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A Year Of Living Safely
I don't think anybody's 2021 ended up as expected. A year ago the COVID vaccine was recently announced, and it looked - at least to me - that by the Spring things would be back to normal. I was working on an EV Buyer's Guide, for which I wanted to gather together all the relevant information that consumers would need to make the transition to E-mobility, and choose any number of the next-gen EVs promised for the later half of 2021. I envisioned that in the fall I would be in the middle of brokering EV's and solar installations. I was under contract with Porsche, since concluded, where I agreed to stay away from late model Porsche sales.
I had to pivot pretty quickly. Chip shortages meant that most of the new EV's would be delayed. Manufactures who did have EV's to sell elected to only sell them in limited markets - mostly where there were Provincial subsidies (not Alberta). The DC fast charge infrastructure - necessary for any highway driving - proved to be beset with technical problems, relegating an EV to a 2nd or 3rd car for wealthy households.
If you take Tesla out of the picture, there are mostly an insignificant number of EVs sold in Alberta right now - I'm guessing 80 of the Hyundai/Kias, 40 Taycan's, 50 Mach Es, 50 Bolts and a handful of Audis, Volvos, and Jags for the year. About enough cars for a single small car dealership to stay afloat - for the entire province. Widespread acceptance will happen, but I am probably a few years premature trying to build a business model around it.
Happily, the booming classic car market and popularity of on-line auctions have given me something else to do. Looking at the cars that I have for sale now, and have sold in the last year, I can't really say that any of them are especially green! I shudder to think of the C02 produced by the Mustang's 390ci big block, although it is somewhat mitigated by the fact that it has only travelled 400 miles in 10 years. Even a 4 cylinder Land Rover will fumigate a large commercial shop in seconds.
I certainly don't have a unique story; adaptability being the survival mechanism for many of us during the last few years. In the Automotive industry for 2021, who has adapted the most successfully?
That the chip shortage caused so much difficulty in 2021 was a surprise considering that the chips used in cars are not that sophisticated, at least relative to the ones used in gaming and cell phones. Tesla managed to rewrite their firmware in three weeks and switch suppliers, avoiding production delays that cost less nimble competitors six months of production. The VW/Audi CEO, Herbert Diess, invited Elon Musk to talk to 200 of his most senior managers about innovation after that - something that his Supervisory Board took a dim view of, and apparently might cost him his job.
2021 was supposed to be the year that the legacy manufacturers were going to bring the fight to Telsa with their superior manufacturing and engineering expertise. This really didn't happen - Tesla's sales appear to be only constrained by the number of cars they can produce. More than that, Tesla has re-thought many production processes, and on the way from increasing production from 20,000 to nearly 1M in 8 years, has learned a few things. It is now an industry leader in manufacturing too.
In 2020, Porsche pulled out all the stops with the Taycan in order for it to better the performance of the 8-year old Model S, and they did - albeit by a tiny margin. It didn't last. The new 1,000hp 3-motor Plaid will dust a Taycan Turbo S in a straight line and on the track - it's not even a contest. Tesla's 20,000 rpm carbon-sleeved electric motor made the Taycan's 14,000rpm motor and 2-speed gearbox obsolete overnight. Twin rear motors allow torque vectoring well beyond what the Taycan platform can muster. Now Tesla appears to be leaders in EV design, manufacture, supply logistics and software. Musk doesn't have too many people betting against him anymore.
A bright spot for the VW Group is its association with Mate Rimac, who has the same start-up mentality as found in the Silicon Valley companies. Giving him Bugatti might be a small price to pay for what he can bring to the organization.
EV Trucks
The first EV truck to market is the Rivian, which was well received, and has just seen its first customer deliveries in the last quarter of 2021. They have produced about one thousand of the 70,000 pre orders that are on the books. Their factory in Illinois can produce up to 200,000 vehicles per year, and they are spending $5B on a factory in Georgia that can produce 400,000 trucks, SUVs and commercial vehicles annually. They will need to sell all of that and more to make sense of the roughly $90B the company is now valued at. Not bad for a company that has delivered less than 500 vehicles.
The Ford F150 Lightning, which should start shipping to customers in Q2 of 2022, has an order backlog of 200,000 units, or about 3 years production. Interestingly, 75% of the orders are from customers new to the Ford brand. They might not be there for long if the dealers are slapping $5k 'Market Adjustment' fees on top of the MSRP, as some are doing. This would be very frustrating if you ordered a car on-line from the manufacturer with a price, then it gets pushed to a dealer who tries to pad the bill of sale... This is happening at some VW and Mercedes dealers as well. In the dealers defence; if they don't do it, others surely will. From the customers perspective, they will ask why they need a dealer at all. In any case, expect a robust second-hand market for the truck.
The order bank for the Tesla Cybertruck is apparently over 3M or about five years annual sales of the F150-North America's best selling vehicle. How many $100 orders will get converted to $70,000 vehicles remains to be seen, but they will certainly have their production sold out for quite some time. Tesla hopes to have it in production later in 2022.
The Chevrolet Silverado EV and the Dodge Ram EV will likely debut in 2024.
On-Line Auctions
In August I reported on the recent surge of on-line auction start-ups, the segment energized by Bring a Trailer's sale to the Hurst Corporation for a reported $100M. A quick snap-shot of the number of live auctions this morning reveals the following:
Bring A Trailer (375)
Collecting Cars - European collector cars site (186)
Cars & Bids - Doug Demuro's platform (63)
PCar Market - Porsche specific (50)
theMBmarket - Mercedes Specific (6)
Fastcarbids - (5)
CollectorsXchange - (0)
It seems clear to me that the platforms that had established traffic made an easy transition to on-line auctions, where as the platforms that started from scratch are struggling. Without the traffic there aren't enough bidders and the cars don't sell, which is a downward spiral.
I tried Shiftgate with a '73 Karmann Ghia and they made a good effort with the write up and presentation, but there just weren't enough people there and it just got a couple low-ball bids. I'd like them to succeed because it can take several months to get your car live on BAT, and that is if they accept it. Shiftgate had the auction up in a couple of weeks.
The traditional auction houses; Gooding & Co, RM Sothebys, and Bonhams have responded with their own on-line auctions, with a competitive fee structure. The difference with these auctions is that all the lots are transported to the auction facility, catalogued, given a pre-purchase inspection and are available for viewing. You rely on the auction specialists to vet the items, rather than the forum gallery. For a Canadian item this would mean paying shipping/brokerage/duty to get it to the auction company.
2021 saw a maturing of the on-line auctions, and now over $1M sales are regular, if not common.
WHAT WE CAN EXPECT FOR 2022
I'm not going to make any more assumptions about COVID, but I can predict steady growth in the Classic car market and on-line sales. There is an increased need for detailed presentation of these vehicles-the standard now being several hundred photographs and several videos.
The chip supply issues should be resolved by early 2022, and the new car dealerships should have their inventory levels replenished and enjoy a period of brisk full-margin sales. There will be a lot of work to re-motivate the staff, and perhaps even find any, as the pandemic has been hard on them. Most of the sales and service staff that I have talked to in the last year are miserable. It may take a while to get customer service back on track.
We'll see some great new EVs trickling in to dealerships in Alberta that include the Mercedes-Benz EQS, Hyundai Ionic 5, Kia EV6, and the VW ID.4. They will mostly all be pre-sold, but at least we will be able to get a closer look at them.
I think we have reason to be optimistic!
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