Once again, bad times are coming for the car, and that will mean that the weakest ones disappear or become part of a stronger one. It is pure natural selection. The new economic crisis will serve to clean up, as in all the previous ones.
Anyone who knows the automobile history You will know that from its foundation to the present day, for no one there have been paths of roses and lack of problems. All manufacturers have had to deal with crises and times when accountants were scared to death, and as it turned out, most fell by the wayside.
Currently the number of manufacturers is relatively small, and the market is dominated by very few companies, some of them accumulate several manufacturers that were once independent, with Stellantis being the most paradigmatic case. They coexist with a series of new batch companies that have come to change things. Nothing new in other times, eye.
The advent of a new economic crisis, which began to coincide with the COVID pandemic, will devastate Tyrians and Trojans, large and small, like a tsunami, and some will fall by the wayside. We have already seen some small fish fall, like the German MCA or the american Electric Last Mile Solutions. More than one is putting their beards to soak while they peel those of their neighbors.
Lucid Air, one of the best electric cars in the world
In a recent article we saw how investor money is leaking out of high-risk deals, and car companies have had huge capital outflows. It has affected more those that were built on sand castles, little real business and little solidity, this hurts the big ones, but it does not put them in great danger.
Expectations do not feed, but help inflate valuations
We are seeing in recent months some movements that are a bit worrying. Tesla opened the season with concerns about a bad feeling about what was to come, and the layoffs of non-essential personnel began. Rivian is also going to drop ballast, as is the British Arrival. They have to tighten their belts.
Companies without sufficient financial muscle and support are going to have it much more difficult. Those who have Zumosol’s cousins behind them, such as Rivian (owned by Amazon and the main customer of its vehicles) or Lucid (backed by money from the Saudis) will be much better off than those who balance on toothpicks. Case of Lordstown or small manufacturers without a solid business.
First units of the Tesla Model Y mass-produced in Germany
The problems to face are many, and it is not exactly a problem of lack of demand make your business unviable. On the contrary, the demand for electric vehicles -those with the most future- does not stop rising, there is cake for everyone, but the main problem is not enough in manufacturing, not what happened years ago: that there were no customers for the product.
The tremendous pressure that the suppliers of components and raw materials have caused are putting the accountants on the ropes. No more promising a vehicle for several years and keeping the same price that was announced at the beginning. that doesn’t work anymorethe economic and industrial context is very unstable, everything is much more short-term and immediate.
Some gave the traditional manufacturers for dead for letting themselves get ahead of themselves, but they can and will react because they have a much more solid base. For example, Volkswagen has a facility to burn trucks of banknotes in development that an emerging market does not have, borrowing from all the banks on the planet. It is a striking example, but it is so.
Arrival start-up product plans
The rise in interest rates by central banks are ending a time when it was easy to get into debt, there was euphoria for many new things and the money flowed smoothly. Now the situation is different, and it will continue to get worse, so manufacturers will differ like the houses in the story of the three little pigs: there will be straw, wood, and brick.
We will see more than one manufacturer fall, surely smaller than large, because the latter have the industrial and financial muscle that the others do not have… They will arrive late to the electric revolution, but they will do so in a much more solid way. Tesla is Tesla, and it is more the exception than the norm.
In every crisis there is always some manufacturer who goes to hell, defaults or is gobbled up by a bigger fish. Throughout history the list is endless: Citroën, Bentley, General Motors, Lancia, Saab, etc. And those who survive the next tsunami, they will come out strongerAlthough they sell much less, the key is what economic figures they obtain.