That is also a very reasonable hypothesis. It would be interesting to know the economics in this case, if that turned out to be true. Spinning up an entire automotive engineering R&D division seems like a very expensive way to generate patents.
Sorry, but this would be an innovation, not a subversion of it. I not have the answer, but know it's possible; also know it goes against the interests of the auto industry.
There's also the way the business evolved. Manufacturers don't have unlimited funds to:
1) design cars
2) design factories
3) manufacture cars
4) retail cars
So somewhere along the line someone figured out that cars are somewhat commodity, same as clothing or food. A grocery store sells several brands of food and department stores sell several brands of clothing. Cars could be done the same way.
Manufacturers liked it because it allowed them to grow much faster by selling franchise licenses and use that money for design of cars, factories and to actually build cars. It's an all around win.
But eventually manufacturers grow to the point where they aren't starved for capital anymore, have good market penetration and growth starts to slow. So a natural next step is to cut out the middlemen (the dealers who have paid franchise fees) and start direct-to-consumer sales efforts. This idea didn't sit well with the dealers who had paid those franchise fees and might have assumed they could amortize them over many years.
So laws got passed preventing manufacturers from competing with the dealers that they had sold franchises to.
But Tesla has never sold anyone a franchise ever. They're not doing naughty things to their former customers (the dealers) because they've never had dealers.
REQUIRING them to sell only to dealers doesn't make sense unless you're worried about Ford doing some kind of shady restructuring to get themselves out of all their dealer contracts and to start selling direct to consumers.
This seems totally backwards to me. New entrants get to learn from all the mistakes every other entrant has made without any of the costs. New car makers aren't at a 120 year disadvantage relative to Ford.
“a hardware manufacturer should be bound by law to sell parts for any vehicle it sold in the past, as long as it exists”
Cars would get extremely expensive. Imagine Ford still having to supply model T wheels and engines.
They either would have to have kept a production line and employees knowing to operate it around, or have stocked ‘enough’ parts, where ‘enough’ is very hard to estimate up front. Also, stocked parts deteriorate, so for, for example, tyres, they would have to keep a production line running.
And that’s the easy case. At least Ford can ballpark know how many model T’s still exist. what if a car of a model that we thought didn’t exist anymore gets discovered in a barn?
And of course, that wouldn’t work in cases where manufacturers get bankrupt.
Like Tesla? Wouldn't Tesla have to have a monopoly on the entire automotive industry to realise their P/E? And as for profit they don't make any at the moment, IIRC
You mean, "and most existing car companies get bought out by the now-larger new companies", no?
Very much no.
There is nothing unique that the existing companies own that up and coming companies desire. It is very much the opposite. It is easier to invent new stuff than it is to winnow out the hidden assumptions in what exists already.
Some of the companies that are part of existing supply chains may successfully make the transition. A tire is a tire no matter what the engine looks like. But there is no reason for someone who is beating Ford in the market to want to pay Ford what Ford imagines its existing investments in obsolete technology are worth.
Now all that happens is that the other traditional car manufacturers get a leg up. They are all businesses run by profiteers rather than technologists. They have no interest in dramatically changing the scene.
Sure, but there’s competition in the subscription car space, just because you make one doesn’t mean it will sell. Businesses will make products that people want when they are in competitive markets.
Yes, perhaps, but the counter to this is that they could "benefit from the closed system of vertical integration" that seems to be all the rage these days. I could envision a scenario where they partner with existing manufacturers for a couple years, then "courageously" break off and produce their own vehicle in order to "control the process".
If they can pull that off and patent it and get a cut of everybody else doing it or block them from doing it at all then the price is justified. Otherwise they'll just be some tiny volume auto maker.
You're essentially saying that tens of thousands of dealers and hundreds of billions of dollars worth of car companies are going to go out of business because they can't find a mutually beneficial incentive structure.
It would be far from the first time. One of the biggest problems is for a company whose internal incentives and business model are based around one set of market assumptions to rethink it all and do something else instead.
Both The Innovator's Dilemma and The Innovator's Solution touch on this. The latter one in particular walks through how internal structures and incentives have caused company after company to fail to figure out how to sell products that they know consumers are buying.
The two most common problems being that it is very hard to cut your own margins to match a low margin competitor, and it is even harder to convince a third party sales distributor to cut their margins.
Anyways this is something that I've been aware of for close to 20 years. In another 10 years you'll be able to decide whether I was wrong.
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