Automotive News Europe - January 2020 - 34

AUTOMOTIVE NEWS EUROPE

FINAL WORD

Luca Ciferri

is Associate Publisher
& Editor at Automotive
News Europe. He
can be reached at
lciferri@autonews.com.

Revenge of the Flintstones
T

he start of the 2020s was supposed to
be when disruptors such as electric car
startups, ride-hailing companies and tech
giants would start to surpass the centuryold traditional automakers. These relics
from the Stone Age -- companies that design, engineer, build and distribute cars -were on the verge of extinction, we were
told. What I have seen lately has proved
that these companies are a lot more likely
to survive than most of the disruptors.

A sign of this came when Dyson abruptly
cancelled its plans to enter the automotive arena with a premium electric car.
Dyson's car project was interesting because it was different than most other
EV startups. First and foremost, Dyson,
a company renowned for its pricey-butpopular vacuum cleaners, hair dryers
and fans, is not a cash-starved startup.
The company, which turns 29 years old
this summer, generated 4.4 billion pounds
(5.2 billion euros) in revenue in 2018. In
addition, founder James Dyson wasn't looking to become rich by moving into EVs. The
72-year-old self-made man ranks No. 110
in the Bloomberg Billionaires Index with a
personal fortune valued at $12.2 billion.
On top of this, Dyson did not seek fresh
market capital to finance the car project.
He pumped in about 2 billion pounds of his
own money. Therefore, when he wrote to
employees in October to tell them the Dyson car was dead and he had failed to find
anyone to take over the project it was a
wake-up call. It signaled that the high cost
to enter the automotive industry is probably going to cause a lot more casualties.
China's Nio is close to collapse. Byton had
to be absorbed into FAW. Faraday Future
and Lucid may never even get started.
Tesla has, so far, been an exception. So
has Amazon-backed Rivian, which will not

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Photo: Getty Images

The status quo is here to stay because
no matter how much innovation changes
things - and I'm a huge fan of innovation
-- there is no getting around the most
basic business principle: your long-term
future depends on your ability to make
money now. For a number of years this
golden rule was ignored, but reality is
starting to return.

only make its own cars but also share its
electrified chassis with another investor:
Ford Motor. Croatia's Rimac Automobili
is following a similar path, supplementing
its development of EV supercars by sharing its technology with investors including
Porsche and Hyundai. Despite this success, CEO and founder Mate Rimac admits that his company has "been on the
brink" often and only gives his company a
30 percent to 40 percent chance of survival (See interview, Pages 12-13).
Separately, Uber and Waymo are well behind with their plans to offer driver-less
robotaxis on a large scale. That means the
Level 4 autonomous cars that were supposed to start appearing this year probably
won't arrive until after 2030, leaving the future of those businesses at risk as well.
"The truth is, barriers to entry in autos
remain high. Making cars is hard. The

move to EVs will be expensive but will
probably be led by traditional OEMs.
There will be less disruption than
feared," Bernstein analyst Max Warburton wrote in a recent note to investors.
While Warburton expects traditional
automakers to survive for a long time,
Mate Rimac is pragmatic about the future of automotive startups: "Every year
in Geneva a new company appears and
then you never hear about them again."
An automaker CEO confidentially gave
me a view that epitomizes what I think
we will see in the new decade: "The financial markets were convinced that
anyone could enter the car business and
be profitable. This is a huge lie. This is a
tough business for grown-ups, with very
little room for kids." Or, as he nicely summarized, what we are likely to witness is
"The revenge of the Flintstones." ANE

JANUARY 2020

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Automotive News Europe - January 2020

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