Hey, Your Top Automobile News for 02 September, 2020

Your Daily Automobile updates From Around The World [img]  [Learn more about RevenueStripe...]( [img]( [The Automobile News]( [Tesla Introduced A Business Model The World Has Not Seen Before]( You can save tens or hundreds of thousands of dollars with continuous improvements to a Tesla, which is a stark contrast to other automaker that do something else continuously: ask you to pay again! One of the major reasons why Tesla is winning against its competition hands down is completely overlooked, underrated, and rarely mentioned. It is the value creation for customers. Other manufacturers have no answer for. Tesla adds value for its customers like no other company in the world. I am not talking about safety features, being fun to drive, or sustainable transportation soft values, but about hard dollars in their pockets. This has nothing to do with autonomous driving or robotaxis, which, if they arrive one day, will add 6-digit value appreciation on top. What we are experiencing today is not a competition about who has the fully electric vehicle (BEV) with the best specifications, the longest range, the best efficiency, or the ability to charge the fastest. What we are experiencing is not a competition between BEV and gas/diesel powertrains, but the competition between two contradicting business models. When Tesla started its operations, Elon Musk chose a unique business approach compared to all other automakers, and it makes all the difference. That difference is expressed in today’s high market cap of Tesla [TSLA] despite still low vehicle delivery volumes. The incremental value Tesla creates per vehicle for its customers is higher compared to any other competitor, and that is critically important for a successful business. If customers get a better deal financially, why should they ever buy again from the competition?! The business case Tesla offers to its customers is worth some tens of thousands or up to hundreds of thousands of dollars per car over 10 years, and no one can compete with that. Tesla is the only automaker worldwide that continuously improves the vehicles it has sold, and for free. Compare this to all other companies that sell you, again and again, a new model with slight changes for a premium price. With a well-thought-through set of hardware, a Tesla vehicle can continue to improve with over-the-air software updates almost endlessly. Minor hardware adjustments are silently included when ready but not even advertised. The newest Autopilot computer is also a good example of adjustments in older vehicles that are free of charge to keep your car up to date. Other continuous improvements are included in the hardware when appropriate, and many are not even immediately detected by the market. Some hardware changes are included that don’t move into previously produced cars, but that does not matter for the value created for its customers as long as the delta between used car values and new car values of comparable competitor vehicles remains the same. That will be explained in depth later in this article. To conclude: the hardware gets better, the software gets better, and the bulk of it is for free. Tesla’s unique business approach is a key difference to the annual model releases incumbents are known for. With smaller changes and adjustments often combined with a facelift, this did guarantee that consumers for many decades wanted the latest and greatest new model and, of course, had to pay a premium price for it. A model was enhanced and slightly changed on a regular basis to drive sales. That business model enabled manufacturers to continuously sell new cars for 100+ years because consumers wanted the latest and greatest advertised features. Marketing and ads successfully motivated them to do so. They guaranteed a conversion and stable revenue flow from an old customer who sold their used vehicle, with depreciation, to people who could not afford a brand-new car. The used car created further aftermarket revenue with services and spare parts. Tesla instead decided to produce one hardware set that improves with software updates. The business model requires an integrated and centralized IT architecture and a “vehicles build around a computer” approach. It is superior because, as a consumer, you have a new vehicle all the time regardless of how many years you own it. It is almost as if it does not age, a Dorian Gray of the automotive world, with many secrets but no hidden aging painting. For that reason, you do not have a Tesla model year, but a car with a certain software version, and that version describes how current your car is. The software version, not the year of production, describes what it can and can’t do. This is actually not comparable to smartphones. In that market, you are gently forced to buy a new smartphone from the brand of your choice due to your wish to have the latest functionality, or you stick with an outdated phone with old functionality. Tesla’s approach is different. Because it is so new and different, it is not understood and the consequences are misinterpreted. Tesla is the most misunderstood company in the world. Even today, with continuous strong coverage in the media and a ton of analysts turning every stone over to understand the market cap, almost nobody understands the basics of their fundamental business model. The approach from incumbent automakers to sell models with enhanced hardware features makes sense since they earn money with every vehicle sold, and even more important, with spare parts and services in the aftermarket. Their global fleet of used vehicles is the cow they milk until it dies in an accident or by old age decades later. Without the after-sales business, most automakers would be structurally unprofitable, because the revenue stream from the fleets on the roads is tremendously large and much more important for their bottom lines than new vehicle sales. A Tesla does not have a large fleet on the road or significant after-sales business, so how can it make any profit, especially when giving continuous vehicle improvements away for free? If you don’t have an answer to that question, you do not understand what Tesla is doing. A BEV is a car that does not have a lot of wear and tear, compared to a car with a combustion engine. The latter is a vehicle that is under tremendous stress, with continuously exploding gas inside putting force on many parts of it until those parts need to be replaced. Many parts need continuous care and have to be exchanged again and again to keep the car running. An entire industry with a separate supply chain, separate services, and separate manufacturing has lived on that after-sales business for 100 years very well with profits much better than vehicle manufacturing offers. Without the after-sales revenue, the automotive industry is structurally unprofitable. An incredibly large fleet of 1.33 billion vehicles in the world need to be repaired and serviced every day. A BEV does not need all of that after-sales service, and typically has a long life. Already, today, Tesla can deliver a battery lasting a million miles. Soon, a million miles will be a standard for a Tesla and expected from customers. It is a long-living vehicle and will hold two times the life of a gas/diesel car for a fraction of the cost, or even longer. If you now expect low revenue and profits for Tesla, the opposite is true. Tesla is one of the most profitable automakers in the world. How can that be and how is that possible? The answer is simple. A gas/diesel vehicle manufacturer is only selling a new vehicle if a buyer in that specific vehicle segment needs one to replace the previous car or wants the latest and greatest new model. The market for incumbents is saturated with the demand of about 70–90 million vehicles per year. With a projection of 20 million Tesla vehicles per year, Tesla could account for about 25% of the annual market. That alone could be the largest revenue increase the world has ever seen in the auto segment and could mean long-term revenues and profits. The margin and revenue from a Tesla will be much bigger than what any internal combustion engine (ICE) car will ever create, because Tesla doesn’t only sell a car, but also the vehicle software, a charging network, energy to power it, car insurance, a solar roof, and house batteries, to name just a few things. All of this needs software, and software is eating the world, with incredibly high margins. [Read more…]( [Read Full Story]( [Opinion: AtmaNirbhar Auto Industry: The China Factor]( With the current upheaval in diplomatic ties between New Delhi and Beijing, we look and analyse how AtmaNirbhar is really in the Auto Sector and the ways the industry has been impacted owing to humongous supply chain disruptions that the Galwan Valley situation has brought with it. As enticing as it may sound for India to be self-reliant, especially from what China is exporting to us, the numbers beg to differ significantly in China’s favour, at least for now. he latest official figures from the Indian embassy in Beijing, China, show export of USD16.32 billion worth of goods and services from India to China while the imports from China to India stood at USD68 billion, indicating a very high current account imbalance of USD51.68 billion. After the sweeping nationwide Anti-Chinese sentiments, the trajectory of the imbalance seems to be shifting in favour of India, but the numbers still indicate us far from being AtmaNirbhar in a real sense. [Time Fram: 2019(Jan-Nov)] The Indian automotive industry has been mainly importing components like suspension & braking, body/chassis/BiW, drive transmission & steering, engine components, and cooling systems from China. [Product wise segmentation of Imported Components. Data Source: - India Auto Component Industry Performance FY 19, ACMA ACMA.] In FY19 the total imports for auto components were at USD17.6billion. Among these figures, China happens to be the largest exporter of auto components to India. Out of the entire pie, 27% of India’s auto part imports, including engine and transmission parts, came from China, according to data from the Auto Component Manufacturers’ Association of India (ACMA) [Source- ACMA Annual Report] No other options The foreign reliance of the automotive industry doesn’t end here. In 2020 the Indian automobile sector saw the highest Foreign Direct Investment (FDI) of about USD988 million followed by metallurgical, electric equipment and services. “We don’t import because we like to, but because we have no choice,” said RC Bhargava, chairman of Maruti Suzuki India Ltd, the country’s biggest carmaker. On delving deep into finding the reason as to why there is not much of an option, we find that the industry was forced to upgrade from BS-IV emission standards to BS-VI emissions in three years, a time frame very short to allow the industry to set up the cost-effective domestic supply chain. This forced the sector to look out for cheaper and efficient global supply chain alternatives. Given the technical expertise of China, combined with its extremely cheap labour, the automotive companies found the country to be the best option to have trade with. [ Keeping aside the nationalistic sentiments this can hurt the budget of the common citizens when they see an intense upward pressure in the prices of goods and services at least in the short run before things gradually settle in the longer run.] Over and above the constantly evolving bilateral arrangements, Trump and his policies also have a huge impact on the way business unfolds between India and China in the near future. The recent escalation of shutting down consulates in each other countries indeed doesn’t indicate towards an optimistic trading period any time soon. The industry is keenly looking at the upcoming US Presidential elections and the avenues that it brings. Drawing an analogy from what happened with Iran, it is very much likely that amidst this tug of war, India, a strong ally of the US, comes out as collateral damage as further sanctions and tariffs involving trade with China come across. Keeping aside the nationalistic sentiments this can hurt the budget of the common citizens when they see an intense upward pressure in the prices of goods and services at least in the short run before things gradually settle in the longer run. The Caixin China General Manufacturing PMI, an Index which measures the performance of the manufacturing sector and is derived from a survey of private 430 Chinese industrial companies, rose to 52.8 in July 2020 from 51.2 in the previous month, beating market consensus of 51.3. The IHS Markit India Manufacturing PMI, an Index which measures the performance of the manufacturing sector and is derived from a survey of 500 Indian manufacturing companies, declined to 46.0 in July 2020 from 47.2 in the previous month. The numbers clearly show that while China has recovered almost entirely in its core manufacturing business, India still struggles to overcome the COVID-19 scar and thus the need to be more cost-efficient in its operations. Rajan Wadhera, President, Society of Indian Automobile Manufacturers, said in a note, “Inordinate delays in clearance due to congestions at the port could impact the manufacturing of vehicles. The industry is piecing itself together as growth is limping back; any further disruption now is best avoided.” [Read more…]( [Read Full Story]( [This puristic Panhard tackled the Tour de France. Now it’s back.]( Size isn’t everything, as this tiny 1955 Panhard Dyna X Dolomites and its owner Hugo Baldy are about to demonstrate when they contest this year’s edition of the Tour Auto next week in the competition grid. We joined for a last-minute shakedown… Next week, the magnificent Grand Palais in Paris will reverberate once again to the sound of horsepower when the four-wheeled stars of this year’s Tour Auto file out into the streets of the French capital and commence their 2,140km journey to the Circuit Paul Ricard in Le Castellet via Clermont-Ferrand, Limoges, Toulouse and Pont du Gard. While your social media feeds will no doubt be filled with photos and videos of thunderous Ford GT40s and howling BMW M1 Procars slip-sliding their way across the countryside, there are countless quirky, chic and ingeniously designed smaller-capacity cars further down the entry list that are equally worthy of note. That’s why we felt obliged to draw your attention towards this fabulous 1955 Panhard Dyna X Dolomites by Pichon & Parat, which will contest the Tour Auto next week in the hands of its owner Hugo Baldy and Romain Grabowski (we coincidentally recently featured Grabowski’s rally raid Lada Niva here on Classic Driver). In comparison the utilitarian and somewhat frumpy body of Panhard’s own Dyna X, the coachbuilders Bernard Pichon and André Parat’s Dolomites body was sleek, slippery and sexy, if a little proportionally quirky. The underpinnings of the Dyna X were ripe for a racing transformation. The chassis was light and Panhard’s engines were renowned for being small yet remarkably efficient – ‘engineers’ engines’, as Baldy describes them. Only between 10 and 15 Dolomites were produced by Pichon & Parat and it’s believed that only seven or eight are known about today. A proud veteran of the punishing original Tour de France Automobile in addition to several other high-profile races including the Rallye Monte Carlo and the Rallye Lyon-Charbonnières, this dinky French blue coupé was unexpectedly discovered in a ramshackle state by Baldy near Paris in 2018. After a long negotiation with its owner, Baldy agreed to buy the Panhard and set about researching its complex history in preparation for a sympathetic restoration. “I am really passionate about racing cars, particularly those with rich histories and many accolades, and I love research,” Baldy explains. “I bought this Panhard without knowing who it had belonged to, where it had raced and how it had performed. It’s so exciting to search through archives, period press clippings and race entries in order to unravel a car’s history.” Once the Panhard’s early history was established, Baldy set about restoring the car to its original specification with the help of his father Dominique (who’s kindly on driving duties during our visit) and his best friend Romain Grabowski. “When I discovered that the car had competed at the Tour de France Automobile in period, I knew I wanted to participate in the Tour Auto,” Baldy recalls. “We started the restoration in September last year and because we had such little time before the original start date in April, my father worked like crazy to help finish the car. He dismantled everything, worked with the coachbuilder to ensure the precious patina was preserved, and spent 10 days with me and Romain reassembling the car in his workshop.” The work to return the car to its former glory was extensive and included replacing the incorrect dashboard with an original one and rebuilding all the mechanical componentry, from the engine and the gearbox to the brakes and the suspension. Although the original owner of the car raced with both 750cc and 851cc engines, Baldy has opted for an 850cc unit that’s subtly different from the original as it utilises parts from later Panhard engines. “I’m still running in the engine and I can drive at 140–150kph easily!” [Read more…]( [Read Full Story]( ------------------ You Might Like [Learn more about RevenueStripe...](        ------------------ Connect with TheAutomobileNews on Facebook and Twitter [fb](  [tw]( ------------------ You received this email because you operate or create content for a website/service and based on your website it seemed like this could be important information to you and your users. TheAutomobileNews daily newsletter is managed by [Postbox Consultancy Services Pvt. Ltd.]( C-4/5, IBD Emporia, Kolar Road, Bhopal, Madhya Pradesh, INDIA, 462042 Want to change how you receive these emails? [Update your preferences]( or [Unsubscribe]( Â