(Bloomberg) – The epic battle over who controls the future of the auto industry is about to get a lot more interesting.
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Tesla Inc., the pioneering trend-setting company, has mastered the early rounds of the new energy era, capturing investors’ imaginations with a vision of what the next generation of vehicles will look like and taking full advantage of the nascent automobile market. electrical
At the other corner of the ring are giants of scale: Volkswagen AG and Toyota Motor Corp. The world’s two largest automakers – each sold about 10 or 11 cars for every one Elon Musk sold last year – realize that that the age of the battery-powered vehicle has arrived and they are trying to figure out how to stay on top.
Five days apart last month, these masters of mass production drew up plans for a massive $ 170 billion spend over the next several years to preserve their position in an industry they have dominated for decades.
Senior executives are well aware that the internal combustion engine transition will not be orderly. Things could get ugly, something like when Apple Inc. entered the mobile phone market and overtook Nokia Oyj, which was once dominant.
After a year of remarkable growth during which Tesla became by far the most valuable automaker of all time, the trillion-dollar question is whether Musk’s advantages for the next generation of car manufacturing they are as unsurpassed as your company’s market capitalization suggests.
“When the world’s two biggest auto companies decide to go for electricity, it’s no longer speculation – the mainstream is going electric,” said Andy Palmer, former Aston Martin CEO and former Nissan Motor Co. executive, often called “the godfather of electric vehicles” after being instrumental in the development of the Japanese automaker’s Leaf, which runs on batteries. “I hope the switch to electricity is faster than everyone expects.”
The swashbuckling giant to take on Musk is VW, which has grown over 84 years to a group of a dozen brands, with some 120 locations worldwide and an employer of more than 671,000 people. VW Group generates approximately $ 280 billion a year.
Every year that CEO Herbert Diess has been at the helm, VW has announced unbeatable budgets for electrification. On December 9, it delivered its biggest plan yet, allocating 89 billion euros ($ 100 billion) to developing electric vehicles and software over the next five years.
Diess constantly uses Musk as a measuring stick, so much so that he has acknowledged that it upsets some within VW. In October, he welcomed Musk as a surprise guest at an executive conference with 200 of the automaker’s top managers.
In the first 10 months of 2021, VW had delivered around 322,000 fully electric vehicles, just over half of its sales target of 600,000.
VW has also delivered strong results with its high-value EV models within the group. The Taycan, for example, would outsell the iconic 911 sports car. More Porsche electric cars are on the way, and the brand is expected to introduce an all-electric version of its popular Macan SUV next year.
They showcased Toyota’s long-standing positioning for the future a couple of months ago on a race track in the hills of western Japan. While the company took its battery-powered bZ4X electric SUV, the car Akio Toyoda used to drive around the circuit was a Corolla Sport H2 Concept equipped with a hydrogen engine.
“As we are heading towards uncertainty, what we need are diverse solutions,” the Toyota founder’s grandson said during a press conference on Nov. 13. “We do not want to be tied to only one option.”
Diversity is one thing; being absent is another. The hybrid powertrain pioneer known for the Prius admitted that it was “a little late” to fully electric models, and that was four years ago. Toyota’s first global mass market electric vehicle will not debut until the middle of this year.
But weeks after spinning around in a hydrogen car, Toyoda unveiled a number of future products. When the first curtain was unveiled at a press conference on an artificial island in Tokyo Bay, it was flanked by five electric vehicles.
Toyoda gave a short sales pitch for each vehicle, then raised his palms to the sky before another curtain revealed 11 more battery-electric models. “Welcome to our showroom of the future,” he said, announcing plans to launch 30 electric vehicles by the end of the decade.
Of the 8 trillion yen ($ 70 billion) that Toyota spends on electrification in that span, half will go to all-electric models. The manufacturer aims to sell 3.5 million electric vehicles a year by the end of the decade, almost double the goal set just seven months earlier.
Toyota needed a bit of prodding to get to this point. There were cautious comments from executives who objected to the industry’s general enthusiasm for electric vehicles, and some investors and environmental groups criticized the automaker for delaying. Last summer, Anders Schelde, chief investment officer at Danish pension firm AkademikerPension, which owns Toyota shares, said he did not perceive management attitudes toward electric vehicles as a long-term winning strategy.
While the attack on Toyota should be taken seriously, the start VW has had with its VE push shows that the transition to electricity will not be a matter of simply flipping a switch.
Plus, Tesla is doing its thing too. The company is just closing a year in which it delivered more than 936,000 vehicles – an increase of almost 90% more – and has already made an investment of up to 1.2 billion yuan (US $ 188 million) in its two-year-old Shanghai plant. to upgrade equipment and push production beyond its declared capacity of 450,000 units per year. It will add another 4,000 workers to the facility, bringing the total to about 19,000.
Some envision that Tesla will be toppled from the throne of electric cars as new entrants enter the growing market. IHS Markit projects that Tesla’s US electric vehicle market share will fall to 20% by 2025, from just over 50% today.
A strong investment “will put Toyota and Volkswagen in a better position to compete with the electric vehicle specialists,” said Anna-Marie Baisden, director of automotive research at Fitch Solutions. “We have long held the view that more traditional automakers will have certain advantages over startups, such as scale, manufacturing expertise and brand loyalty.”
Volkswagen, Toyota Pledge Billions in Bid to Dethrone Elon Musk
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VW, Toyota pledge billions to dethrone Elon Musk