|
Audio Asylum Thread Printer Get a view of an entire thread on one page |
For Sale Ads |
73.229.29.71
Blame Apple, Google, or Tesla?
CNNMoney (New York) First published May 16, 2017: 3:41 PM ET
The U.S. auto boom that fueled record sales and profits is winding down. Next up: A radical transformation that could threaten the survival of some automakers.
"The auto industry is changing more today than it has in the past 50 years," General Motors CEO Mary Barra has said publicly -- more than once.
"I don't make this claim lightly," she said. "I believe we are on the verge of a revolution in personal transportation."
It's true that the U.S. auto sector had a close call during the 2008 financial crisis, when both GM (GM) and Chrysler needed federal bailouts to survive bankruptcy. But that was a pretty straightforward crisis, caused by excess labor costs and a plunge in auto sales due to a wrecked economy.
The challenge today is posed by electric and self-driving cars, and it is far more fundamental.
Automakers are investing billions to develop these new vehicles. At the same time, they're facing a tremendous competitive threat from upstarts like Tesla (TSLA) and Uber, as well as from tech giants with deep pockets such as Google (GOOGL, Tech30) and Apple (AAPL, Tech30).
"We're at a major crossroads in the industry," said Michelle Krebs, analyst with AutoTrader. "The nature of the vehicles will be different. The models by which we acquire transportation could be completely different."
She compares the environment to the 1960s, when Japanese imports like Toyota (TM) and Honda (HMC) disrupted the industry.
And with all of these changes comes belt-tightening.
Late last month, Ford (F) disclosed that it may have to slash $3 billion in costs in order to free up money to invest in new technology. There were reports this week that in order to do so, the automaker may trim its global work force by about 10%, or as many as 20,000 jobs.
"If automakers are going to stay around, they have to be investing in these new technologies," said Krebs. "And it's difficult because there's no payback yet, and no time frame for when there will be."
Manufacturers are also cost-cutting thanks to a slowdown in U.S. auto sales after seven straight years of sales growth that reached record levels.
GM has cut production at four of its U.S. assembly lines and laid off about 4,400 factory workers. Fiat Chrysler (FCAU) also laid off 1,300 workers at a Detroit-area assembly line. And Toyota and Nissan have signaled they may cut production as well.
Related: Apple gets permit to test self-driving cars in California
Another sign of the times: Tesla's market value is now greater than that of than either Ford or General Motors.
But not even Tesla's long-term prospects are guaranteed, as Google's Waymo unit continues to test self-driving cars and Apple moves into the space as well.
"We believe Tesla's most important competition will ultimately come [not from automakers, but] from the world's largest, best capitalized tech firms," said Adam Jonas, an auto analyst with Morgan Stanley who has been bullish on the stock until recently. "We have an increasingly difficult time imagining Tesla as the dominant player and as a stand-alone company longer term."
CNNMoney (New York) First published May 16, 2017: 3:41 PM ET
Follow Ups:
If the Auto Industry gets a major shakeup, than Aircraft can't be far behind.
High speed rail might take short and middle length plane trips out of the picture.
California's venture into this space is ill considered and wasteful at this time. A better use of the funds would have been a SoCal to Vegas run.
Far fewer obsticles, like land acquisition and environmental. Vegas / Nevada could and SHOULD have been tapped for maybe 1/3 the bill.
The Musk version of 'Train In A Tube' will also play into the future. This would be fine for longer runs where it may be possible to reach 1000mph or higher. I think people would flock to this new mode of transport since it would cut maybe 2 hours from an LA to NYC run.
Too much is never enough
And then the bicycle. I know, I still have a long wait ahead of me that I may not make it through.
Rail has a basic problem: it depends upon extremely expensive infrastructure that only has one use. The cost of track build-out (including design, right-of-way acquisition, hard construction and maintenance), plus equipment costs (those trains cost millions), plus staffing costs (God help you if they're public employees in California), is too great to amortize across the limited pool of users. It's well documented that rail fare payers won't pay enough to cover those costs. And at this juncture, there don't appear to be enough alternate users to take up the rest of the burden: fiber optic cable companies have gone ahead with other rights of way, and other modes of transportation are incompatible with sharing rail rights of way.
As a case study, I refer you to the Baltimore area light rail system, which was built on existing rail rights of way (thus saving tons of money) in the densest commuting corridor in the region (thus positioning itself for the most viable stream of fare payers), and it still can't cover costs. See, for example, the Baltimore Sun article at the link. Key quote: "Light rail cost roughly $36 million to operate in 2015. In the 2016 state fiscal year, fares paid by passengers covered only about 18 percent of operating costs."
Happy listening,
Jim
"The passage of my life is measured out in shirts."
- Brian Eno
Maybe possible in some parts, but not here in Kelowna BC. Starting a couple years back our entire city track system was removed, finally paving where all the tracks crossed the roads within the last year. Tracks will not be making a comeback here.
They turned from DT to the end of town into a bike, jogging, walking path.
he US should have, in the 1950s when they decided to build the US freeway system, to also make a complimentary rail system, independent of the railroads of the time.
So rail passenger transport would be fully compatible with the freeway system and just as thorough.
Every major freeway would have included dual passenger rail tracks..
If they had any brains, they would be planning such in the future for ALL freeway upgrades.
Such tracks owned by the DOT and not some railroad company.
.
Ever hear of Salim Ismael of Singularity University? He was a keynote speaker at a conference I attended earlier this year. He spoke of "exponential technologies", unexpected results from technology and the paradigm shift from scarcity to abundance.He cited that over a five year period in Argentina, the car wash industry lost 50% of their business. Huh? What on earth was responsible for that? Are folks not buying cars? Are they not taking as good care of them as before? As it turns out, the reason had nothing to do with any of that. Cause?
Weather apps. Let me say that again. Weather apps. Now folks knew with great certainty when it would rain and didn't go to the car wash if it was going to rain soon. Think about that for a minute.
Scarcity to abundance. We've already seen that in the photographic world. Remember the bad old days when cameras were limited to say 36 exposures on a roll, film was relatively expensive and you actually had to wait days in order to get your finished prints or slides? Today, that concept to most is like rotary dial phones. "Daddy, did people actually have to wait to see their photos?"
Salim observed that 3D printing is not a new concept. In fact, its been around since the 80s. What changed? We're now on the cost effective side of the exponential technology curve. And with each passing year, it will become more prominent as costs are cut in half. Ever hear of Local Motors ? They build 3D cars to order. Don't like the way your three year old car looks? Take it back, have the body recycled and print a new one!
The most incredible prediction Salim made has to do with energy. He asserts that solar is on the verge of reaching that practical part of the exponential technology curve. Within twenty (actually fewer) years, solar will be cheaper than buying from your power company. Think about that for a moment! He put up a chart of businesses that will be affected by the shift to autonomous cars. How about insurance? Vehicles will still need to be insured, right?
Maybe not. At least according to Volvo and others. How about service stations of all types? Oil change businesses?
Think of a time in the near future when the cost of energy follows the curve and shifts from scarcity to abundance. Some of the poorest countries in the world have the most abundant amount of available sunlight. Economies dependent upon petroleum revenue such as Russia, Venezuela. Saudi Arabia, Norway, et. al. will necessarily need to adapt.
When you get some free time, listen to what Ismael is saying. He already has the ear of many prominent corporations today. Prepare to have your mind fried. :)
edit: Here's another:
Edits: 05/17/17 05/17/17
I watched the entire first video. Great stuff! I'll watch the second one later. Thx!
but more realizations on my part. :)
I noticed that the second video has a more recent publication date on YouTube so maybe Salim Ismail will give more recent examples of "Exponential Organizations" vs the old guard companies. His examples in the first video were very interesting and spot on when you think about it.
GM has to adapt or die. Good to see Ford investing in the future, you can see videos of Teslas robots putting together cars very quickly on YouTube.The problems of old companies is legacy, old systems, old thinking sometimes. It takes a fresh face in the marketplace to stir things up, the Tesla company started only a few years ago, they don't have decades of baggage to deal with.
As with operating systems for the computers and how I treat them, sometimes you have to erase everything and start from scratch to get everything up and running again to be competitive.
Edits: 05/17/17
...GM is far ahead of Ford wrt autonomous and electric veh. This is one reason Ford's stock price is down while GM's is flat. Also, ALL major mfgrs make extensive use of "robotics" in all areas inc metal forming, welding, paint/sealer and some final assy. Tesla has done well stock wise because they present themselves as the future and investors buy that schtick. They've also positioned themselves to take max advantage of govt subsidies and sell "mileage/emission credits" 'to other mfgrs for huge income. If only Tesla could produce something other than losses for investors.....
Edits: 05/17/17
P/E ratio.
http://www.nasdaq.com/symbol/tsla/pe-ratio
unicorn fluff, cotton candy.
also thanks to AA I'm going to be dating beautiful russians, screenshot from central attached.
These days, that is only one factor. This ain't your dad's stock market.
:)
"If only Tesla could produce something other than losses for investors....."
I'm not sure I understand what you're trying to say about [Tesla] "losses for investors". Here's a chart showing Tesla stock price (black) vs GM (green) over 5 years.
Tesla vs GM stock over 5 years as of May 17, 2017
...the cynicism and sarcasm in that statement. Long ago a publicly traded enterprise was expected to provide a continuing return on investment, typically in the form of a dividend or whatever. Back then a commonly accepted idea was that a stock price represented the market's assessment of an enterprise's future earnings. Apparently that's no longer the case as investors seem to prefer a short term run up in stock price over long term returns. By the old reasoning GM is in trouble and Ford is done. Could be.
IMO, the stock price run-up trumping (ha-ha) long term returns is non-sustainable because it totally discounts the "future" and basic soundness of the enterprise and you have to cash out of the stock at the right time to realize the gain. IOW, "time the market" - an investing mortal sin per old timey investment advisors. How soon we forget the "dot-com" boom and quickly following bust of about 18 years past. I remember IPOs back then where offering price was positively correlated to loss magnitude preceding the IPO. Pets.com anyone?
You said, "If only Tesla could produce something other than losses for investors." I showed that there have been huge gains for investors.Based on your two paragraph explanation in your subsequent post it is obvious that what you originally said did not support what you actually meant.
I'm not a mind reader. ;-)
I see huge gains for investors in Tesla! (Tesla in black, GM in green)
Edits: 05/17/17
...so here it is in one sentence. "I believe current market demand for stock price run-up vs more traditional ROI is unsustainable in the long term and is ultimately bad for most investors and the nation as a whole." There is absolutely no question that Tesla totally outperforms GM, Ford and most other "legacy" mfgrs of anything when measured by the "new" standards of financial performance. And Tesla and a lot of other techs do this while showing no traditional profit or paying dividends.
What you said in your first post could only have one meaning and I responded to it appropriately.
You should have said what you meant in the first place instead of back peddling with a totally different explanation in your subsequent posts.
Yes, you've done a fine job of subsequently explaining what your REALLY mean. Totally different from what you SAID in your first post.
But OK, I got it.
...maybe too subtle.
On a closing note, I read of speculation by investors that even Tesla's future is not so bright. One version is that self driving autos will bring commodification to the market. The analogy these people draw is to mass transportation vehicles: most people don't care who made their bus ride or what it looks like. Exceptions for emerging rock and country stars and well off retirees with busses acting as high end motorhomes.
but I think we're on the same page now.
To add to your last comment......
"Millenials also said that when going out for an evening with friends, they use ridesharing services 70 percent of the time. ReportLinker stated one factor in millennials' ridesharing use is that fewer have their own cars. The survey found that while 91 percent of older generations are car owners, only 78 percent of millennials have their own wheels."
At one time Uber approached Tesla about some sort of partnering arrangement and Tesla turned them down. I don't know where Tesla stands today.
There are a few grains of truth in that largely hogwash article. For example:
Ford IS cutting jobs. That was on the business news wires.
GM and Chrysler DID take taxpayer money to stay afloat as GM and Chrysler. But, now, tell me again who owns Chrysler? ;)
GM's stock was at about $30 about 4 years ago. It's now at - drum roll please: about $33. Have they completely paid off the debt to the U.S. taxpayers? (I haven't read their annual reports.) They should've been bought by another automaker years ago. Maybe they still will be - you read it here first.
I knew at the time that the bailout was a bad idea. It never was about saving the companies or the jobs, it was about saving the executive officers and the bondholders. Shareholders got the shaft, as usual. It would have been much better to let them flounder and be sold to another automaker, as Chrysler already has! (Actually, it's a little hilarious that a company in Italy, which is an economic basket case, bought a major U.S. automaker!)
This is the kind of warped, twisted "business" we end up with when government bureaucrats get involved. All they care about is their re-election so they can continue to funnel projects (money) to their supporters.
:)
...actually pretty static thru the period. Consider Ford (who didn't "take"'taxpayer $) has fallen about 30% during the period. If one considers stock price as a reflection of future earnings, investors aren't optimistic in spite of huge present earnings. Both cos face internal revolt from activist investors. This will be the most immediate and true threat to survival of the "traditional" US auto cos. And, FYI, FCA (Chrysler/Fiat) is a Dutch co.
I didn't know they reorganized and incorporated in the Netherregions. It's still Italian-controlled. Kinda like a company incorporating in Delaware even though the actual company is in, say, Illinois. But wait, it gets better. Their headquarters is in London, for tax purposes.When I log back on to the stock market later today, I'll get the official company scoop from their company profile.
In the meantime, I found this:
https://en.wikipedia.org/wiki/Fiat_Chrysler_Automobiles
:)
Edits: 05/17/17 05/17/17
...things are complicated these days. Maybe it would be more appropriate to call FCA a British co because that's where they're taxed. Listing location and controlling location are interesting but not so relevant today...IMO.
In these days of globalization things are a lot less clear cut than that.
Fiat-Chrysler is incorporated in the Netherlands, headquartered in London, listed in New York and Milan and ultimately controlled by the Agnelli family which holds 45% of the voting rights.
So now there may be a few lean years. Who cars. This has happened many times before.
As far as self driving cars? again, that is a long way off for the average person.
The car companies are trying to get a foot in the door now so they are not shut out IF self driving takes off.
As for all that worry? The story is TOTAL 'click bait' unless you own major shares of some auto company.
FAQ |
Post a Message! |
Forgot Password? |
|
||||||||||||||
|
This post is made possible by the generous support of people like you and our sponsors: