The digital development of automaking will see a new dawn tomorrow
driven by new laws that deem dirty to average cars illegal!
"This is the single biggest step the American government has ever taken..."
What's the number one factor and
number one consumer benefit that
is driving digital automaking?
Many studies and most of the research over the past decade
shows that higher gas prices cause digital cars and trucks
to accelerate in sales as buyers seeks higher MPGs.
Starting tomorrow, the USA MPG bar will move significantly
higher than ever before in American history as
California's green digital screams turn into new laws
on capitol hill; the highest MPG state laws are being
studied to establish a new federal wide standard that
will force digital automaking unto all players
that want to continue to enjoy the most important
car and truck markets in the world.
CA and CAFE's millennial son could become the biggest
stick in the history of digital automaking and I'm
going to place my bets by buying Honda Motor Co., Ltd.
common stock traded on the American markets because
this digital automaker has the highest
mileage fleet being bought in the USA.
These companies also hire tens of thousands of American
workers that are working to make cars and trucks cleaner
so that our precious oil used for everything from shipping
everything you buy at every store to your toothpaste tube
to every toy to your entertainment center and computer
can last longer and we don't have to burn up the rest
running errands and waiting at stoplights.
Remember that all digital vehicles have the ability
to stop burning oil at stoplights and stop signs!!!
INVESTMENT ANALYSIS
Based on the assumption that a new race to 42 MPG
for automaker fleetwide average will take off tomorrow
the following analysis is based on Greenopia's MPG ratings
of 42 automakers from Ferrari at 12 MPG to Smart at 36 MPG
allthough the list does not include brands such as Tesla
that earn well over 100 MPG in gallon of gasoline equivalent
which doesn't matter anyway in terms of investment since we
cannot buy public stock in them. Also note that companies like
MINI or Smart are also not available as stand alone investments,
so the trick is to find the automaker that has the best MPG
AND has enough volume on a stock market to enjoy appreciation.
25 MPG BRANDS: there's only six brands
(Smart, Mini, Scion, Honda, Saturn, Toyota)
that get over 25 MPG and of those
only two are automakers (Honda and Toyota)
as Smart is Daimler, Mini is BMW (20.5) and Scion is Toyota.
How many brands at the bottom of the list are in bankruptcy?
Hummer (15.5 MPG), Cadillac (17.6), GMC (17.8), Jeep (19.1), Dodge (19.2)
and interestingly, none of these brands have launched a successful digital.
In summary, I have decided to buy shares of HMC (Honda Motor Co., Ltd.)
at market open price based on anticipation of the new federal digital race
towards 42 MPG and hope that my investment in the 500 companies that Honda
runs continue to provide us with benefits, utility and future value!!!
Showing posts with label GM. Show all posts
Showing posts with label GM. Show all posts
Monday, May 18, 2009
Sunday, April 5, 2009
3 Digital Cars Cost $2,600,000,000???
Going green is great but why is saving our oil so expensive?
Why do automakers claim it cost $1,000,000,000
to put digital vehicles into showrooms???
Is it the R&D, testing, regulation, insurance, etc?
Or is it overkill before getting to the showroom?
The first mainstream digital vehicle hit American roads
over 10 years ago but consumers didn't buy enough 70MPG...
Honda discontinued the digital Insight after several hundred million and five years of efforts. Toyota spent over a billion on the Prius and lost money for years until the technology went through generations of cost reductions. GM spent a billion on their infamous EV-1 and another billion on The Hybrid Development Center that led to hybrids like the Escalade.
In the heat of the Great Recession,
after borrowing over $15,000,000,000
from American tax payers,
GM has requested more money!!!
This time around, GM, the automaker born from Ford's 2nd business,
asked American tax payers to lend another $2,600,000,000 so that
Chevrolet could develop three version of the infamous Volt
that should get 100+ MPG.
Do you think a billion per new vehicle
is a feasible business model for the
new era of digital automaking???
Would you loan a digital automaker
$1,000,000,000
to develop a digtal automobile?
Based on the industry standard of
a few thousand in profits per vehicle
how many of those digital widgets
would your investee have to sell
to pay salaries run the factories
and pay you back?
There has to be a cheaper way
to get a digital vehicle on the road...
Why do automakers claim it cost $1,000,000,000
to put digital vehicles into showrooms???
Is it the R&D, testing, regulation, insurance, etc?
Or is it overkill before getting to the showroom?
The first mainstream digital vehicle hit American roads
over 10 years ago but consumers didn't buy enough 70MPG...
Honda discontinued the digital Insight after several hundred million and five years of efforts. Toyota spent over a billion on the Prius and lost money for years until the technology went through generations of cost reductions. GM spent a billion on their infamous EV-1 and another billion on The Hybrid Development Center that led to hybrids like the Escalade.
In the heat of the Great Recession,
after borrowing over $15,000,000,000
from American tax payers,
GM has requested more money!!!
This time around, GM, the automaker born from Ford's 2nd business,
asked American tax payers to lend another $2,600,000,000 so that
Chevrolet could develop three version of the infamous Volt
that should get 100+ MPG.
Do you think a billion per new vehicle
is a feasible business model for the
new era of digital automaking???
Would you loan a digital automaker
$1,000,000,000
to develop a digtal automobile?
Based on the industry standard of
a few thousand in profits per vehicle
how many of those digital widgets
would your investee have to sell
to pay salaries run the factories
and pay you back?
There has to be a cheaper way
to get a digital vehicle on the road...
Monday, March 2, 2009
GM's Digital Flagship Gets European Makeover
The same leader is developing the Chevy Volt and Opel Ampera as GM's Flagship to lead the digital automotive revolution in power-train technology. These amazing and complicated cars are expensive. GM's 1st Digital Bet on the EV-1 cost an estimated billion ($1,000,000,000.00) or more to develop and the Volt doesn't look that far behind with the Ampera makeover costs. How many cars will we have to buy to help GM break even on this digital double-down?
Wednesday, February 27, 2008
What is Detroit's Strategy?
One of the world's leading automotive journalists just wrote a piece titled,
"Shooting For Last Place" at Forbes http://www.forbes.com/2008/02/25/detroit-autos-carmakers-oped-cz_jf_0226flint.html
that talks about strategy.
It's an excellent discussion of the tactics pursued by the Bid 3 in early 2008, but I argue below that "tactics" are not "strategy."
Jerry, very courageous in tackling one of the most important yet misunderstood business concepts that plagues the auto industry today: strategy.
In simple terms, the strategic problem is how to get from analogue to digital.
DIGITAL DILEMMAS
Kodak struggled with this from film to digital cameras. Hollywood and New York struggled with this from Napster to iTunes while Apple became one of the most powerful in the world. All the computer manufacturers struggled with this from IBM all the way to Dell. Even your industry Jerry, media, has struggled with the print news to YouTube's dominance. What's the common theme???
Cost cutting tactics such as laying off the most expense part of running a business or lowering the cost of sales channels like Dell did with the highly doubted www.dell.com in the computer maker shakeout are simply tactics.
Strategy is almost always confused with tactics. Detroit is focused on tactics while strategies ebb in and out with various technologies, such as hydrogen hype, hybrid phenomenon to plug-in doubts. Employees and technology comes and goes, strategy is like a ship's keel.
The bottom line is that tactics are worthless without a solid strategy.
Did Dell pursue laying off or cost cutting as a strategy? No, Dell pursued the toughest strategy, a combination of two of Porter's generics: 1) cost leadership (the ONE automaker that can make cars cheapest not cheaper) 2) differentiation (something special customers pay more for) to sell directly to the customer and 3) focus or niche (dominating a small piece of the market).
Dell's goal from Michael's (from dorm room to #9 richest American in 2007) autobiography, was to lower customer costs and increase service. This is sometimes referred to as, "best cost," and often misunderstood. Toyota just about has it, but any loss of service of cost of building any car will hurt. Dell succeeded even though the service subsided over the years.
COST LEADERSHIP
The key is that you've got to build cars as cheap or cheaper than anyone else. Dell was able to get days inventory down from weeks to eight days in his book, and it's probably lower today. This is often misunderstood as the lowest prices. An example would be Wal-Mart vs. K-Mart. Wal-Mart can move and track a pallet of anything cheaper and BETTER than any other supply chain in the world! That's cost leadership, just like Toyota executives that eat ramen instead of sushi on international business trips!
What are average days inventory for the auto industry?
Most businessmen know that a day's inventory can
translate into millions of dollars of cost savings.
Compared to Dell at 8 days, I've heard 20 to 40 is good
and during the rise of the Prius, it went negative as people
placed orders, just like shopping at www.dell.com and waited
for their hybrids to be delivered to the local dealership.
DIFFERENTIATION FOCUS NICHE
The lock is that your quality is also above industry standards because you are delivering 2) and/or 3). For Dell, that was not only the products, but the 24/7 real-time advantage of www.dell.com linked to a supply chain that ran just in time and cost accounting that only purchased things when they were already sold. In short, "build to order" or "direct."
Could you imagine if an automaker pursued the impossible "best cost" strategy with the goal of lowering the cost for the customer while delivering the BEST quality and service.
The Big 3 did this once. After Ford invented the assembly line just as Dell invented direct, Ford held costs down to help the masses open up American roads. The goal was social change and not just hiring more people or creating more dealerships. Those were tactics behind the philosophy distilled into a very clear strategy: "best cost."
Jerry, you are absolutely right in that any automaker "caught in the middle" of strategies is doomed for last place. Porter confirms this happening in industry after industry shakeout. Especially when technology matures and a new curve comes along. Firing people or closing dealership WILL NOT get an automaker to a strategy.
Stuck in the middle strategy is pursuing tactics with no strategy. For example, thinking you can be the ONLY automaker with the LOWEST (NOT LOWER OR LOW) costs and NOT LOWEST PRICES!!! Word of advice to Detroit, forget about COST LEADERSHIP and 1), leave that up to Toyota, India, China, Korea, etc.
DETROIT'S OPTIONS
What about strategy 2) and 3). This is a different story! We know that American quality is higher than expected; this is a business ace! You can build a strategy around "something special" such as high quality large trucks, BUT EVERYTHING has to be special, not just the truck. The employees need to feel special, the factory has to ooze special, the suppliers top of the heap, and in the end the price, yes it's high, but customers are happy with special products backed by special service. So the dealership in this case, would only service trucks, and do it better than Toyota, Nissan and anyone else.
What about 3) focus or niche. Porsche is a good example of differentiation strategy, very clear culture, goal and DNA, and guess what, tactics like human resources and dealerships becomes a no-brainer tactic. Small market, proud world-class employees and R&D, high prices, and lots and lots of profits. Enough to try and buy out the 5th largest company in the biggest business in the world. This would be like Tesla buying Chrysler and not the other way around. How can this be??? A clear strategy setup by Porsche decades ago.
DETROIT'S TACTICS
1) chopping heads
This tactic only supports low costs if you can replace those heads with people that can build cars cheaper than ANY OTHER automaker in the world. Otherwise, the new employees better know how to make something special or have specialized knowledge of a market niche, let's say electric vehicles.
2) closing dealerships
This tactic only supports low costs ONLY if you can run dealerships CHEAPER THAN EVERY OTHER AUTOMAKER. As far as differentiation, maybe if you're the first to be able to develop the direct model for cars, but are customers ready? Toyota did sell half a million Prius without a test drive sight unseen... How about niche? Closing dealerships MIGHT WORK if they are consolidated and moved into specialized markets. For example, shut 80% of the dealerships leaving only those in electric vehicle markets open to become the industry's top service provider for maintenance and repair of ALL electric vehicles from Golf Carts to Teslas to Volts.
FINISH LINE
When Detroit finally gives up its quest for revenues and is forced to focus on profits, there is only ONE WAY TO SURVIVE = A VERY CLEAR AND SIMPLE STRATEGY that everyone from the line worker to the greeter at the dealership can understand and take to heart everyday!
Making cars cheaper than everyone else, making special cars and making cars for a specific market are the only generic strategies available according to Porter. Only the brave can dream of mixing these into best costs and those stuck in the middle will die in the digitization of the world's largest business!
"Shooting For Last Place" at Forbes http://www.forbes.com/2008/02/25/detroit-autos-carmakers-oped-cz_jf_0226flint.html
that talks about strategy.
It's an excellent discussion of the tactics pursued by the Bid 3 in early 2008, but I argue below that "tactics" are not "strategy."
Jerry, very courageous in tackling one of the most important yet misunderstood business concepts that plagues the auto industry today: strategy.
In simple terms, the strategic problem is how to get from analogue to digital.
DIGITAL DILEMMAS
Kodak struggled with this from film to digital cameras. Hollywood and New York struggled with this from Napster to iTunes while Apple became one of the most powerful in the world. All the computer manufacturers struggled with this from IBM all the way to Dell. Even your industry Jerry, media, has struggled with the print news to YouTube's dominance. What's the common theme???
Cost cutting tactics such as laying off the most expense part of running a business or lowering the cost of sales channels like Dell did with the highly doubted www.dell.com in the computer maker shakeout are simply tactics.
Strategy is almost always confused with tactics. Detroit is focused on tactics while strategies ebb in and out with various technologies, such as hydrogen hype, hybrid phenomenon to plug-in doubts. Employees and technology comes and goes, strategy is like a ship's keel.
The bottom line is that tactics are worthless without a solid strategy.
Did Dell pursue laying off or cost cutting as a strategy? No, Dell pursued the toughest strategy, a combination of two of Porter's generics: 1) cost leadership (the ONE automaker that can make cars cheapest not cheaper) 2) differentiation (something special customers pay more for) to sell directly to the customer and 3) focus or niche (dominating a small piece of the market).
Dell's goal from Michael's (from dorm room to #9 richest American in 2007) autobiography, was to lower customer costs and increase service. This is sometimes referred to as, "best cost," and often misunderstood. Toyota just about has it, but any loss of service of cost of building any car will hurt. Dell succeeded even though the service subsided over the years.
COST LEADERSHIP
The key is that you've got to build cars as cheap or cheaper than anyone else. Dell was able to get days inventory down from weeks to eight days in his book, and it's probably lower today. This is often misunderstood as the lowest prices. An example would be Wal-Mart vs. K-Mart. Wal-Mart can move and track a pallet of anything cheaper and BETTER than any other supply chain in the world! That's cost leadership, just like Toyota executives that eat ramen instead of sushi on international business trips!
What are average days inventory for the auto industry?
Most businessmen know that a day's inventory can
translate into millions of dollars of cost savings.
Compared to Dell at 8 days, I've heard 20 to 40 is good
and during the rise of the Prius, it went negative as people
placed orders, just like shopping at www.dell.com and waited
for their hybrids to be delivered to the local dealership.
DIFFERENTIATION FOCUS NICHE
The lock is that your quality is also above industry standards because you are delivering 2) and/or 3). For Dell, that was not only the products, but the 24/7 real-time advantage of www.dell.com linked to a supply chain that ran just in time and cost accounting that only purchased things when they were already sold. In short, "build to order" or "direct."
Could you imagine if an automaker pursued the impossible "best cost" strategy with the goal of lowering the cost for the customer while delivering the BEST quality and service.
The Big 3 did this once. After Ford invented the assembly line just as Dell invented direct, Ford held costs down to help the masses open up American roads. The goal was social change and not just hiring more people or creating more dealerships. Those were tactics behind the philosophy distilled into a very clear strategy: "best cost."
Jerry, you are absolutely right in that any automaker "caught in the middle" of strategies is doomed for last place. Porter confirms this happening in industry after industry shakeout. Especially when technology matures and a new curve comes along. Firing people or closing dealership WILL NOT get an automaker to a strategy.
Stuck in the middle strategy is pursuing tactics with no strategy. For example, thinking you can be the ONLY automaker with the LOWEST (NOT LOWER OR LOW) costs and NOT LOWEST PRICES!!! Word of advice to Detroit, forget about COST LEADERSHIP and 1), leave that up to Toyota, India, China, Korea, etc.
DETROIT'S OPTIONS
What about strategy 2) and 3). This is a different story! We know that American quality is higher than expected; this is a business ace! You can build a strategy around "something special" such as high quality large trucks, BUT EVERYTHING has to be special, not just the truck. The employees need to feel special, the factory has to ooze special, the suppliers top of the heap, and in the end the price, yes it's high, but customers are happy with special products backed by special service. So the dealership in this case, would only service trucks, and do it better than Toyota, Nissan and anyone else.
What about 3) focus or niche. Porsche is a good example of differentiation strategy, very clear culture, goal and DNA, and guess what, tactics like human resources and dealerships becomes a no-brainer tactic. Small market, proud world-class employees and R&D, high prices, and lots and lots of profits. Enough to try and buy out the 5th largest company in the biggest business in the world. This would be like Tesla buying Chrysler and not the other way around. How can this be??? A clear strategy setup by Porsche decades ago.
DETROIT'S TACTICS
1) chopping heads
This tactic only supports low costs if you can replace those heads with people that can build cars cheaper than ANY OTHER automaker in the world. Otherwise, the new employees better know how to make something special or have specialized knowledge of a market niche, let's say electric vehicles.
2) closing dealerships
This tactic only supports low costs ONLY if you can run dealerships CHEAPER THAN EVERY OTHER AUTOMAKER. As far as differentiation, maybe if you're the first to be able to develop the direct model for cars, but are customers ready? Toyota did sell half a million Prius without a test drive sight unseen... How about niche? Closing dealerships MIGHT WORK if they are consolidated and moved into specialized markets. For example, shut 80% of the dealerships leaving only those in electric vehicle markets open to become the industry's top service provider for maintenance and repair of ALL electric vehicles from Golf Carts to Teslas to Volts.
FINISH LINE
When Detroit finally gives up its quest for revenues and is forced to focus on profits, there is only ONE WAY TO SURVIVE = A VERY CLEAR AND SIMPLE STRATEGY that everyone from the line worker to the greeter at the dealership can understand and take to heart everyday!
Making cars cheaper than everyone else, making special cars and making cars for a specific market are the only generic strategies available according to Porter. Only the brave can dream of mixing these into best costs and those stuck in the middle will die in the digitization of the world's largest business!
Wednesday, February 13, 2008
Who will win the Lithium race?
Automakers spend more on R&D than any other industry. For example, Toyota spends 10 times more dollars than Apple. Getting to the Prius cost $1 billion and getting to the next digital transportation breakthrough is costing more.
The race to marry Lithium with automobiles is attracting top talent, global money powering new technologies with promising futures.
Just as entrepreneurs and corporate American filled the analogue to digital wake that Napster left in the music industry, venture capitalist and the largest organizations in the world are racing to R&D the iPod for the auto industry.
I wonder who will sell me the automobile that can drive across the digital divide and set the standard to accelerate away from the competition...
Start your Lithium teams and then engines (ranked in random order)!!!
The race to marry Lithium with automobiles is attracting top talent, global money powering new technologies with promising futures.
Just as entrepreneurs and corporate American filled the analogue to digital wake that Napster left in the music industry, venture capitalist and the largest organizations in the world are racing to R&D the iPod for the auto industry.
I wonder who will sell me the automobile that can drive across the digital divide and set the standard to accelerate away from the competition...
Start your Lithium teams and then engines (ranked in random order)!!!
- Team Volt: Sequoia, GM, A123
- Team VW: 360 million euros to develop Li-ion batteries by Bosch, Evonic Degssa, Li-Tec, STEAG Saar Egnergie including 60 million euros from the German govt. (Automotive Engineer, Dec 2007, Vol. 32 Issue 11, p 47)
- Team Nissan: NEC Lamilion Energy, A123, SAP AG
- New Enterprise Associates, BlueRun Ventures, Draper Fisher Jurvetson and DFJ
- Element/$7.5mR1-$15MR2 Deeya Energy
- Team Ford: GE, $30 million R1, $40 million R2 for A123, Sanyo
- Team Phoenix: Al Yousaf, Altair
- Team GM: Cobasts, Johnson
- Vincent Bollore/EDF/$52.8M BatScap/Continental AG/BMW/Pininfarina/BlueCar
- Team Mitsubishi: GS Yuasu, Lithium Energy Japan, MiEV
- Team Tesla: $37M Musk/VantagePoint Venture Partners, Technology Partners, and Draper Fisher Jurvetson/$105M Tesla
- Team Fisker: $10M Kleiner Perkins Caufield & Byers/Quantum
- Team Zenn: Kleiner Perkins Caufield & Byers/EEEstor/$25M Zenn/Lockheed
- Israel Corp., Morgan Stanley, VantagePoint Venture Partners/Renault Nissan/Israel's Ofer Shipping Holdings/$200 million R1 for Project Better Place
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About Me
- John Acheson
- Portland, OR, United States
- LinkedIn Profile http://www.linkedin.com/in/johnmba Yahoo Answers Profile http://answers.yahoo.com/my/profile;_ylt=AqUFgloHkgwIawoJS0O77lDsy6IX;_ylv=3?show=98f170ed6dadf6edd5fc239fce211dfcaa&preview=true
