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Le secret qui rend les Tesla et d'autres MOINS CHÈRES — Transcript

by The Choucroute Garage · 3,163 words · 536 segments · language en · Watch on YouTube

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0:00Hello and welcome to this new episode of
0:02Electric Planet. With the massive
0:04arrival of electric cars from almost
0:06every manufacturer, one question
0:08inevitably arises. What makes certain
0:11cars so expensive?
0:12And how do some manage to lower prices,
0:14even with all the necessary or optional
0:17equipment included as standard?
0:19How can we explain that for under €
0:2240,000, Teslas or Xpengs offer
0:24infinitely more than much pricier
0:26Mercedes, BMWs, or even Stellantis
0:28models?
0:30Some will tell you that the quality
0:32isn't the same, and that might seem
0:34reasonable, but in fact, it has
0:35absolutely nothing to do with that.
0:39Today, I am going to show you how to do
0:41better, with more equipment and for less
0:43money, using an idea that isn't hidden
0:44at all.
0:46It is as plain as the nose on your face
0:48on every configurator from every car
0:51manufacturer.
0:53Let's get started with the analysis.
1:14To start this video, I will share a
1:16little personal anecdote with you. In
1:182013, I was a salesperson at a Chevrolet
1:20dealership. I often had customers sent
1:23to me by my colleagues from Opel. It was
1:26the same garage. The reason was the
1:28budget.
1:29Where an Opel was too expensive for my
1:30clients 'budget, well, in the Chevrolet
1:32range, I had cheaper cars that were a
1:34better fit.
1:35One might think the Chevrolets were of
1:37lower quality and not as good, but
1:39actually, no. A Corsa, for example, was
1:42, except for its look, exactly the same
1:45car as a Chevrolet Aveo.
1:47The German model's range went from €
1:5012,500 to € 20,900, while the
1:52Chevrolet's range was only € 12,000 to €
1:5517,100. At these price levels, a
1:57difference of € 500 to € 3,000 sometimes
1:59made a huge difference for the customer
2:01.
2:02So, if we ask ourselves if the cars are
2:04technologically identical, why such a
2:05price difference?
2:07Is it linked to production costs?
2:10Well, no, the Opels were produced in
2:12Spain and the Chevrolets in South Korea
2:14, where wages are higher than in Spain.
2:17But then what is it?
2:19Well, that's what we are going to see
2:20now.
2:26To properly establish the concept, I am
2:27going to ask you a question. In your
2:29opinion, how many variants of its GLC
2:31model does Mercedes-Benz produce?
2:345, 10, more?
2:37Well, let's go take a look. It starts
2:39with 12 possible combinations of engines
2:41and trim levels.
2:42These are offered in 10 possible colors
2:44.
2:4610 possible colors for each trim. Here,
2:49we can't just add; we have to multiply
2:52the variants.
2:53So, we already have 12 variants times 10
2:56colors, which already makes 120
2:58possibilities. Then you can choose from
3:01four types of rims, which multiplies the
3:03total once again, and so on until the
3:05end of the configurator. And with the
3:08number of options, you can imagine what
3:10that adds up to. To be perfectly
3:12realistic, however, you have to subtract
3:14incompatible options, as well as
3:16mandatory packs that force you to add
3:18others.
3:19It’s clearly a huge mess, and to make
3:21sense of it, well, you really have to
3:22hang in there.
3:24So, you can't just multiply the options
3:25together and then multiply that by the
3:27number of combinations we just
3:28calculated.
3:30I ended up calling on someone to help me
3:32sort it all out, and even then, we had
3:34to rely on estimates.
3:36The total number of unique Mercedes GLC
3:39combinations varies between 5,000 and
3:4117,000 depending on the assumptions.
3:43Personally, I think the truth is closer
3:46to the lower end.
3:47However, if you apply the exact same
3:50logic to the Tesla Model Y, well, it’s
3:52much easier.
3:54You can even do the math by hand. The
3:56rear-wheel-drive model is available in
3:58four colors and two rim types, meaning
4:00eight variants. Premium models can be
4:03chosen in two powertrains, seven
4:05exterior colors, two interior colors,
4:08and two rim types. So that adds 56
4:10variants.
4:12For the performance model, since there
4:13is only one type of rim, we add 14
4:15variants.
4:17Plus, you can double that with the tow
4:19hitch option.
4:21So there are 156 variants that can be
4:23produced in Berlin. I’m not counting the
4:25seven-seat versions because I think they
4:27are fairly anecdotal.
4:29Well, that’s all well and good, but we
4:30already knew that.
4:31They simplify designs, reduce the number
4:34of parts, simplify interiors, and even
4:36go so far as to simplify or truncate
4:38interactions between customers and the
4:40brand to save money.
4:43Well, keep one thing in mind: reducing
4:45the number of variants is at least as
4:47important as everything I just mentioned
4:49.
4:56In fact, a car can be expensive even
4:58before it has been manufactured.
5:01Let’s look at an example; it will be
5:03clearer. Imagine a seat. It’s simple, a
5:06seat, right? The manufacturer defines a
5:08frame, some foam, and a cover. Now,
5:10let’s imagine Tesla wants to make
5:12several versions of this same seat.
5:14We would have a base seat that’s fully
5:16manual, a power-adjustable seat, and a
5:18high-end version with heating and
5:20cooling. The frame would be common, but
5:23not the rest. The foam and cover would
5:25be different due to the heating or
5:27cooling features. The electric version
5:29would have buttons and electric motors,
5:31while the manually adjusted version
5:33would have levers and linkage.
5:35You have to manufacture different
5:37plastic trim and different wiring
5:39harnesses. If you add all that, airbag
5:42validations and everything else, we're
5:44not out of the woods yet.
5:46Each element requires the development of
5:48specific parts but also planning for its
5:50integration.
5:52Then, you have to plan the supply of
5:54spare parts, the various assembly
5:56procedures, storage, and seat management
5:58so they go into the right car.
6:02If you really think about it, beyond
6:05just the drawing board, it's a total
6:07logistical headache.
6:10Well, you might say it's not always the
6:12same, right?
6:13So, let's take a wheel rim.
6:15It's a single part, so you might think
6:17it's relatively simple to offer several
6:20alternatives, but for each version, you
6:23still have to design, test, homologate,
6:25buy, store, transport, and plan twice as
6:28much as for a single rim design.
6:32For the worker installing it, nothing
6:33changes, nor for the engineer planning
6:35the car's production.
6:38The assembly times are the same. However
6:40, background management, supply chain,
6:42and overhead costs are still
6:44significantly higher.
6:45Well, that's the rational side, but
6:47let's look at another point of view.
6:50Let's change perspectives and look at it
6:51from the marketing side.
6:58At a car manufacturer, you don't launch
7:00a new model without having conducted
7:01solid market research. At a premium
7:04manufacturer, for example, offering
7:06extensive customization is a given, so
7:09you have to deal with it. However,
7:12budget constraints exist both in
7:14development and in manufacturing.
7:18The final car must be both customizable
7:21and competitively priced.
7:23A competitive price is one where the
7:25cost of the car is lower than the car's
7:27selling price. We'll come back to that
7:29later. This means that the car's
7:31development fully incorporates the
7:33portion for customization, and therefore
7:36the budget for technological development
7:38is reduced by that amount.
7:41Imagine a budget of 100 million dollars
7:44to develop a new car. If you know that
7:47the different variants require 40
7:49million in investment, then you only
7:51have 60 million left for the rest.
7:53To make it work, you'll have to use
7:55compromises or take shortcuts. And very
7:57often, they are of two kinds.
8:00Firstly, a massive use of already
8:03existing parts that don't require new
8:05testing or validation, and secondly,
8:08delegating part of the design to the
8:10cheapest possible service providers.
8:14This also applies to subcontractors for
8:17parts.
8:18On the other hand, if you only have 10
8:20million for variants, then you can bet
8:23on technological research and on more
8:25expensive and efficient partners in both
8:27design and production.
8:29And here, there is one important thing.
8:31The design phase is certainly important
8:33for the budget, but it is not yet
8:35decisive for the final price of the car
8:38. It is much more what follows from the
8:40design for production that changes
8:41everything. And here, the numbers are
8:43clear. Imagine our fictional
8:46manufacturer spent its 100 million to
8:48produce 100,000 cars. Each car will
8:51include € 1,000 of research and
8:52development in its price. If production
8:55is 500,000 cars, then we are only
8:57talking about € 200.
8:59That's for the overall picture. Now, if
9:01we segment production based on the
9:03different variants, well, that changes
9:06everything. The fact of having created
9:08different variants will make some
9:09profitable and others unprofitable. And
9:12that is due to the diversity of parts
9:14you will have to source. Let's go back
9:16to our seat example.
9:18If the manual version sells 50,000 units
9:21, the electric version 30,000, and
9:23finally the high-end version 20,000,
9:25then you have a problem.
9:28Each version costs more because your
9:30supply contracts are based on volumes
9:33that are too small.
9:34Eliminate the manual version and keep
9:36only the other two. It shares quite a
9:38few common parts, so you can source your
9:41parts in larger numbers and therefore
9:43get better prices.
9:46By ordering 30,000 electric and 20,000
9:48high-end seats, your purchase price will
9:51be lower than the three-version
9:53configuration for your entire order, and
9:55thus your margin will be better, while
9:58adding a feature to the base seat, all
10:00without changing the sale price.
10:04This is exactly the reasoning Tesla used
10:06for the seat in the standard version of
10:08the Model Y. Granted, the seats have no
10:11adjustment buttons or ventilation.
10:13Granted, they have specific upholstery,
10:15but for everything else, they are
10:17identical to those in the premium
10:19version and do not require separate
10:21certification either.
10:23If this is true for a seat, it is even
10:25more so for structural elements such as
10:27a panoramic roof.
10:29Take Mercedes, which decides to offer
10:31two versions, one with a steel roof and
10:33the other with a glass roof. The
10:35structure of the steel roof version must
10:38be either specific or oversized to meet
10:40requirements. In both cases, there are
10:42additional production costs.
10:45If the structure is different, then we
10:46optimize the use of materials but
10:48complicate the production line.
10:50And that has a cost. Indeed, you need
10:53different dies for the presses, handling
10:55, and different management for assembly
10:58, for example with robots.
11:01On the other hand, if we build the same
11:03structure for both roof types, then
11:04Mercedes optimizes its production but
11:06ends up with more materials and
11:08unnecessary solidity for the versions
11:10with a steel roof.
11:12Furthermore, if we reason like we did
11:14for the seats, the number of sales with
11:16a panoramic roof will be decisive for
11:18the prices that buyers can obtain from
11:20suppliers.
11:22By making the panoramic roof standard,
11:24you can lower costs without lowering the
11:27product's quality.
11:29Offering a choice is more expensive for
11:31all models.
11:34All versions are impacted by a choice
11:36between two options, but it is easier to
11:38distribute the cost across high-end
11:40versions than entry-level ones.
11:44Hence the fact that manufacturers are
11:46often reluctant to sell you an
11:47entry-level version.
11:50At Tesla, the Model Y has a glass roof
11:51on all versions, even the basic one.
11:54For the car's production volumes.
11:57However, it was interesting to lower the
11:59price of the glass by using
12:01black-painted glass and a closed
12:03headliner without changing the car's
12:05structure, and that was a win.
12:08That was for the Model Y, but for the
12:10Model 3, well, that was not the case.
12:12The volumes were not sufficient.
12:15So they kept the transparent tinted
12:17glass roof even on the standard version
12:19because it was cheaper to proceed that
12:21way.
12:22There you go, you have the general idea
12:24now. And yet, we are not at the end of
12:26this episode yet.
12:28There remains one more practice that can
12:30change the game: the sharing of
12:32platforms.
12:39The Mercedes GLC shares a huge amount of
12:41elements with the CLA and the new
12:43C-Class, but also with other models in
12:46the range.
12:47The Tesla Model Y also shares some of
12:49these elements with the Model 3, and
12:51that leads to lower purchasing costs and
12:53easier management.
12:55This is, for example, what allowed Tesla
12:57, for the standard models of both 3 and
12:59Y, to install a manually adjustable
13:01steering column.
13:03If it hadn't been identical, the Model 3
13:05would likely have kept its electric
13:06adjustment. And here, I will return to
13:09my initial example.
13:10The Opel Corsa against the Chevrolet
13:12Aveo, and you will see that it is very
13:15explicit.
13:16The Corsa D appeared in 2006, while the
13:19Aveo only saw the light of day in 2011
13:21on an already proven and profitable
13:23platform.
13:25Despite developing specific parts like
13:27body panels or interior elements, it
13:29became attractive to create a new,
13:31budget-friendly model. By adding the
13:34VO's volume to the Corsa, costs are
13:36lowered for both. This is the perfect
13:39example.
13:40Of good use of a common platform, and
13:43many European or American manufacturers
13:45have eagerly proposed multiple versions
13:48of the same car across various brands.
13:51Thus, Volkswagen’s MB platforms are also
13:54found in Audi, Cupra, Skoda, and Ford
13:56models. The Korean E-GMP platforms are
13:58used by Hyundai, Kia, or Genesis, while
14:01GM’s Ultium Medium platforms have been
14:03seen in Chevrolet, Cadillac, Buick, and
14:05even Honda or Acura. While these
14:07economies of scale are attractive, the
14:10risks are also enormous. High stakes,
14:13high risk.
14:15If a shared part fails, it’s a disaster
14:17for several brands and a huge number of
14:20vehicles.
14:22In this area, we can cite Hyundai's ICCU
14:25charging units, Stellantis' PureTech
14:27engines, or LG batteries in Volkswagen
14:30products.
14:32In all these cases, a defective part
14:34impacts a massive fleet and generates a
14:36colossal warranty cost.
14:38The worst part is that these issues
14:40aren't due to the technology, but rather
14:42to the manufacturers 'choices. When the
14:44people designing the cars have no say in
14:47purchasing parts, it eventually leads to
14:50huge blunders. Let’s return to our
14:53previous logic. Fewer versions mean
14:55higher volume for the same part.
14:57Therefore, mechanically lower prices,
14:59and also less development and validation
15:01since there is no need to make multiple
15:03variants.
15:05The fact remains that if you have to
15:07install the same part in several cars,
15:09you increase the risks, and from an
15:11engineer's perspective, it makes sense
15:13to design parts with higher safety
15:15margins and more testing before
15:16installing them on production lines.
15:20But that is a logic of common sense, not
15:22a logic of finance.
15:24While decision-makers are happy to see
15:26costs drop, they struggle to spend a
15:29little extra to ensure the parts they
15:31buy are good enough to avoid spending
15:34huge amounts of money later on warranty
15:36claims.
15:38By increasing volumes, a good manager
15:40will choose a better part, slightly less
15:42expensive than a very cheap, low-end
15:44part.
15:45The one who wants the lowest costs to
15:48maximize profit will end up with the
15:50problems mentioned earlier. Because yes
15:53, by reducing the number of versions or
15:55using shared platforms, you can adopt
15:58higher-quality parts without increasing
16:01the car's final cost, yet it can
16:03actually increase the price paid by the
16:06customer.
16:08Indeed, there is a huge difference
16:10between a car's customer price and its
16:12production costs.
16:19Contrary to what one might think, the
16:21two are not linked.
16:23The price of a car or an option is
16:25defined by the customer themselves, not
16:26by the manufacturer.
16:29When we set the price for metallic paint
16:31, it’s because we have a panel of test
16:33customers who were asked what they
16:35considered the fair price for it,
16:37regardless of the actual production cost
16:39.
16:40For the car as a whole, if it is too
16:42expensive, it doesn't sell, so the price
16:45must be lowered to move the inventory.
16:48Conversely, if your product sells too
16:50well, you must raise prices to match
16:52demand with your production capacity. It
16:54is simply the law of supply and demand.
16:57And that is what determines the price of
16:59the car, not the money needed to build
17:02it.
17:03The manufacturer's entire challenge is
17:05to ensure the production cost is lower
17:07than the price the customer is willing
17:09to pay.
17:10Let me give you an example. In 2011,
17:12during the launch of the Kia Sportage,
17:15prices were too low, and waiting lists
17:17very quickly climbed to 10 or 11 months
17:19. The manufacturer was losing sales but
17:22also losing out on margins. In the
17:25spring of 2011, Kia raised the prices of
17:27this model by almost € 5,000 in just 3
17:30months. They did this by adjusting list
17:32prices but also by reducing discounts.
17:35The entire production sold at a higher
17:37price, but since wait times were shorter
17:39, they didn't lose any customers, and
17:41the actual costs remained the same.
17:44So Kia made a higher margin and recouped
17:47the profit they were entitled to due to
17:49the model's success.
17:52And here, we touch upon a very important
17:54element to understand about the
17:55automotive market.
17:57The price of a car is determined by the
18:00brand and model's image, and therefore
18:02by the product's desirability.
18:05However, image is determined by its
18:07market segment—mass market, premium, or
18:10luxury—as well as the requirements of
18:13that segment.
18:15In the premium market, customization
18:16comes before everything else, often even
18:18before quality.
18:20And here, I will give you an example
18:22that illustrates this well.
18:24When a customer has the means to spend
18:27on a luxury GT, for example, even for a
18:29pre-owned vehicle, the warranty is
18:31secondary.
18:33Some of my former colleagues worked as
18:35salespeople for very high-end brands,
18:37Italian ones for instance, and told me
18:39they sold used cars with the legal
18:41minimum, covering only safety parts for
18:443 months.
18:46In short, even an engine failure was at
18:48the customer's expense; they paid, and
18:51it was never an issue.
18:53And yes, these customers had the means
18:55to replace a supercar engine just as you
18:57would buy a new washing machine.
19:00It has the same impact on them.
19:02Conversely, in a low-cost brand, quality
19:04and warranties are essential because, at
19:07the slightest major breakdown, the
19:09customer won't have the funds to repair
19:11it, and they will blame the brand. This
19:13will tarnish the image of the
19:15manufacturer or the model, and
19:17consequently, its sales, margins, and
19:18market prices will be affected. They
19:21therefore depend on the quality of the
19:22products, or at the very least, on the
19:24perceived quality. In conclusion, what
19:26makes cars cheaper is not the intrinsic
19:29quality found inside the car.
19:31It is the superfluity that surrounds it
19:34and the image that follows.
19:37If Tesla and others manage to produce
19:39competitive cars at more attractive
19:41prices than others, it is not by using
19:43second-rate parts. By making luxury cars
19:46without a luxury image, they provide
19:48more for less.
19:50While others certainly make you pay for
19:52customization and image, they don't
19:54guarantee that you are getting a better
19:56product.
19:57Makes you think, doesn't it?
20:00And on that note, I wish you a safe
20:01drive and see you soon for the next
20:03episode of Le Chou de Garage.
20:04Take care.
20:06Ciao!

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