Governments Will Bail Out Their Auto Industry
As I look into the future, what is the landscape of the automotive industry. In my view, it is plenty of bankruptcies from legacy auto.
In this video I discuss how we are likley to see governments step in to bail these entities out. This means Japan, Germany, and the US all will pony up money to save these relics from the past.
▶️ 3Speak
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Summary:
In this video, Task discusses the challenges that legacy automakers are facing as the electric vehicle (EV) market grows. He points out that these companies, such as Toyota, Volkswagen Group, and Stellantis, will need to cannibalize their internal combustion engine (ICE) sales to compete effectively in the EV market. Task highlights the financial strain on these automakers, who are already heavily indebted, and emphasizes the shift towards EVs at the expense of ICE vehicles. He suggests that as EV sales continue to rise, legacy automakers could face significant declines in revenue and profitability, especially if market share for EVs grows rapidly. Task raises concerns about how these traditional automakers will adapt to this changing landscape.
Detailed Article:
Task begins by addressing the looming challenges faced by governments bailing out their automotive industries, pointing out that Japan, Germany, and the United States are likely candidates for such interventions. He expresses particular concern for Japanese automakers, German automakers, and the already troubled U.S. automakers, hinting at the impacts of the current strike affecting the industry.
The central issue, Task outlines, is the necessity for legacy automakers to cannibalize their ICE sales to succeed in the EV market. He references major players like Toyota, Volkswagen Group, and Stellantis, highlighting the significant adjustments they must make in their production and sales strategies to accommodate the shift towards EVs.
Task underlines the imminent challenge facing these automakers as they attempt to balance their existing ICE market dominance with the growing demand for EVs. He explains that failure to scale up EV production could result in internal competition where EVs replace ICE vehicles within the same manufacturer's lineup. This, he believes, could profoundly impact the financial well-being of these companies.
The analysis shifts towards the financial aspects, with Task emphasizing the heavy debt burden carried by these legacy automakers. As the projected costs of transitioning to EVs (ranging from 25 billion to 40 billion) loom over their balance sheets, diminishing sales and revenues due to the rise of EVs pose a dire situation for profitability.
Looking ahead to 2024, Task predicts a substantial growth in EV sales, using Tesla's impressive sales figures to illustrate how EV purchases are largely substituting ICE vehicle sales rather than entirely expanding the market. He warns that as EV market share grows, legacy automakers face the risk of a significant revenue drop, potentially leading to financial distress.
In conclusion, Task highlights the need for legacy automakers to swiftly adapt to the accelerating EV market to avoid being left behind. He points out the possible scenario where Tesla and Chinese manufacturers dominate EV sales, causing a substantial shift in the global automotive industry within the next few years. Task's analysis underscores the urgency for traditional automakers to prioritize EV investments and production to secure their position in the swiftly evolving market landscape.
Notice: This is an AI-generated summary based on a transcript of the video. The summarization of the videos in this channel was requested/approved by the channel owner.