August 13th, 2020 by Zachary Shahan
What does “top 10” mean? Good question. Perhaps top 10 best sellers. Perhaps top 10 in terms of sales growth. Perhaps top 10 in terms of other measures of popularity.
My initial idea was to make this about sales — the top 10 best sellers in the auto industry in 2025 and 2030. However, when I think about what inspired the piece, the meaning is more vague and more about which companies will clearly be leading the automotive industry forward, creating the best products, and — perhaps — seeing the most sales growth.
I do think we could have a battery mineral shortage in 2025 that will limit the actual production capacity and sales of electric vehicles, which may mean that the best automakers with the coolest products in the highest demand are not among the top 10 automakers in terms of overall sales.
On to some thoughts about specific automakers.
Tesla: Clearly. Tesla has led on batteries, electric vehicle powertrains and performance, and automotive software for more than a decade. It also pick up the title for best driver-assist package along the way. It’s hard to imagine that changing in the next 5–10 years, when these technologies will become much more competitive and popular overall. [Full disclosure: I own a Tesla Model 3 and I own shared of Tesla/TSLA. Return to beginning of paragraph for explanation.]
I know — this is a short explanation. But it’s much longer than my initial one: “duh.”
Xpeng: Xpeng has a somewhat infamous reputation at the moment for being a “Tesla copycat.” Indeed — it copied much of what Tesla created, including using the patents Tesla opened up for anyone’s use years ago. However, if you wanted to become a top company in a fast-changing market rushing into disruption, wouldn’t it be wise to follow the leader of this revolution? (There’s a legal matter about Autopilot source code we’ll probably dive into at some point, but I will leave deciding legal disputes in the hands of the courts.)
I was skeptical of Xpeng for a long time myself. But as far as I can tell, Xpeng is currently focused on creating “smart EVs” built on top-level integrated hardware and the company’s own constantly evolving software stack. I am not sure any other automaker is doing this in as thorough a way and producing consumer vehicles every day (other than Tesla, of course, which is even more integrated). And it was founded and backed by some top Chinese tech billionaires — people who know tech hardware and tech software. I consider that important.
Lucid Motors: Again, it’s popular with some Tesla fans to hate on EV startups because they aren’t up to Tesla’s level. Clearly, no other startup has come close to achieving what Tesla has achieved. But that doesn’t mean they don’t have solid founding teams with a lot of potential, especially compared to legacy automakers that have to wind down and retire enormous fleets of gasoline and diesel vehicles and the components, factories, and service infrastructure that supports them.
As one commenter pointed out this week, the CEO and CTO of Lucid Motors is Peter Rawlinson. Rawlinson is quite heavily responsible for engineering the original Tesla Model S. His titled at Tesla, where he worked from 2009–2012, was “Vice President of Vehicle Engineering and Chief Engineer of the Model S.” Not too shabby. I hear the Model S is a pretty good vehicle. Furthermore, Lucid Motors “has been the exclusive supplier of battery packs for the Formula E racing series since 2018 and will continue to supply battery packs to the series through 2022.” That implies to me that Lucid knows batteries, Lucid knows battery management, and Lucid knows EV tech.
NIO: I need to dig into NIO’s tech more to feel more confident about this one. But I think it is also built on solid tech hardware that forms a foundation for the vehicle and then is equipped to develop a robust, compelling software stack on top. How well does and can it execute on this? I’m not sure. However, the company has got off to a pretty rockin’ start and is the top selling EV startup in China, so that’s something. It also has worked hard to build a strong, atypical Chinese automotive and lifestyle brand — which is a big deal in the auto world — and it loves to chase (and then proclaim) superlatives, something my friend David Havasi (at Tesla from 2012–2019) has repeatedly pointed out is one of Tesla’s strengths.
BYD: BYD has conventional cars, so it can be considered a legacy automaker, but it started out as a battery company and it has done a phenomenal job building itself into a multi-industry corporate giant, mostly focused on cleantech. BYD has seen its EV market leadership drop in China — dramatically now with Tesla’s rise — and is probably struggling to find itself again. However, the Han may show that it’s read for the 2020s. Also, BYD is finally entering the European passenger car market with this vehicle, something I’ve been expecting BYD to do for years. If it can get some good sales in Norway, BYD could then roll out across more of Europe and even eventually to the US. Maybe. We’ll see. If it does, though, it could have a big hit in the young EV market, which could lead to many more. Maybe. We’ll see.
Legacy automakers? As I noted above, legacy automakers face a pretty huge challenge, or two. They have to wind down their fossil fuel vehicle business at the same time as they scale up their EV business. I think that’s considerably harder that launching a startup and getting everything in order. I’ve compared it to having to surf on a needle (as if that makes any sense). But that’s not all! They also have to transition from “dumb vehicles” to “smart vehicles” at the same time. That’s two revolutions in one decade. I’d love to be the CEO of one of these companies long enough to make a good chunk of money to invest into one or all of the companies mentioned above.
On the other hand, as I also noted above, branding is a big deal in the auto world. It’s a sort of monumental, mountain-moving deal. It shocks me, to be honest. So, as long as legacy automakers can fool people that they are surfing on a needle long enough, while putting in their best efforts, some will make it through and will even benefit from the transition. I think. The question is, which ones? Which ones get it, are setting up the inside teams to develop compelling “smart EVs,” and will be able to connect the dots enough to execute?
I don’t know. Some days I think Volkswagen Group will do well. Some days I see a software nightmare that scares the crap out of me. Some days I think Hyundai–Kia are building momentum, but then some days it feels like they are intentionally or unintentionally blocking their own progress and sabotaging their own future. Some days I’m super bullish on Ford’s “Team Edison” crew and the commitment of the elders running the company. Some days … well … I’ll leave it at that. The same goes for GM, which turned some big corners, but then might have gotten dizzy and lost while trying to go two directions at once. Volvo Cars has the most aggressive electrification target of the legacy automakers, so you have to throw it in there as well.
As a final note, while it is tempting to think legacy automakers should become tech companies like Tesla, that also seems totally unrealistic at this stage. Maybe if they had set their minds to it in 2015 they could have. However, I do think they can partner with tech leaders like Nvidia, Waymo, and Mobileye/Intel and survive, even if they don’t thrive to the same degree as tech-based automotive companies. Volvo, among several others, has partnered with Waymo. Ford and Volkswagen (and NIO), among others, are in the Mobileye/Intel camp.
I guess the section above reveals the legacy automakers I think have the best (but not necessarily great) chances of being “top of the industry” in 2025 or 2030: Volkswagen Group, Hyundai–Kia, Ford, GM, and Volvo Cars.
What is your best guess?
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