Accelerating the Auto Industry's Convergence with Energy & Software

December 18 2008 / by Garry Golden
Category: Transportation   Year: Beyond   Rating: 2

Combustion Engine Cars

The auto industry is going through a long painful transition that will take decades to unfold.  

Why be optimistic about the future?

Because the two most profound industry shifts are wonderful platforms for growth and changing the world.

The Auto Industry is converging with the world of energy storage and software.

While we cannot ignore the short term pains, we should not lose sight of the opportunities ahead.

First, the pain.  In the past three days: Toyota has delayed plans to build a Prius factory in Missiissipi, GM said that the Volt will not have its own factory as it taps existing plants, and Norway's darling electric car maker struggling to stay alive.  Meanwhile suppliers and car dealerships are close to failing all over world.

What went wrong?
Everyone has their own reasons for why automakers are failing: Labor costs, oil, management, credit markets, et al. All have valid points. And, obviously there are multiple problems, not one issue.

But I have a very different theory and set of presriptions.

The problem isn't oil, it's the combustion engine and its legacy liabilties of intensive manufacturing, limited design and obsession with 'new car' sales paradigm.

Our great opportunity?
The problem is based on how we build and sell cars, not how we fuel them.  So let's focus on the platform of a post-combustion engine era of mobility.

How do we get there? You cannot summon the future on demand with band-aid solutions, you must enable it and wait for it to change.

Our priority should be to enable a multi-decade long transition that changes how cars are bought, sold, driven and upgraded.

21st Century Vehicles: Focus on Wheel-based Electric Motors, Energy Storage and Software...

Problem #1 - Reliance on a Manufacturing System based on 'Build then sell' sales model

Combustion engines have too many parts, and are not modular.  So you have to own and operate separate plants for V4, V6 and V8 chassis. 

Automakers have too many factories, too many suppliers and lose money while plants run at low capacity utilization.  Workers sit idle when their vehicle platform loses consumer appeal.

What's worse?

$30,000 sit at seaports and car dealerships waiting for a buyer.  What other industry build multi-thousand dollar products with no committed customer.  It's rolling the dice with depreciating assets.

The future auto industry can be thought of as mobility services and solutions industry where companies make for every mile driven or riden on transit.   Instead of only selling 'new cars', make money in after-market product upgrades and mobility services like Onstar and Sync.

Solution to Explore: Wheel based Electric Motors

Evolve the engineering behind wheel based electric motors and drive-by-wire conrols systems.  Change how cars are built, sold and upgraded using GM's vision of the Autonomy 'skateboard' chassis.

It can reduce the complexities of building cars.  Allowing for one factory to produce multiple chassis.  around scalable, modular electric motors.   

What about the transition?  Don't merge the Big Three - let them share combustion engine factories during this multi-decade long transition.

Solution to Explore: Go global around Energy Storage devices

America and Europe are not winning the race towards advanced energy storage devices (batteries, fuel cells and capacitors)

Asia is the place to grow.  Based on the flurry of partnership announcements with automakers and Asia energy storage companies, it is obvious that the electric car industry is already going global around the integratation of batteries, fuel cells and capacitors.


Problem #2 Design and User Experience

Automakers need to make money with every mile driven, and every minute spent inside a vehicle.  How?  Software.

Software is already changing the driving experience, and we are only at the beginning of the growth curve.  Cars are becoming smarter, 'more aware', more autonomous, and more personalized to the driver. 

Solutions to Explore 

- Exploit the performance and customization experience of electric motors and drive by wire systems for all its worth. 

- Shift profit stream of automakers to mobility solutions.  Make money every time a person steps in a car, bus or train.


Accelerate the strategic relationship of software system providers (IBM, Johnson Controls, Garmin, Nokia, AT&T-Apple, Google Maps, Microsoft Sync,  et al) who can change the driving experience.

[Lots more to explore here... in future posts!]


So what should we do now? 

How do we talk about the future of the auto industry? First, don't talk about band-aid solutions.  Talk in terms of years and decades, not weeks and months.

Focus on the Platform, not Profits


We made our bed and must sleep in it.  Even industries must learn to live with choices and inevitable transitions.

Electric drive cars are the future platform, but are not yet profitable. And they are not likely to be anytime soon.  (At least until 2012-16)  Yet they offer a clear platform for leaner manufacturing and electricity-based mobility software solutions. 

Focusing on squeezing slim profits off an aging combustion engine platform, would result in a 'fixes that fail' future.

Instead, let's talk about what is really happening with the platform of mobility:

- The shift from mechanical drive trains to electric drive systems will take 20-40 years.
But it started in 2008. So be grateful!

- The expanding role of the auto industry in the electric energy storage industry (batteries, fuel cells and capacitors)  This industry is already going global.

- The role software will play in changing the driving experience.

So we can try to improve the buggy whip (e.g. combustion engine), or enable a decades long transition that redefines the human platform for mobility.


Image AllSpice Flickr CC License


Keywords: cars,


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Electric vehicle industry goes global around energy storage systems
Video Interview with Shai Agassi on disruptive business models for electric cars
Is Detroit asleep at the wheel?
The Good news? China is investing in electric cars, The Bad news? China is investing in electric cars
Is GM expecting China to extend its grid for electric cars?
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Comment Thread (2 Responses)

  1. Stellar. I love this article. It deftly unpacks the auto-biz scenario, before, now, and potentially to come. It offers clarified direction that even the guys who are getting paid (too much?) to make these kind of decisions ought to be inclined to tune into, so, but it reads easy for a little guy like me, who knows more now than he ever did before about how we got here and where we should (and shouldn’t?) go. Very cool.

    Posted by: Adam Cutsinger   December 19, 2008
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  2. Well written article.

    What really caught my eye is the in-wheel motors. I have been promoting this for about seven years now. If you Google – William Lucas Jones Hybrid – You will find a number of old posts that describe a vehicle power train that I have advocated for years.

    I’ve gathered a lot more information and ideas in the last few years and will be happy to write an article sharing with those of us with like minds.

    Posted by: Lucas   December 20, 2008
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