - nor convince people they need more than what they want. At a point - you saturate the market and kill demand.

- On the obverse of that - when supply is extraordinarily tight - people will convince themselves they NEED a product - even when they don’t. Fear of missing out is real. Just like TP in early 2020 - panic buying can spur people into action.

- Car dealers HAVE struggled with inventory - but it has started to subside….BUT if you make it look like your short and you can falsely inflate demand. A funny thing happened in used cars - check out some of the prices from November-February of this year…they dropped. But then in February it started climbing again - sharply. Turns out the rate hikes and the holidays caused a false bottom - but then things turned around quickly and no one was buying up inventory fearing the bottom might keep falling out with the rate hikes so a lot of places were caught flat footed come early February (the month car sales typically peak - despite being the shortest month - February is usually the biggest sales month at a dealership).

I suspect as we go through April and May things will slow - and the traditional slow months of June/July will return with things picking back up in August a tad - back to school time and then do the traditional ramp up into December before a lull and then the Feb bump. Of course - it could be madness any day too - and taste change based on trends and gas prices. Things like mid size SUV and full size trucks have been recession proof for a while - wonder how long that can last.

 

Good thing Toyota has a pile of cash reserves banked so they can spend some of it on developing EVs that outlast Tesla, Rivian, Lucid, and others in addition to hybrid production.

 

Saw on the news that Ford said their EV division will lose 3 billion dollars this year, they lost 2 billion in 2022.

 

I think the long game of breaking results down by division is to create a paper trail showing the division the government pushed it to grow dragged the company down. Makes an excellent case for a government bailout in the case of bankruptcy.

 

In EU it didn't work well. Because most of everything is high-voltage, only a trained mechanic (really trained to not take his own life, not ASE bs) can touch an EV. As an outcome, his pay grade is above the roof, only a few repair facilities exist in the whole country, long wait times, and an EV is almost assuredly totaled before even attempting a repair. EVs in Norway are all junked as soon as they have a minor problem. Compared to that EV disaster, ICE is a piece of cake and is very ecology-friendly, since it can be repaired almost indefinitely by anyone, who knows how to turn wrenches.

They really need to tax every new produced vehicle, a big time, like 50% of the production cost. It makes no sense to fight against ICU pollution and promote buying a new vehicle every 2 years at the same time. Vehicles must be repairable.

 

I bought the extended warranty on my Tacoma. It paid for itself at 95000 miles when my A/C died.

 

I think Hybrids and Plug in Hybrids are still going to be the sweet spot for a while now. There is no doubt that EVs are the long term future but I just don't see the mass adoption as of yet.

 

And not replaceable. Because who cares? Everyone is replacing phone every year or two.

 

It is mostly a chip technology improvement. Modern smartphone consumes nothing compared to old phones when truly idling (no background activities, like facebook).

Replace a battery in 10 years? Lead-acid battery - yeah, sure. It is $100 or so, right? Hybrid or EV battery - never happen, people will just dump their vehicles. Hybrids with failed battery still may be operated by poor people who will drive them to death, but a new battery? Never happen.

 

Think of gas or diesel fuel as an ultimate battery nature created. ICE is not very efficient in converting the chemical energy to kinetic energy, but neither is the battery effective in converting electric energy to chemical.

There are novel ICU designs, like a high speed rotary engine that can have 1 ignition cycle every few hundreds or thousand cycles. That will kill ICU's inefficiency when idling. On a highway, modern ICU vehicles are already not much different from EVs in terms of efficiency.

My 20 years old Volvo has 400 miles range. Would it be diesel, like they are in EU, the range would be 600+ miles. When I go to wilderness, I put as many 5 gallon jugs in the roof basket as I need to extend the range. Would switch to EV if the effective range is in thousands of miles, so I could charge it at home before the week-long trip and do not worry about fueling/charging. Right now EV can be driven only short range.

 

Spicy pancakes!!

 

I honestly don't understand these 100% confident "wave of the future" predictions.

Can EV technology improve to the point where it becomes more practical to a wider variety of people? Sure. Absolutely. That isn't in doubt.

What is in doubt is whether investing the capital to get there will be practical for most auto companies for the long term if profits don't materialize on these divisions with the technology in its current form and the government support disappears. Generally you invest in development where you see potential for profitability and you don't invest where you don't. And you have to measure how much the development will cost and how long it will take compared to what your slice of that pie is going to be if every company is all in on EVs when your investments come to fruition.

A company like TESLA that has always done only this will still be there after the dust settles. When every other company jumps into the pool saturating it with product that doesn't sell and then politics change and the incentives are no longer there, and maybe oil exploration opens up again, these will be the barriers to EV development. Not the capability to improve it, that's there. It's the practicality of the investment if there comes a time where automakers start to see better use for the money back in the ICE division.

LEt's get back to a free and unconstrained energy market without any pressing down on one side of the scale then see what things look like. I have trouble calling something the wave of the future when we're not sure everyone would gravitate to it without being pushed. IT may be or it may turn out to have been a fad. We aren't going to know for awhile.

 

What is obvious is that none of us knows what the future holds. An if EV's are the future than the future is bleak. Between the fact you have to total the car for a minor accident, the absolute insane prices for what you get, the complete lack of infrastructure, all the way to destroying the earth to obtain the materials needed to make them. ICE will be around for decades longer, at least 50 or more years. Maybe hydrogen or something else will prevail but EV is not the solution. YMMV.

Also a Lucid starts at over $89000 and that is the base model which gets 410 miles. A niche level price. The 520 mile version starts at $169,000.

 

You mean battery-powered EV? EV that is converting, say, water to electrons right on board would blow just everything else out of, uhm, water I would scrap all my gas-powered vehicles right away and buy an EV that works on water. I could go overlanding for weeks carrying only beer in trunk and peeing in fuel tank.

 

Yes we can continue to move the goal posts all day long here, but my comments were based in response to your earlier comment. As far as that price for a Tundra? Only a moron would pay that. YMMV.

Read. Do research. Plenty of facts to be had on the state of this EV debacle.

https://www.caranddriver.com/news/a42709679/tesla-insurance-fixes-expense/

 

Yeah they have the repairs all figured out...


https://www.reuters.com/legal/tesla-hit-with-right-repair-antitrust-class-actions-2023-03-15/

 

That would be great! An probably possible. Problem is they won't make any money off of us that way so will probably never happen. The making money off of us and/or exerting control over us is another reason why they are pushing what they are pushing.