Auto & Transportation

In the face of the big wave of new energy vehicles, on the one hand, new car-building forces are following each other, and various new models and new concepts have sprung up; on the other, traditional car companies are faltering, and new models are falling behind when they are launched. We can't help asking, what happened to these traditional car companies?

Weakness and ignorance are not obstacles to survival, arrogance is. If we regard this backwardness as the result of traditional car companies' narrow vision and too small structure, then this view itself is actually a kind of arrogance.

Talking about transformation and transformation all day, is transformation so easy? What is the reason for the repeated failures of traditional car companies?

1/The critical point is coming

Regarding transformation, American Douglas North gave a simple analytical framework in his famous book "Institutions, Institutional Changes, and Economic Performance": "In institutional changes, a change in relative prices makes the exchange party or The two parties perceive that changing the agreement or contract will improve the situation of one party or even both parties. Therefore, an attempt to renegotiate the contract has emerged."

Regarding the transformation of traditional car companies, the so-called relative price changes are nothing more than the pressure that electric vehicles put on traditional passenger cars. The added value that electric vehicles can carry is increasing, and they are intelligent and self-driving. Let the cost-effective balance gradually tilt towards electric vehicles.

This tipping point appeared on January 3, 2020. On this day, Tesla finally pulled the price of Model 3 within 300,000. The significance of this pricing is that for the first time, Tesla can truly impact the market of the three traditional luxury car manufacturers, BBA (Mercedes-Benz, BMW, and Audi), in terms of cost performance. It belongs to the era of electric vehicles and officially kicked off.

When this critical point appears, the sales of electric vehicles are increasing, while the sales of traditional passenger vehicles are gradually shrinking, and the income of related employees is declining. Traditional car companies have to use their own companies for survival.

2/The temptation is great, but the cost of betrayal is greater

"It doesn't matter loyalty, but the temptation is not enough, or the bargaining chip for betrayal is too low." This is a familiar piece. Although rough, it is used to describe traditional car companies but there is nothing wrong with it. The transformation of electric vehicles depends on the temptation of traditional car companies. The other side, of course, is how high the cost of betrayal is.

1) Look at temptation first. Even the most stubborn diehards in traditional car companies now admit that electric vehicles are indeed the general direction. But the question is whether the transformation of electric vehicles can bring immediate benefits to the enterprise.

"Institution, Institutional Change and Economic Performance" also said: "There are two forces that shape the path of institutional change, an incomplete market characterized by increasing returns and obvious transaction costs." Increasing returns means whether they can be in the process of change. Create new interest groups and continue to grow. To put it bluntly, it is whether the transformation of electric vehicles can bring immediate benefits to the enterprise. So, sorry, not now. And transformation also means long-term high capital investment and distant returns.

Great Wall Motors is the most determined transformation among traditional car companies. We have listed the company’s sales, management, finance, and R&D expenses in each quarter since the second quarter of 2018. It can be found that in a normal year, the sum of these four expenses of Great Wall Motors is generally below 2 billion. From 2020 Since the third quarter, this value has soared to more than 2 billion.

Last month, Huawei's self-driving video showed the expected strength that the masses would like to hear, but it was bad news for those traditional car companies with some strength. Once such technology giants realize automatic driving, traditional car companies will inevitably degenerate into what Huawei calls "computer peripherals" and become foundries. For the traditional car companies that still dominate the market, this is tantamount to a thunderbolt. The most feared is not never, but once owned.

Therefore, the majority of traditional car companies must differentiate themselves and strengthen their brand positioning before Huawei’s autonomous driving technology is officially launched. This also means long-term high-level R&D and capital expenditures.

In 2021, the situation faced by the majority of traditional car companies is likely to increase revenue but not profit. What about new energy car companies, have they made money?

Tesla is the leader in the new energy automobile industry. Since 2006, the company has been losing money for 14 consecutive years. In 2020, a net profit of 721 million US dollars has finally been realized. Is it dawning? Wait a minute, everyone, take a look at the picture below.

Tesla's revenue for 2020 includes "Automotive regulatory credits", which translates as "carbon emission credits." According to US regulations, companies that produce fuel vehicles either produce new energy vehicles themselves to balance this quota, or they buy from new energy vehicle companies like Tesla. In 2020, Tesla's carbon emission quota revenue is US$1.580 billion, and its annual net profit is only US$721 million. That is to say, Tesla is still not making money from selling cars, and it is barely profitable by selling carbon emission quotas. .

For these traditional car companies, fuel vehicles are still cash cows. If this red flag really falls, let alone the fluttering flags, it's time to drink northwest wind.

2) On the other hand, the cost of betrayal is too great. For traditional car companies, the cost of transformation is too high. On the surface, new energy vehicles have moved the vested interests of traditional car companies. Furthermore, the transformation is faced with various deep-seated corporate cultures in the fuel vehicle industry that have been involved in forty to fifty years.

The automobile industry usually accounts for about 6% of a country’s GDP. According to data from the German Federal Labor Agency, one-seventh of the employed population in Germany is related to automobiles. In Japan, another major automobile country, automobile exports account for two of the total export value. It is not for nothing to say that millions of water workers are related to food and clothing. Compared with the fuel car, the electric car is not so much overtaking on a curve, as it is to overturn and start again. Everyone restarts a game of mahjong, cleans the house and treats.

"Wang Chuan: Why are most traditional car manufacturers going bankrupt soon?" 》Explains the huge difference between the design of electric vehicles and fuel vehicles:

Electric vehicles do not require a fuel engine or a gearbox, and the corresponding fuel delivery and emission control systems are also unnecessary. The core of the technology accumulation of fuel vehicles over the past century, the mechanical system centered on engines and gearboxes, instantly disappeared from the market.

From a design point of view, the technical heritage of fuel vehicles can be applied to electric vehicles, almost rare. All these engineers who depended on the technology of internal combustion engines suddenly discovered that their skills were useless. In a traditional car company, how many people account for this part? Start at least 50%.

If these are still internal adjustments for traditional car companies, then the reform of the sales model of 4S stores is simply self-sufficient for traditional car companies.

4S stores are the mainstream model of traditional auto companies' auto sales. The so-called 4S shop (Automobile Sales Servicshop 4S) is an automobile sales enterprise integrating vehicle sales (Sales), spare parts (Sparepart), after-sales service (Service), and information feedback (Survey). For traditional car companies, this model is well adapted to the current actual car sales.

Car companies perceive and feed back the various needs of customers through 4S stores to serve customers. 4S stores also assume the inventory function to some extent. Without the market temperature sensor of 4S stores, traditional car companies have basically lost the ability to understand the market.

The problem lies in the fact that the existing 4S store sales model for new energy vehicles is a draw from the bottom of the pot. Under the new energy vehicle model, the simplified car body structure and the increase in online services have greatly reduced the demand for such offline 4S stores, and the profit margins for the 4S stores will also be greatly reduced. The 4S stores have higher investment and rents. And labor costs are very rigid.

Under the premise that new energy vehicles have not achieved sustained profitability, automakers must also maintain the cash cows of traditional fuel vehicles through 4S stores. How to balance the interests of 4S stores and automakers in vehicle sales? People's hearts are not scattered, and sincerity is a problem that makes people bald.

3/ Cultural conflicts and unspoken rules

If faced with the general trend of new energy vehicles, various stakeholders of traditional car companies can still sit down and negotiate. That is, the various corporate cultures and corporate cultures hidden in the involution of fuel vehicles have existed for 40 to 50 years. The unspoken rules bring more pressure.

The older you are, the more you like Gu Hongming: "The braid on my head is tangible, but the braid in your heart is invisible." Even if the problem of vested interests is solved, there are various cultures and unspoken rules under the system. It will disappear so easily.

The so-called involution is the fineness, complexity and exquisiteness of the surface, and it looks very dedicated, but in fact this kind of effort is close to the limit of business, very close to the ceiling. For fuel vehicles, the basic consideration is nothing more than the internal combustion engine, which is the total efficiency of the engine. In theory, the overall efficiency of the engine can reach 50% is the limit, but in reality the overall efficiency of the gasoline engine can be more than 30%, and the diesel engine can reach 40%. No matter how high it is, it is difficult to reach the sky.

Over the years, how much progress has fuel vehicles made? how to say? From the fuel consumption of about 16L per 100 kilometers in the middle of the last century, it has dropped to about 8L today, which is an average decrease of only 0.1L per year. Among them, the contribution of the internal combustion engine is not unique, and the lightweight and electronicization of the vehicle has also played a big role.

At the same time, fuel vehicles have also entered the same dead end as mechanical watches, and they have begun to pursue the fineness, complexity, and attention to the surface. In the past 40 to 50 years, traditional car companies have also evolved a corporate culture that adapts to this involved industry. There are two typical manifestations, which are also the two cruxes most criticized by the market.

The first is meaningless excellence. Friends who are familiar with industrial product design know that from the classification of industrial products, they can be divided into four types: consumer grade, industrial grade, automotive grade, and military grade. Among them, the automotive grade is the highest among the products used in daily use. Because the entire life cycle of a car is about 10 years, it is necessary to ensure the reliability, consistency and stability of the product within this length of time.

In the research and development of new energy vehicles by traditional car companies, the requirements for core parts such as batteries and motors have complied with the high requirements of the past. The price is that the model development is slow, and the market is out of date. High standards and excellence are politically correct for auto companies. But that is based on the fact that the traditional auto industry technology is already very mature, and the introduction of a new system is of little significance. For the new energy vehicle industry, the combination of rapid technological progress and uncertain market environment makes this rigorous and pursuit of product quality seem extremely luxurious and incomprehensible.

Take Volkswagen’s electric vehicle platform as an example. As early as October 2015, Volkswagen announced that it would build the MEB platform and invested 7 billion US dollars for this. But until November 3, 2020, 5 years have passed. The late Volkswagen ID4 announced its launch in China. This speed of R&D to market is not enough to look at in the face of a major change in the new car-building force in one year and a major change in two years of technological iteration.

The real problem behind this is that traditional car companies have adapted to the so-called high-standard and refined development requirements from corporate culture to mechanism, and are completely unsuited to the small-step, fast-running and fast-iterative model required by the new energy vehicle industry. .

The second is to deal with work passively in order to avoid responsibility. Traditional models are actually very mature and there is little room for improvement. Therefore, it is necessary to be cautious when introducing new technologies. Seeing more and doing less is the best way to deal with it. In history, many automobile companies overturned vehicles because of the introduction of new technologies or the use of newly designed parts, which caused recalls and damaged their reputations and wallets. Therefore, for the internal employees of traditional car companies, unless they are promoted by the top leaders, they will not take the initiative to push new applications. When new problems arise, the first thing we think about is not to solve the problem, but to draw a clear line and protect ourselves from being liquidated in the future.

As a result, the finalization of a new energy model often involves countless discussions and countless rounds of expert argumentation. As long as one expert has reservations, the plan will basically be shelved for a long time. A simple motion to replace even one screw requires OA to go to countless departments, and even wait for the German board of directors to open a meeting to put this possibility on the back.

The market is very strange. Why is it clear that Weilai’s APP is very successful? You can copy it, but the APP of the traditional car company is similar to the official website, and the customer service responds like a funeral. Because the core of the APP designers of traditional car companies is not to solve the problems of users, but to exempt them from responsibility. They need to assign the business to other departments first.

The instructor said, "If you want to look at the future, you must look at history." What is the probability of success in transforming traditional car companies? We have to mention the vigorous "corporate reengineering" movement in the 1990s. The core of this revolution called "caterpillars into butterflies" is to transform the original work process to make the company more suitable for the future survival and development space. . The prescription is given, but what is the result?

Michael Hammer, the initiator of this movement, concluded that “50% to 70% of companies did not achieve the expected results, or failed.” Moreover, the corporate reengineering movement quickly became the dismissal of thousands of people. Synonymous with so much so that the initiator Mike Hammer condemned conscientiously about this side effect and was awake at night.

In the current transformation, the leaders of many traditional car companies will also make up their minds to "change people without changing their minds", but layoffs may be the most negative means. Sweeping out an old engineer who has been serving himself for 20 years and telling him, I’m sorry, we have paid you salary for so many years. We are all market-oriented. Now the company is going to transform. Since you can’t keep up with the situation, Make a living by yourself.

This kind of layoffs will destroy a company's hard work for many years, through various team building, to expand the established corporate culture. No one believes in the idea of paying for the enterprise and being proud of the enterprise. Everything is business. It takes a lot of steps and a long time to burn a fine porcelain. However, it only takes a moment to break it.

For the transformation of traditional car companies, knowing the cruel fate, but still insisting on moving forward, no matter what, it deserves our objective view and evaluation.