How did we end up in this mess? History is a fine teacher.
The gist is that in order to get a better grasp of how the international auto industry got itself in this current mess, along with its tax payer money to clean up mistakes made, we need to look at history. As far as electric vehicles, EV are concerned, their future depend on a restructured approach to building them, i.e. a completely different business model. Their fate will depend on learning from mistakes made in the past. Are auto makers serious this time around about truly and deeply changing their business models? Are today’s financial woes enough of a lesson to install long lasting changes? In other words, are government subsidies helping car makers or making them even more reliant on help, i.e. less innovative in the long run?
England’s Automobile Rise And Fall. Looking back at history, the the 1960’s brought the kiss of death for the British automobile industry as small, specialized car makers were bought out by bigger, more profitable corporations. To name one, British Leyland helped saved a few brands from total collapse by rationalizing choice, it also started a dangerous trend, over-consolidation. It only delayed the inevitable. If Great Britain had a wide and rich choice of cars and drivetrains, many were dropped in favor of rationalization. MGs eventually had Triumph engines, which begs to ask if it was an MG anymore.
Who Is Next? The next one to fall pray of over-consolidation was the U.S. auto industry. The U.S.A. was once home to many startups and small car makers that thrived on innovations and fantastic designs. Four decades later, only three giants emerged from a wild, un-contained buy out spree, that eventually left the country paralyzed this year. Brands were fropped, again in the name of rationalization where different makers used the same drivetrains. They lost its image and DNA, and eventually all went bankrupt, save for one. The next market to face a collapse seem to be German car makers. The consolidation it has gone through ends up with only three companies holding six to ten others, depending on how you count. This could spell disaster. This is especially true considering the latest woes in the Porsche trying to take control of the VW group saga. The Italians made a smart move last year by having Fiat relax its grip on the Ferrari, Maserati, Alfa Romeo and Lancia groups that have regained more control over their destiny. Maserati will be able to sell its cars on its own and not have to depend on Ferrari, the same is true for Alfa Romeo. This is something other conglomerates could learn from.
Who Is To Blame? Playing the blame game is a dangerous thing. While the obvious culprit is the desire to squeeze as much profits as possible and rationalize technology choice under different car bodies might have made sense on a purely financial basis, it was pushed too far. On one hand, putting all of your eggs in one basket has never been a good idea, hence the saying. On the other, having too many diversified makers is not the best way to further technology and bring costs down. The ideal scenario is somewhere in between.
Will car makers learn how to self regulate or will they once again splurge and invite governments to curb their enthusiasm? One thing we can only hope for, especially in the case of EVs, is that more passionate car aficionados will once again be at the head of companies who will hopefully relegate the financial side to accounting, not the decision making.