PMD UNPLUGGED, PART III.

By Peter M. DeLorenzo

Detroit. Editor’s Note: Peter churns out column after column, week after week, and produces a body of work every year that is simply staggering when you really think about it. But every once in a while, I feel it’s a good idea to find out what’s really on Peter’s mind. Not in column form, but through a series of rapid-fire, real-time questions. So, I conducted another email interview for a frenzied hour on Wednesday morning (7/18, 6:00 a.m.), and ready or not, here he is, PMD, in all of his unpluggedness. –WG

What’s your latest take on Elon Musk?

I have not changed my thoughts on “St. Elon” one bit. Smart? Certainly. A visionary? That too. But is he able to execute on his vision when it comes to automobile making? No. I said the Model 3 would be Musk’s Waterloo and I stand by my assessment. There’s an excellent reason why the major automakers are experts at mass production. And there are myriad reasons why Musk & Co. aren’t. His runaway ego won’t allow him to listen or believe that there are other companies out there in the real world that not only know what they’re doing but that they’re able to do it better and much more efficiently than the way Musk approaches things. And Musk absolutely refuses to accept that. Musk has had a good run, but when the major automotive brands start launching serious, all-electric vehicles into the market, Tesla’s fifteen minutes will be up. And rather than lose face – as if he hasn’t already with his latest self-inflicted embarrassments – Musk will sell Tesla and get out of the automobile business altogether, declaring the whole thing too tedious and boring for his brilliance.

Have your thoughts changed about the headlong rush to autonomous vehicles and the insistence by these auto companies – especially GM – and suppliers that they’re poised to make boatloads of cash in The New Mobility Economy?

In a word, no. And I remain beyond skeptical. First of all, the efficacy of the technology is suspect, because it’s fraught with fundamental issues and recurring problems. Anyone who thinks that a magic switch will be flipped and that we’ll all be suddenly awash in autonomous cars careening around faithfully doing what they’re supposed to do is simply wishful thinking. As for the companies lining up to be a part of The New Mobility Economy by cranking out cars for the masses to be squired around town in, on paper it all sounds good. The reality will be far less than that.

GM is insistent that they will be in the thick of The New Mobility Economy and that they will win. What do you make of this?

GM has been insistent about a lot of things over the years that haven’t panned out. What’s different about this time? They’re talking a good game, with Mary Barra and Dan "I Am" Ammann getting all puffed up about GM’s bullish future but it all remains to be seen. They are making a calculated shift to this “New Mobility Economy” but what they’re really doing is turning GM into a commodity company. And that may not end well for them.

So, what about the future?

Anyone who thinks that the idea – and the freedom – of personal mobility will give way to a blissful national mobility stupor dominated by robo cars is missing the mark. As I’ve said repeatedly, robo cars will have limited use and applications in urban centers, but beyond that this country is going to be moved by personal vehicles that people acquire of their own volition for decades to come.  

And then what?

I do see a “transportation dichotomy” looming. Some manufacturers will completely throw over to building mass-use autonomous cars, while other manufacturers will retain brands – especially luxury brands – for people who want them, because they will remain profitable. I think in the future people will have a “gray” car, meaning an appliance for when they absolutely need one for mundane duty, but they will also continue to seek out real cars that they actually desire to own. The car companies that squander the legacy of their brands will simply disappear into the fog. Take GM for instance. I can see GM management’s judgment being clouded on the bet that obscene profits will come their way through the promised ride-sharing explosion. But that is a recipe for disaster. The smarter automobile companies will identify brands that they absolutely will not relinquish, and then they will continue to nourish them well into the future. I still have zero confidence that Barra and Ammann understand that.

And what about electric vehicles?

They’re coming hard and fast. And once the big players start cranking them out we’re going to see 25-30 percent market penetration in no time. But the fact that this country doesn’t have a cohesive plan for a national charging network is a travesty and simply inexcusable, and that is going to pose a huge problem. And let’s not forget that actually selling all-electric vehicles isn’t going to be a slam dunk for these automakers either. It’s going to take considerable marketing might to establish these vehicles as part of the national consumer consideration. I remain firmly convinced that in the long-term, hydrogen fuel-cell-powered electric vehicles will be the ultimate winning technology.

It has been a while since their debut, so what do you think of the monthly vehicle subscriptions now?

At first, I thought it was an interesting way of retaining brand loyalty. But when you really study the prices and realize that they’re completely out of whack for all but the most cash-flow rich consumers, I think the concept is a glorified fool’s errand. People who talk themselves into believing that these monthly subscriptions make financial sense are simply delusional, because when you factor in the real costs they’re anywhere from 30 – 50 percent higher than even the fattest leases. Monthly vehicle subscriptions will be a niche of a niche in the overall market, and that’s all they’ll ever be.

You’ve continued your relentless series of columns about The Future of Racing in “Fumes.” What are your latest thoughts on the subject?

I am the most pessimistic about racing as I have ever been. Racing is in deep, deep trouble. With the manufacturers chasing their tails on myriad mobility options, racing will continue to be pushed down the list of priorities. As I’ve gone on record repeatedly, the danger that all racing will become “vintage” racing is very real, as the disconnect between what’s going on in our street vehicles and cars used in competition grows wider by the day. The only hope in all of this is that certain manufacturers will understand that there will be money to be made with high-performance cars and parts for decades to come, and the manufacturers who want to continue to play in the personal high-performance vehicle market will want to be there. 

What about the two very disparate racing series, Formula E and NASCAR?

My thoughts on Formula E are expanded in this week’s “Fumes,” and though I was optimistic about the formula at first, the reality of the slot car sounds and the uninvolving nature of those machines leaves me cold. Formula E is missing one crucial component that is an absolutely essential part of racing, and that is passion. The Formula E cars are soulless conveyances completely devoid of passion. Once you get past the novelty of the whole thing, the reality of what it actually is sets in almost immediately, and it's not compelling in the least. And that isn't going to change next year, even when the cars will be able to complete the race distance on a single charge. The consistent allure of racing since Day One has been the visceral appeal of the sound and the fury. The woefully benign sound signature of a Formula E machine has all the audio appeal of a slot car, as in Not Good. 

As for NASCAR I have nothing good to say about it. It’s a nostalgia racing play and its appeal is fading faster than even I thought it would. The declining spiral of NASCAR’s popularity is actually accelerating, yet the powers that be in Daytona Beach steadfastly refuse to do anything about it, and NASCAR’s chief enablers – the participating manufacturers (GM, Ford and Toyota) – continue to be dupes of Brian France and his inept posse. NASCAR management’s relentless intransigence, combined with the litany of repeated mistakes, is killing that form of motorsport. It’s up to the participating manufacturers to extract meaningful changes from NASCAR, and that means – at the very minimum – a 25 percent reduction in that death march of a schedule, for starters. The next television contract will be a sobering two-by-four to the forehead of the NASCAR brain trust, because it could be as much a 70 percent less than the current overinflated contract. Maybe that’s why the France family is eagerly shopping the declining racing entity in hopes of cashing out. Too bad they’re about ten years too late, as in everything else they do. 

What are your thoughts on the overall health of the market?

Unlike some other media outlets who insist everything is fine, we’re clearly at the end of the longest “up” cycle in recent memory. Transaction prices are going to go up – stumblebum tariffs, or not – because the manufacturers are going to be squeezed, which means incentives will be reduced. (Okay, maybe not in the pickup truck wars, but everywhere else.) Some analysts are insistent that there’s no reason that this current torrid pace in the market can’t continue. But it can’t, and it won’t. It’s just a question of how big the pullback is going to be. And any manufacturer that says it is prepared for whatever transpires in the future is kidding themselves, because they’re not prepared for what they can’t see, and what they don’t know.

On a final note, the winds of change blowing through this industry are ominous and cold. Seasoned, intelligent executives have convinced themselves that they’re on the cusp of a glittering, limitless future that will bury the traditional auto company model within the decade. Some of these executives are going to find out the hard way that their exuberant prognostications are not going to pan out. And because of that, some of the big-name auto companies that have become part of the American fabric will simply disappear. 

As Bob succinctly said, A Hard Rain’s A-Gonna Fall. 

And that’s the High-Octane Truth for this week.