The Future of Four Wheels
Goldman Sachs released an excellent 4-part series this week on electric vehicles. "The Future of Four Wheels" highlights the electrification of vehicles and what we can expect from autonomy over the next few years.
There were a few takeaways for me that seem obvious but are monumental shifts.
We now talk about a subset of cars with a completely different vocabulary. We use terms like kWh instead of MPG and processing power over horsepower to discuss vehicle performance.
The winners of the auto industry will soon be determined by the best software and design, not by drivetrain and transmission. That change creates a whole new class of winners and losers across the value chain.
Finally, you can't have a conversation about EVs without discussing the "slow-down" in growth. According to the headlines, the best days of EVs are behind us. Somewhere along the way, 50% annual growth became a bad thing. I'm sure we'll see slower growth this year, too, as the basis continues to grow.
But Elon Musk said something this week that I agree with, and that's a rarity for me these days. "We are in the middle of two growth waves."
The early adopters have purchased their EVs. They were willing to pay a premium for either the sustainability factor or to be seen as cutting-edge. The mass market won't make this tradeoff. They'll want price parity, charging stations everywhere, and even greater reliability than we have now. We'll solve those problems in the next five years.
Most manufacturers rely on the mass market and can't give up that business. Ford, GM, and Toyota need that market segment to win, AND software isn't their core competency. It's going to be a tough road for them to succeed.
Tesla, meanwhile, is a software and design-first company that didn't need the mass market to win early. Reaching the mass market will be where they struggle.
Check out the Goldman series. If anything, it's a great listen on the potential implications of the sea change caused by electrification and autonomy revolutions.