Big 3 still don't "get it"
Simply not enoughAsk some of the world's "most prominent venture investors", about the direction of the US auto industry , and they will tell you it "remains too wedded to a dying business model and too out of touch with the sources of innovation to become competitive again".
Instead, these investors are looking to the likes of Fisker, Tesla, Bloomenergy and Better Place.
According to Vinod Khosla, Managing General Partner of Khosla Ventures, companies like Better Place are rethinking the auto industry with "business model innovation".
Still, it's a lot easier to rethink your business model when you're aren't producing millions of vehicles every year. Nonetheless, with numerous Asian automakers - let along Silicon Valley startups - quickly ramping up production, quality and ideas, it does seem that the Big 3 will need to redefine themselves in order to survive another hundred years.
Labels: project better place
posted by Dahcredyns at
11:22 AM
14 Comments:
Have you seen this study:
U.S. Tax Breaks Subsidize Foreign Oil Production
Gotta love this quote:
"The research demonstrates that the federal government provided substantially larger subsidies to fossil fuels than to renewables. Fossil fuels benefited from approximately $72 billion over the seven-year period, while subsidies for renewable fuels totaled only $29 billion. More than half the subsidies for renewables—$16.8 billion—are attributable to corn-based ethanol, the climate effects of which are hotly disputed. Of the fossil fuel subsidies, $70.2 billion went to traditional sources—such as coal and oil—and $2.3 billion went to carbon capture and storage, which is designed to reduce greenhouse gas emissions from coal-fired power plants."
The US automakers had their free run. They existed and prospered during an era where people were frankly oblivious to external concerns such as the environment, efficiency, and quality.
They had a good run freeloading off the backs of people who were willing to pay for crap....
They now simply need to die and make way for something better. Sparing people their jobs to stop this sort of change and progress is, frankly, really really stupid.
Thanks for the very informative post
wrong wrong wrong
I don't dispute the tax subsidies nor the inequitable treatment of renewables but what does that have to do with American automakers verses Foreign Automakers including the foreign companies that product cars (and jobs) in America?
If we take ethanol out of the renewable fuel category - what does that leave for automobiles and how would that be different between foreign and US automakers.
the concepts alluded to here are not consistent nor congruent to the issues IMHO.
Whether or not foreign car makers beat the snot out of US carmakers has exactly what to do with renewables and tax subsidies?
I was just trying to show that the Gov't doesn't get it either. We talk about ending foreign oil dependence while our Gov't continues to help fund foreign oil dependence. I am also tired of hearing from the "drill baby drill" folks that the market should sort it all out while we give huge tax breaks to the fossil fuel companies. I'm not sure any politicians have the balls to resist the money from the fossil fuel industry to change anything any time soon so can we really blame the Big 3 when our Gov't continues to fund fossil fuels and how much can Obama(or any politician) change that?
larry,
i think zendude has a point.
the auto industry has closely followed the government's actions regarding fuels. for instance, toyota isn't building massive amounts of flex fuel vehicles, but GM certainly is, yet most never fill up with higher ethanol blends. and by doing this GM avoids massive CAFE penalties.
so, part of the reason the big 3 don't get it, is because of government action. the government has made it easy for the big 3 to be complacent.
and, let's be honest, obama is hugely supportive of the ethanol industry. too much of that industry, unfortunately, and obama's support of it, is based around corn, not more promising ethanols, such as cellulosic ethanol. and even that technology might never live up to the hype.
thus, i think the collusion between the government, the auto industry and the energy industry is a big part of the problem. the us auto industry doesn't get it because they don't have to.
and, when they do have, they'll still probably be too big to fail.
of course, we the people, overall, have been supportive of this collusion because we've been raised to expect, and largely demand, cheap fuel.
from the government through industry down to the people, america has become too fat, dumb and happy. ok, not happy, but complacent.
we've lost much of our innovative drive as a nation i think.
I don't disagree with much of what is said about the fossil fuel industry... the subsidies, our energy policy, and Administration support for ethanol (so far)...
but I don't get the connection to the auto industries especially when we're saying it's the American ones.
Toyota makes cars in this country and they would surely sell as many Tundras as Silverados and E-150s if they could - don't ya'll think?
It's easy to whack on GM (and Chrysler) because they mostly deserve it but Ford?
Remember also - GM and FORD both sell - successfully on the world market.
FORD is quite a successful seller of smaller cars and trucks on a worldwide basis.
I'm just having a little difficulty threading together our wrongheaded energy policies with our domestic auto industries.
I think both have problems..but I'm not convinced they are directly linked...
one of the biggest problems that our auto makers have - and we need to admit this is that our auto makers pay tremendous health care costs for not only their active workers but all of their retired workers and it's killing their competitiveness because all the other countries they are competing against - those companies do not have those costs - and especially the newer ones who do not have the enormous numbers of retirees.
Second problem - I read the story.. and I'm not clear at all on the foreign. oil tax subsidy.
Either I'm not very good at understand what they said or they did not explain it well.
Can anyone who better understands what they are saying.. explain it better ?
thanks.
before alan mulally, ford deserved to be put in the same category as GM and Chrysler.
Still, why was Ford able to turn the corner to some extent, while GM and Chrysler could not? doesn't there have to be some accountability here, aside from just legacy costs?
likewise, why are other US companies able to profit despite health care costs?
additionally, toyota was able to save significant amounts of money on health care costs by opening clinics within their plants for basic health care. certainly, that's not apples to apples as toyota doesn't have legacy costs are union wages.
still, why can toyota think a little differently about business costs, but detroit cannot?
nonetheless, legacy costs are a big issue for detroit, a big issue that they also agreed to take responsibility for via contracts made during some of their worst years - in terms of quality.
for decades the big 3 produced inferior products while signing contracts with unions that they should have known weren't equitable for the quality being produced.
if consumers had made detroit pay for their lack of quality a few decades ago, they probably would have signed more realistic contracts, and started building better products sooner. however, most americans chose to buy american junk over a cheaper quality foreign product.
we were the suckers that enabled this mess.
and the big 3 cashed in on that angle and continued to produce junk while avoiding smaller cars and sedans - essentially handing huge market share to japan without ANY competition.
complacency, arrogance and ignorance.
likewise, unions - whom by every measure contributed to the inefficiencies of the us auto industry - didn't deserve such great benefits. so, i'll blame them as well. besides, too often, unions are driven by complacency and maintaining the status quo as well.
certainly, today, the US has largely caught up to the rest of the world in quality, but they are still lacking on the innovation side, especially gm and chrysler according to the world's automotive suppliers.
finally, why has the big 3 never tried to find innovative solutions to their legacy costs? they yield massive power in this arena, yet they've never used it up until just a few years ago.
and regarding toyota and big trucks. sure toytoa will sell as many trucks as possible, but honda has never taken that path. and while toyota did chase large trucks and suvs, they also, concurrently, produced the prius and other quality small vehicles while GM axed all their hybrid and EV programs that the government helped them fund via tax payer money.
again, lack of innovation and vision.
perhaps the complacency has been cured, but the lack of innovation is still quite clear, although i will agree that ford does give me some hope.
perhaps we should have just given ford 100 billion to consume gm and chrysler. jk.
You need to read the study, not the summary, to understand what they are talking about. I don't understand it all but here are some interesting facts:
Most of the largest subsidies to fossil fuels were written into the U.S. Tax Code as permanent provisions. The vast majority of subsidy dollars to fossil fuels can be attributed to just a handful of
tax breaks, such as the Foreign Tax Credit ($15.3 billion) and the Credit for Production of Nonconventional Fuels ($14.1 billion). The largest of these, the Foreign Tax Credit, applies to the overseas production of oil through an obscure provision of the Tax Code, which allows energy companies to claim a tax credit for payments that would normally receive less-beneficial tax treatment.
It has been said that a sure formula for failure is......
to have an increasing share in a decreasing market.
I appreciate Drac's explanation.. and agree with much of it.
Zendudes explanation is helpful also but not quite as satisfying.
It "sounds" like the US is giving tax breaks for overseas production of oil....
i.e. letting US companies bring in the oil for less than foreign companies could import it for.
Okay.. the money question..
are we talking ... 1 cent a gallon or 10 cents a gallon or a buck a gallon for this subsidy?
I suspect it's a penny or so..
but I'm also not sure how you would do an apples to apples equivalent subsidy for renewable fuels ..
and to be honest.. beyond ethanol.. I'm not sure what the other renewable fuels are. to be honest.
larry,
there are a bunch of biofuels out there, but this study shows that almost all of the money is going towards corn-based ethanol.
the idea is if you pump enough money into corn-based ethanol, eventually it will drive innovations into non-corn forms of ethanol, such as ethanol from biomass, agricultural and municipal wastes, as well as other carbonaceous material.
but corn itself, as a fuel, seems to have been shown to be a dead end on multiple levels. its all politics and lobbying, and yet the plan is to pump even more money into this direction, even though nothing but corn has been shown to be even remotely cost-effective - and even then - not without massive subsidies.
instead, i'd prefer a smaller subsidy - research grants - for cellulosic ethanol, and other non-food powered biofuels, such as algae, which seems to be the hot biofuel - in terms of potential - these days.
then the renewable fuels are basically all ethanol variants?
If you get the same subsidy for ethanol - does it require you to get it from corn or can you get it from any source?
Is it Brazil that is getting most of it's ethanol from sugar cane?
brazil is sugar, but not all biofuels are ethanol. for instance, there is biodiesel. still, in america, ethanol is king.
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