12 November 2007

Time for Automakers to Learn from Tech Industry

Last quarter, GM lost about $39 billion. It wouldn't take too many quarters like that before I was forced to borrow money from friends. Ford, too, is struggling, having narrowed their losses for the most recent quarter to just $380 million - beating analysts' expectations. While that might be only 1% of GM's loss, it still seems like a big number to me.

One reason that oil is difficult to replace is that if it were suddenly rendered obsolete, about $7 trillion in wealth - as yet untapped oil reserves - would suddenly be worthless. The folks who sit atop this vast wealth aren't particularly inclined to see that happen.

So, what vested interests have an interest in rendering oil obsolete? Why not auto makers?

One of the ways that Intel and Microsoft and Seagate (and others) have fed each other's success is by co-evolving. More storage or computing power allows for more sophisticated software (bloatware, to its critics). More sophisticated software requires more storage space and computing power. If you have a ten year old car, you can go pretty much wherever a brand new car can go. If you have a ten year old computer, you find large swaths of computer land are off limits for you. Whether it is planned or simply serendipitous, this rapid evolution of technology has helped computer sales. Today, even our phones rapidly become obsolete.

TV manufacturers have learned a lesson from this. In February of 2009, all analog broadcasting will stop and viewers will be forced to upgrade to High Definition - an act sure to stimulate hardware sales.

It seems to me that auto makers would want to take a similar approach with their cars. Imagine if they were to design cars that depended on something other than oil. Something that polluted less, or ran on cheaper fuel, or needed fueling less often - all of these options could help to stimulate sales. We so often talk and write about how positive might be the effects on our environment and our continued funding of extremism if we broke our oil addiction. But just imagine what this could mean for the auto industry.


cce said...

I couldn't agree more. It's so damn obvious that the oil industry controls the auto industry. What was the name of the documentary made in the last five years about the top secret development of battery operated cars by one of the big automakers that were then dragged out into the desert and destroyed? Wish I had the details on this one because I think it answers a lot of the questions we have.

David said...

Mean old oil Barons screwing us poor oil-addicted big car drivers. Would it be okay if ethanol cost $5.00 a gallon just because it wasn't oil? I don't think so. There's always a mystery battery or carburetor or trick head that will extend gas milease where some oil cartel killed the inventor. It's a conspiracy. It's about CO2 emmissions. No it's not. It's about time we learned to conserve oil so we don't run out, that's all. So, in a way you're right Ron, we need to encourage auto makers to take action and stop selling us cars that consume large amounts of gas. That's the first step. Or we need to stop buying them. Why is it easier to have someone else do something rather than take proper action ourselves?

Vladimir Dzhuvinov said...

I think the success of the Prius slowly got the auto industry to think along these new lines. I have to admit I was sceptical this car would sell at all in the US. Recently I heard the hybrid has passed the 1 million sales mark.

I personally have been driving on biodiesel, for almost 3 years now.

Ron Davison said...

Is that the "who killed the electric car" video? Still haven't watched that, but a friend said that it really did point to a confluence of reasons.

The only way we won't run out of oil is to find substitutes. And ultimately, I'm not sure how an individual changes the system over to, say, use of solar powered cars. That's a bigger problem than one you or I can solve alone.

I think that you're right that there is demand for new technology, as proven by the success of the hybrids.

Anonymous said...

Just got back from 5 days in Italy . . . where are the electric scooters and Smart cars?!

And why is it so hard to walk anywhere? (Have you ever tried to cross a major highway on foot when there are no pedestrian bridges?

And why aren't automobile registrations based on fuel economy and gross weight?

And parking fees based on the size of your vehicle's footprint?

Ron Davison said...

Indeed. What a difference to subordinate everything to cars vs. those people who navigate the world by foot.