The "Tesla Provocation" or the Auto Industry going upside down.

Few weeks ago in a previous post, we described the Tesla Provocation from two perspectives.

  • From the consumers: a Tesla customer will be charging at a Tesla Supercharging station and all of his/her activities will be managed through a Tesla app;

  • From the disruptive energy approach: charging a vehicle does not require a separate supply chain between turning the lights on and fueling your car; hence simplification.

As the weeks go by, while analysts keep discussing the sustainability of the Tesla business endeavor, the Provocation is generating multiple ripple effects, which have the potential of turning the Automotive industry upside down.

The EV battle

During the launch of the Model Y, Elon Musk stated that "one of Tesla's goal was to get the rest of the car industry to go electric" (min 28.00).

Indeed it is happening, but it is taking some convoluted developments.

Let's take a look at the strategies of the 2 largest automakers: Volkswagen and Toyota.

The latter has been very aggressive to push a ZEV model into California after ending the partnership with Tesla. Leveraging the Japanese ecosystem the chosen path forward was Fuel Cell Electric: "the powertrain for the next 100 years".

The technology is extremely interesting because it offers various comfortable advantages over the Battery Electric (e.g. range, refill/recharge/refuel time) leveraging the properties of Compressed Hydrogen to generate power through a Fuel Cell. Furthermore, the only by-product would be water.

On the other hand, though, this solution will require a tremendous logistic efforts and would not be an answer to the two points raised by the Provocation.

Interestingly enough, the Hydrogen movement is mainly concentrated in Japan (Primer Minister Abe launched the Hydrogen Economy vision and plan in 2015), California and Germany.

While in Germany a partnership of industry leaders is pushing for the Hydrogen adoption, Volkswagen decided to go fully Battery Electric. This decision is extremely disruptive and in the eye of some leading industry analysts abrupt and reactive. Indeed the Dieselgate scandal pushed VW to taking action, but this action can impact one of the main elements of the German industry. For the sake of numbers an Internal Combustion Engine vehicle comprises of more than 1400 elements