Which Car Companies Will Survive The Electrification Megatrend?

Legacy car companies vs startups

Polestar Precept (concept car)

While Tesla started the electrification megatrend (thank you Tesla for accelerating the world’s transition to sustainable energy), cars remain a from of art.

You can’t monopolize art, therefore, you can’t monopolize the car industry.

The automotive industry is highly competitive, very technologically advanced, and legacy car manufactures were already operating in this thin profit margin and cut-throat environment. Tesla didn’t invent the electric car (EV), nor they invented the batteries, however, they created a market for it. They also innovated with their business model (e.g., direct to consumer, and software subscription). I believe, the biggest challenges facing legacy car manufactures to transition to electric future are:

  • Rebranding
  • Business model
  • Design language

For example, BMW is known as the ultimate driving machine, so can it be the ultimate electric driving machine? Can luxury be sustainable? should electric car look and/or drive like an internal combustion engine car?

Another example is Volvo, which is known for safety, and simplicity. I think those brand characteristics blend very well with electric cars.

Some data suggest that Generation Z consider a car an appliance, in that case, I argue that a company like Hyundai is positioned to lead the future of mobility.

Even when you zoom out, and consider robotics, solar panels, and all the crazy things Tesla is doing, legacy car manufactures are not behind. Did you know that Hyundai own Boston Dynamics? Did you know that Volkswagen own Electrify America?

So which legacy car manufactures will survive this electrification megatrend? I think all of them have a much higher chance than a EV startup (provided they were not already struggling, looking at you Chrysler 👀). And by the way, I don’t consider Tesla a startup anymore, I’m talking about EV startups who haven't scaled up their manufacturing processes yet, looking at you Rivian 👀. Elon Musk admitted it that scaling up the manufacturing at Tesla was the hardest thing he has ever done in his life!

I think it’s an exciting time for legacy manufactures to reposition themselves, reinvent their business model (e.g., cut the middle man, and sell software subscription), while taking advantage of their manufacturing and technical capabilities.

In case you’re wondering what’s my favorite electric car, it’s the BMW iX M60.

BMW iX M60
BMW iX M60

To be continued…



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