Archive for the ‘Car industry’ Category

A political connection makes for a Better Place

January 21, 2009

Interesting to see that one of this Blog’s earlier discussion points – the Better Place electric car consortium – is back in the local news. 

It turns out former state parlimentarian and ministerial possibility Evan Thornley will be heading up their Australian operations. Of course, this is raising some understandable concerns about conflicts of interest (see this Crikey discussion).

It does make sense that the consortium would go for a post-industrial entrepreneur (Thornley was one of the few Aussie dot-commers to walk away with serious cash from the bubble – he was a founder of Looksmart) and one with political connections.  The Better Place business model is heavily reliant on such infrastructure and personal networks if it is to work.

It remains to be seen whether this furore over conflict of interest might significantly undermine Thornley’s social capital.

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Picking winners in tough times

December 23, 2008

One of the more curious emergent industries to spring up from the current economic downturn is storage facilities for unsold new cars. As The Age reports, landowners are benefitting from the excess supply of vehicles and the need to park them somewhere in the interim:

“Each car costs a car-maker between $1.20 and $2.50 a day to store. With one source putting the number of vehicles in storage throughout Australia at 100,000, the industry is potentially racking up almost $2 million each week.”

Australia is far from alone in seeing such stockpiling. Nice to see someone making some money out it…

Friedman and I get Wired – an electric combination

December 11, 2008

New York Times op-ed dynamo and Flat World zealot Thomas Friedman has joined me on the Better Place electric car bandwagon – see his discussion of the consortium’s expansion (and my post on them earlier this week).

I also found a lengthy Wired magazine profile of the man behind the scheme. It certainly sounds audacious yet practical. The article provides a lengthy explanation of the components of the puzzle (click on the figure above for an explanation). There’s a video explanation of the Israel rollout below.

The challenge for firms is to find where they can best contribute to or benefit from such a different set of infrastructure and behaviours. What possible complementary products can you foresee?

Network externalities & electric cars

December 8, 2008

Further to my post of last week about US electric companies potentially boosting the sales of electric cars through bulk orders, the state of Hawaii’s has endorsed a proposal to develop the network of recharging stations necessary for large-scale adoption of the technology.

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Hawaii joins a list of countries and locations reportedly jumping on board, including Israel, Denmark, San Francisco, Renault-Nissan, and Australia (through yet another Macquaire consortium).

The driver of all this is Shai Agassi and his Better Place startup. The firm clearly has a very strong grasp on the need to build partnerships when dealing with products so reliant on network externalities. Put simply, unless consumers can be convinced that shifting to electric vehicles is not a hastle, then most won’t bother. Likewise, until they can be sure there will be enough consumers, most providers of the necessary infrastructure, like “filling stations”, won’t bother either. Better Place is trying to break this impasse. Now let’s just hope they are backing the right technology, and also, are not just building monopoly via technology lock-in.

Following up on cars and caring

November 18, 2008

Further to two posts from last week (on the Australian auto industry subsidy package and on the collapse of childcare giant ABC Learning), two relevant articles have popped up in the business press.

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This piece in The Economist provides valuable insights into the growth of car manufacturing in emerging markets, in particular the BRICs (Brazil, Russia, India & China). It does highlight the huge pull towards these markets for the major global car manufacturers, and also the limited scope to truly globally integrate their operations. The attraction of untapped consumer markets have pulled the firms into each market. Trade barriers and the need for product adaptation have played a major role in these MNEs manufacturing in each of these countries also. The output levels (and more importantly the growth rates) talked about here far swamp those in Australia (around 2.5m cars per year in Brazil, 6m in China, 1.5m, 2m in Russia compared with 1m in sales in Australia, but only about 300,000 vehicles produced).

And on the ABC Learning front, every journalist worth their salt is now calling on their immense powers of hindsight to demonstrate why the firm was bound to fail. This article makes a couple of interesting points regarding the failure of the childcare firm to achieve any economies of scale from consolidation, and the illusory nature of growth generated via acquisitions.

I’m not so convinced that firm wasn’t able to lower some of it labour costs or “achieve economies of scale in purchasing power or marketing power”. I also struggle to take any journo seriously who tries to use this downright fallacious argument to support his case: “Corporate farming has never overtaken family-run operations because a family will run their business on a much tighter budget and will endure leaner returns than any corporation just to ensure their survival.” Not sure what his definition of overtaken is, but corporate farming (and childcare) has certainly been growing at a faster rate that family-run operations in Australia for quite a while now.