I learnt a couple days ago about Britain’s plans to advance the deadline to stop sales of petrol and diesel vehicles from 2040 to 2035. The article also mentions India’s own deadline of 2030.
As I read though the article, I realised how slowly the auto industry moves at a macro level. We are talking about fifteen years from today. Cars sold in 2005 aren’t that different from ones sold today. The car I drive today is the exact same model introduced in 2005. Today’s model, two generations after, is slightly roomier, slightly more powerful, slightly more fuel efficient, and has a lot more electronics in it. But it’s not radically different.
Meanwhile the phones, computers, wearables we use today were probably unimaginable in 2005. The sophistication of software we use today (Photo editing, Maps, Uber, Zomato, Netflix, Slack, even Whatsapp) would not have been possible to imagine on mobile then. Nearly everything about information technology has been transformed during that period; comparatively very little in automotive technology has.
No wonder auto manufacturers are concerned and are complaining. If Norway, India, Britain actually meet their targets, the cars on the road then are unlikely to be from the manufacturers who make cars today. Massive disruption is afoot because the industry has just never gone through a major discontinuity and therefore has no idea how to retool itself quickly. Even the oil shock of the early 1970s, now almost fifty years old, has not led to any major lasting changes.
Given all this, maybe Tesla’s stock price rise is justified. It is the only car company that’s got it together – manufacturing, software, infrastructure, distribution.