Earlier this month I was a guest of the UK’s Department of International Trade on a low-carbon vehicle trade mission to California and Mexico.
With several days in LA to start the trip, the city of dreams inevitably set the tone. It’s hard not be smacked around the face by this extraordinary place. The real positivity, the relentless politeness, the universally terrible coffee, the ubiquitous fast food, the homelessness, the vast wealth spilling over the Hollywood hills. But most of all the traffic. The extraordinary levels of it, spread uniformly across the expanse of this vast urban sprawl.
This is a city with no centre. Arteries don’t run into and out of a metropolitan heart as they do in older cities. LA is a giant grid which people criss-cross 24/7: more than in probably any other western city the population works around the clock, servicing everything from the entertainment business to the fast food industry. Property prices and wealth inequality mean that people often live a very long way from where they work – even for relatively low-paid jobs they commute, say, 30 miles, and they drive it, which can take a couple of hours. Hardly anyone uses what public transport there is. The nearest anyone from the professional classes gets to public transport is Uber. It’s a default option which only adds to the traffic: effectively a single-occupant car, usually with a large internal combustion engine. Uber and Lyft are simply increasing the car dependency.
So in spite of California’s environmental commitments LA is very definitely not the cool low-carbon city of electric vehicle advocates it’s sometimes painted as. Yes, there are plenty of Tesla’s Model S around (although few Model Xs, and I saw just one Model 3) and a good sprinkling of Chevvy Bolts. But pure EVs and hybrids like Toyota’s Prius are vastly outnumbered by giant gasoline-driven SUVs, ancient V8s, V12-touting Lamborghinis and Rolls-Royces, let alone the humdrum everyday transport of ordinary folk: if you want to spot Hyundais, this is the place to come. LA is a city in love with the motor car. Any car.
It’s simply not realistic to change this mindset. This isn’t Silicon Valley, where utopian business ideas are dreamt up in people’s garages and grow into multi-billion-dollar global disruptives. Currently LA is really the old model, a glittering outpost of Detroit. We visited the LA motor show and its eco off-shoot, Automobility LA, and they echoed echoed this: the latter was, at best, work in progress, the former much like any other motor show (but with more old-school gas-guzzling models). Where were the disruptors? Lucid? Faraday? Nio? Fisker?
The major car manufacturers don’t want the mindset changed – yet. They know that their existing business model is approaching the end of its life, but it’s fine while it still works and until legislation necessitates the change; mass market demand only ever comes into the equation late on. Meantime the carmakers don’t provide attractive low-carbon options. Why should they? EVs are expensive to engineer, mean disruption to manufacturing and retail processes, and offer reduced margins.
It’s in this context that those involved in the low-carbon trade mission can be a factor – smaller companies and start-ups, technologists and innovators, suppliers and integrators. While the major carmakers have a vested interest in slowing things down, these other businesses can be catalysts, forcing change from the bottom up.
Los Angeles can play a big part in this. It’s a bridge straddling the lets-change-the-world optimism of Silicon Valley, San Diego’s low-carbon commitment and the pragmatic ability of Baja Mexico to productionise low-carbon tech. And it’s got a huge potential customer base, vast wealth and international influence.
LA is also quite possibly the model for a major modern city struggling to eschew old ways and acquire new, more sustainable habits. Yes, it’s more extreme than New York, Paris or London, but most of the problems are the basically the same: too much road traffic, unattractive public transport, very little low-carbon choice. If LA can do it then so can others. We should all keep watching.
Asia is key, so expect to see the vehicles being manufactured there. That may mean partnerships with Chinese businesses, which would reduce the huge financial risk. What that in turn means for the brand – British, daring, challenging, idiosyncratic, innovative – is another question.
The furore over the looks of the BMW X7 concept car revealed at the Frankfurt motor show this month, which triggered criticism of the company’s entire presence at the show, was not, at its heart, about design or product.
The current trajectory can be traced back to the early 2000s when BMW commoditised itself by selling the 3-Series heavily into the world of discounted business fleets and aggressively targeting the less brand-conscious private customer with cheap leasing deals. The 3-Series became the new Ford Mondeo. Its appeal was a prestigious badge but the trigger was affordability. The badge began to stand for driveway bragging rights, not engineering, and the ubiquity made it, well, common. And meantime BMW was becoming more a bank that sells cars than a car company. This was a big cultural shift.
Porsche did the same with the Cayenne of course, but Porsche needed saving; BMW didn’t. Every third car made today by BMW is an SUV, and the production X7 will book-end the line-up with an X2 model to be launched in early 2018, both additions to the range. With the lust for SUV volumes came a dip in quality. And the compulsion to proliferate, to find niches nobody has asked for, led to cars like the dumpy and universally disliked 5-Series GT and, more recently, the X4 – a visibly confused creation which is neither fish nor fowl. Or perhaps it’s both.
This is why BMW shifted its emphasis away from ‘The Ultimate Driving Machine’ to ‘Joy’ a few years ago. Joy was still the core theme in a presentation given this summer at the Automotive News Congress in by BMW’s brand boss Hildegaard Wortmann. But it means nothing. It’s feel-good lifestyle marketing-speak which could be applied equally to SEAT. It’s not a principle or a solution.
BMW doesn’t appear to be doing so. To see how to use existing brand values to reinvent a brand for the age of EVs, automation and sharing, it need only look at Volvo. If safety, practicality and family-friendliness can become cool, what can the can The Ultimate Driving Machine become?
But that, as the LYNK & CO website says, is “Almost beside the point.” The service is the product.
The excellent speaker line-up reflects those changes. With SEAT, Lamborghini and Italdesign all on the speaker’s podium, VW Group is somewhat over-represented – that’s because SEAT’s the Host Sponsor, but it also means we get to hang out in Barcelona. And the line-up does reflect many of the changes facing the industry.
A few days on from press days at the Geneva motor show the consensus is that essentially it’s been more of the same: yet more SUVs, some hyper-expensive hypercars, but little to shift things much further along the road to a future mobility landscape. That the Range Rover Velar and Volvo XC90 premium SUVs have been probably the most talked-about cars at the show says much about the industry right now. SUVs and premium-isation are where the volumes and money are.
McGovern by contrast had the Range Rover Velar to launch. It’s curiously named after the very first 1960s Range Rover prototypes, which were go-anywhere, hose-down workhorses. The new car stretches the Range Rover ethos to the opposite extreme – it’s the sleekest, most dynamic, driver-focused car the brand has yet produced. It fills a hole between the Evoque and Sport – whose name it surely should have had – but when that car was named there wasn’t a Porsche Macan to take on. And that, fundamentally, is the Velar’s job.
Sure, there was plenty of talk about autonomous vehicles on the stands. There should be – this technology will bring about seismic change for the carmakers and allow new players to enter the mix, grow quickly and reshape the industry. But VW didn’t want automation to gatecrash the party, and the nearest thing to a roll-out at Geneva was Nissan’s statement that its Leaf and Qashqai models will shortly be available with single-lane autonomous driving – commendable but something of a glorified adaptive cruise control with ancillary safety driver aids.
Mercedes has the most confident outlook of any Geneva exhibitor. Its model proliferation has taken it dangerously close to commoditisation, and it’s grown a little too fond of chrome. But the quality of the products, the way they’re displayed, the technology, the references to its F1 domination, and the interaction with the business both on-stand and digitally mean that it’s the most compelling of the behemoth brands at the show. The elegant and perfectly proportioned AMG GT concept is an admirably unostentatious statement of its assuredness.
The contrast with JLR was marked. Both are effectively challenger brands to the German premium marques. Both are already producing vehicles of the same quality as Audi, BMW and Mercedes, but Volvo’s launch of the new XC60 was very different from that of the Range Rover Velar.
The likely takeover of GM’s European unit Opel by PSA isn’t all to do with economics. It’s also about changing attitudes to mobility and transportation.
Effectively Tesla wants to join the establishment but doing it with a bit of chutzpah; it’s not establishing a new paradigm. But that’s what new entrants should be doing and existing players need to move towards. The likes of Google and Apple have wisely stepped out of the shadows to think very carefully about what their place in the mobility landscape should be. In a decade or less the power may well be at the other end of the value chain from the traditional business model, with Uber-type autonomous taxi brands and ultra-short-term leasing.
Some of the other major OEMs are showing evidence that they’re beginning to think about how they can fit into a world of disruptive change – Volvo for example has established a new shared mobility unit and its parent Geely has recently launched the Lynk and Co brand, founded on the trend towards ad hoc usership.
Audi, the recent king of volume growth among premium brands, is about to be overtaken by Mercedes and slip to third in global premium-car sales.
But they can also fail spectacularly. In April, when he described the forthcoming Tesla Model 3 compact car as “the most compelling product launch on earth” he wasn’t aware that this month’s launch of one of his SpaceX rockets would be dramatically more compelling. The Falcon 9 failed explosively and extremely publicly, made worse by the fact that in its payload was a Facebook satellite for bringing broadband to parts of Africa. It was a PR-loaded fireball and could have been a metaphor for his aim of taking on the established carmakers.
It’s been a bad year. Yet Tesla faces new, fundamental challenges and risks, and rather than provide welcome relief the Model 3 breakthrough car is the heart of it. Yes, the Model will alter the dynamics of the electric vehicle market if, as claimed, it comes to market in 2017 at a base price of $35,000, able to carry five people well over 200 miles and on to the high ground.
But the real battleground is not the vehicles themselves – it’s how they’re powered. So if anything is going to be the Tesla gamechanger it’s the company’s giant Gigafactory battery plant, not the Model 3. It needs to be: around 375,000 people have placed orders for the 3, equivalent to a likely $16bn in sales. Musk says the 3 will propel Tesla from an annual volume of 50,000 vehicles in 2015 to 500,000 by 2018 to meet demand.
So you hope that, for Musk, cars are a way to create the momentum, goodwill and change of mindset for a wider energy brand and a new kind of grid – translating Tesla’s vertical integration into a world where EVs power not just themselves but our homes, are part of the internet of things and a smarter world. Otherwise his efforts may go the way of that Falcon 9.
Mark Carbery 