Ford and VW (Volkswagen) have given credit to Tesla for their efforts in leading the way for electric vehicles. It seems the big 3 auto makers could now be: Tesla, VW, and Ford. Let's see what's happening here.
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Giving Credit to Tesla
Jim Farley, the CEO of Ford, publicly gave credit to Elon Musk for leading the way in electric vehicles:
There is a lot of credit to give here. Elon Musk has helped lead the charge to sustainable energy with Tesla and has all other auto makers reacting to Tesla in making electric vehicles. It's one of the biggest disruptions in a market that I've ever seen. Not since the 2007 iPhone release from Steve Jobs have we had a disruption this big.
There haven't been too many products released by companies that are truly changing the world and helping save humanity. Tesla and SpaceX are two companies. I would venture to say that some of the plant based companies and genomics companies are others that are helping save human kind.
It takes humility for someone to share the truth about someone and Jim Farley, the CEO of Ford, has done so. The question now is, where do things go from here? Will Ford and VW be able to make the transition to electric vehicles and do so profitably? Let's find out.
A Long Road Ahead
There is a long road ahead for Ford and VW. Tesla went through quite a number of growing pains as they released the original Roadster and original Model s vehicles a decade ago. Then there came the Model 3 production ramp which caused Elon Musk to put "all hands on deck" to ensure the success of the project.
Right now, Ford and VW still have their ICE (internal combustion engine) vehicles that are generating profits and sales for each of their companies. But what happens when those ICE sales begin to decline. If those companies cannot sell enough electric vehicles to make the difference, then there starts to be problems at the companies.
One of the big advantages that companies like Tesla, Nio, and Lucid Motors have is that they are already producing all electric vehicles. There is charging infrastructure being built everywhere. Ford, VW, and any other ICE vehicle manufacturers are going to have to find a way to stay in business and successfully make the transition to electric vehicles.
The approach most are making is to slowly phase out ICE vehicles and slowly phase in electric vehicles. But I don't think this strategy will work due to the ever increasing rate of EV adoption. If the sales of ICE vehicles are declining substantially, and the sales of electric vehicles are increasing rapidly, you have a challenge of extra inventory and space for ICE vehicles and not enough electric vehicles to sell to meet demand. It will lead to bankruptcy for many auto makers I believe.
What Is the Solution?
I think the solution is to go all in on electric vehicles and ICE vehicle manufacturers should have done this years ago when they saw the trend starting to change. But like most things, there isn't enough incentive to do it until it looks like a big problem - because, what if you are wrong and there was no need to do it?
Now that it's obvious that electric vehicles are where the future is going, how does a legacy auto maker make the transition without failing? I think they are going to have to lose money and if they go bankrupt, get bailed out. Or they are going to have to merge with each other and lay people off in order to keep expenses under control.
I think it's going to get messy for some of the legacy auto makers like GM, Ford, and VW, unless they can find a way to make the transition to electric vehicles quickly.
What do you think about electric vehicles - are they the future? How will the legacy auto makers switch to electric vehicles without going bankrupt?
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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter, Facebook, LinkedIn and Instagram to stay in touch and follow his Tesla news coverage on Torque News.
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