This is the death sentence for the obsolescence-obsessed auto sector. Geely is already well set up to make smart EVs. Baidu has been developing autonomous vehicle tech for some time now, and the two companies are an obviously good fit. The market already likes it.
The revolution has arrived
Baidu stock jumped 4% on the NASDAQ. (NASDAQ:BIDU) As Reuters reports in murderous detail, Baidu isn’t the only Chinese company moving in this direction. This is no longer about basic auto manufacturing and design trivia. This is a whole new class of vehicle with a lot to recommend it. It comes as a new generation of long-range, high power EVs hit the market.
The mainstream market will be as dead as the internal combustion engine (effectively extinct) if it doesn’t pay attention. This is all existing newish tech, to a very large extent. There’s nothing too hard in this approach.
Mainstream manufacturers have one option – Stay in the pre-Cambrian era of car technologies or join the new streams. The other option is to go broke.
The economics of mega-change
The market for vehicles is pretty tough right now. Someone noticed years ago that Millennials either weren’t buying cars or not buying them as per previous demographics for their age group. The cost of owning a vehicle these days is arguably insane and unjustifiable for many income levels. Maintaining cars is also expensive.
All of this means that the new market is hypersensitive, hypercritical, and not looking for excuses to spend significant money. This situation is roughly the equivalent of the pandemic for the mass market – Immunise your products, or die. There is no getting around this, even in the luxury market, for long.
The costs and economics of EVs, smart or otherwise, are biting, hard. It makes more sense to buy the cheaper option. That’s particularly the case for the multiple younger and early middle age groups, for whom buying fossils just doesn’t work.
A rosier, but somewhat blurry future – Tech, Schmech
There are few things about smart EVs which need to be qualified:
“Autonomous” doesn’t necessarily mean a damn thing. Cute, yes; but they may be prohibited by law, or required to be semi-autonomous. Autonomous does however mean advanced onboard systems, built-in safety options, “call home” etc. Those are all good practical selling points.
EVs ARE the future. Forget the propaganda. The filthy old gas-driven things are well past any level of competition with them. Smart light fast and cheaper vs. overweight stupidly outdated and expensive is no competition at all.
The big car manufacturers are all over new EVs and alternative fuels. German, Korean and Japanese car manufacturers are likely to take a very hard look at Baidu’s new move.
Exactly how this EV tech is going to jump isn’t that easy to predict. What is obvious is that the new EVs are coming with CAD-driven aerodynamics and some truly good design ideas. The new long-range EVs have actual 100kwh power plants, not the old AAA battery-type designs.
It’s pretty safe, in fact too safe, to predict that the competition will go into overdrive – sorry – when the designs start to get market movement.
So what is the US market going to do about it?
The Chapter 11 addicts of the US auto industry are now on notice. Get the lead out, literally, or get buried. It’s very much a matter of opinion whether the US manufacturers are up to the challenge. Part of the problem is cultural. If the anti-expertise disease is running in the sector the way it is in politics, it’s goodbye sector. If not, they’re in with a chance. Even Tesla will get a run for its money.
Watch this space, because it’s going to be like the end of the Cretaceous.
