### Disruption in the Automotive Industry: Challenges and Changes

The car industry faces chaos as companies struggle to adapt to rapid technological and market changes.

### The Turbulent Transformation of the Automotive Industry: Challenges and Changes
* 🚗 Over the last two decades, the car industry has faced **unprecedented changes**, driven by **electrification**, new competitors, and **technological advancements**.
* ⚡ Companies are struggling to adapt to rapid shifts while delivering reliable products, as many consumers are hesitant to purchase new cars due to being **"underwater" on previous purchases**.
* 📉 The electric vehicle (EV) market is experiencing a downturn, with companies like Ford and Volvo retracting their ambitious plans due to **sanctions, decreasing subsidies, and waning consumer interest**.
* 🔥 Jaguar has halted car production to revamp its brand after facing **reliability issues** and a **lack of brand equity**, while other automakers are also grappling with **high costs** and **market saturation**.
* 📊 A study revealed that the life cycle of new cars has **shortened**, with **frequent updates and new models** being introduced, which complicates the landscape for both manufacturers and consumers.
* 🚙 Despite their reputation for reliability, even Toyota is not immune to disruption, facing **engine failures that tarnish their image**, as they transition to **smaller, more efficient engines**.
* 💰 The increasing costs of R&D and production are being passed onto consumers, while investors continue to navigate a challenging environment where many companies are **struggling to stay afloat**.
* 🔍 Ultimately, the automotive industry is in a state of flux, with many questioning whether the push for disruption is necessary, as most consumers simply desire **reliable and affordable vehicles**.

over the last two decades very few major
markets have seen changes quite as widespread
and expensive as the car industry a push towards
electrification new major competitors from China
and South Korea self-driving technology tighter
regulations and hundreds of billions of dollars

in investor money has made it extremely difficult
for companies to adapt to every single last change
while also delivering a product that's not sh
dozens of companies are betting their entire
future on the next 5 years but that's happening as
a lot of people are still underwater on their last

car so they're not in a rush to buy their next
technology is changing so quickly that cutting
edged cars today might be completely redundant
in a few years time meaning the right thing to
do for most drivers is to sit back and wait the
investors on the other hand are realizing that

if you invest billions of dollars to disrupt
a market you shouldn't be surprised when the
market gets disrupted congratulations CEO Elon
Musk unveiling the taxi of the not-so-distant
future the Cyber cab at an exclusive event tonight
it's now moving towards electric vehicle so Jaguar

came up with a bright plan a complete rebrand
except for cars this time they're selling vibes
everyone knows the minute you drive a new car off
the lot its value depreciates but for electric
vehicles the drop is dramatic calling a million
hybrid vehicles because they may catch fire the

Prius Prius plug-in hybrid and the CHR uh SUV
model are all needing electrical system repairs
a few months ago the British car company Jaguar
anounced that it would cease producing
cars until it could totally rethink its entire
product lineup the prestigious automaker was

once a British alternative to German luxury brands
like Mercedes, Audi, and BMW, even though the company
was technically Indian in recent years. Though
the company has released cars that were plagued
with reliability issues, lapses in quality, and were
generally much worse value for money than even the

premium brands they were trying to compete with.
The company's I-Pace compact SUV was supposed to
be their mass market product of the future, but
it had worse range and tech than most other small
electric SUVs, all at a significantly higher price.
Point being, the only thing really selling the cars was

their premium brand image, but that can only last
so long. Last year in an interview, the company's
own chief creative officer admitted that the
company had no brand equity left whatsoever. The
only thing keeping the company alive was its shared
ownership with Land Rover, but eventually, it was

just taking up space on dealership lots that could
be filled with cars that actually sell. In response
to sales numbers that were circling the drain, the
company has stopped selling cars with the plan
to entirely relaunch the brand. The first phase of
this plan was launched last week with a brand new

logo and marketing video that drew mixed reviews.
Advertising a new and improved car company without
actually showing any cars is a bold strategy. Now,
a British car company making horribly unreliable
cars and then going bankrupt is not worth making
a video about. That's just what they do, but this

is just a sign of a much wider issue that is
affecting the whole industry, and that is simply
nobody knows what the [heck] is going on. Back
in the good old days of 2021, Ford and Volvo were

amongst the first traditional car companies that
made a pledge to transition their entire fleet to
electric vehicles in certain Global markets at the
time demand for EVs was outpacing crippled Supply
chains and credits made them quite affordable.
Last month the companies had quietly walked back

their Ambitions because the market for electric
vehicles changed in three big ways. The first was
that electric vehicles specifically have been
the target of major sanctions across the world,
primarily targeting cheap cars coming out of
China despite all of its Swedish branding. Volvo

is actually owned by Geely, a Chinese conglomerate
holding company, and a lot of its EVs are made in
China because the battery supply chain is far more
mature there. This means that their fully electric
fleet would be uncompetitive in markets like the
USA unless they move production there exclusively

which would be hard for a lot of their vehicles.
The second reason is that at the same time tariffs are
going up, subsidies for EVs are coming down. The
price premium of an electric car in many places
was offset largely by tax credits that would cover
a significant share of the purchase price. These

have become less popular as people are seeing them
as their tax dollars going to subsidize some tech
bro's Model 3. And the third simplest reason is that
people just don't want to buy EVs. Early adopters
are a relatively small market, especially for such
a valuable purchase. Even those customers who are

happy to put up with a little bit of inconvenience
or a higher price point to do their part for the
environment or just to signal how forward thinking
they are, are not going back to EVs. A survey
conducted earlier this year by the Mackenzie
Center for Future Mobility found that 46% of

current EV owners would shift back to an internal combustion engine car for their next purchase, setting issues with charging infrastructure as their primary concern. Now, people rolling coal in their lifted F350s are probably never going to switch to an electric vehicle unless there

is literally no other option apart from something completely unthinkable like public transport. But even the group that was already one over and made the big purchase are switching back, making car companies across the industry reconsider going all in on EVs, even Tesla, the undisputed king of EV

sales in America is starting to hit a plateau in new deliveries. The first quarter of this year marked the first time since the launch of the Model S that they delivered less cars in the same quarter the year before. Other new EV companies like Rivian and Lucid Motors, which were

hopeful competitors with Tesla, are still losing tens of thousands or even hundreds of thousands of dollars on every car they sell because they have had to offer extremely competitive cars to market to tempt buyers to take a chance on a relatively unknown company. The cars they are

making are some of the best engineered machines on the road, but they are now only being kept alive by multi-billion dollar financing rounds from foreign governments or incumbent automakers who are probably more interested in their technology than their actual cars. To keep up, every other car

maker has to also compete with a company that is losing money on every car they sell, which is putting even very well-established automakers in a tight spot to tempt new buyers. Car companies have to spend billions to keep on offering something new that makes their old model seem relevant by

comparison, but just as many people are put off
because next year there will be something even better, so there is no harm in waiting, especially
when things can go so badly wrong. Fisker was another new EV competitor that offered alternatives
to the Tesla lineup, which has already gone out of

business. Their cars were cost competitive, but they
are now effectively worthless because their after-sale service no longer exists, and highly technical
proprietary EVs can't be worked on by independent third-party mechanics. Move fast and break things
might work for technology work, cost overheads to

the end user are zero, but the average new car
costs almost $50,000 at the same time that most people are struggling to keep up with the cost of
living. What people really want is a car that will move at all and won't break the bank, so it's
time to learn how Money Works to find out why

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struggling to adapt to changing market dynamics. As the newest product offering in the market, they are being upgraded the fastest, especially since a lot of automakers have scaled back research and development into internal combustion engines. But old-fashioned cars have created their own problems.

Too, cars are simultaneously lasting longer and shorter at the same time. A study by the automotive market data firm CAPA HBI in the mid-20s found that the life cycle of new cars is now significantly shorter than it was in past decades, with the average new model only taking 2 years

before an upgraded model comes along. A lot of models receive a refresh every single year, where manufacturers will make small changes to styling, infotainment, and make small drivetrain tweaks to differentiate between model years. More frequent regulation changes around emissions and safety have

made these equally more frequent updates necessary. But obviously, I don't need to tell you that if brands can make last year's model look obsolete with some styling changes, they will do it. The number of different car models available in the market has also increased by over 50% in the last

20 years fueled by both the introduction of new EV models but also car brands trying to cover more of the market 20 years ago a Bentley Aston Martin or Ferrari SUV would have been a laughable idea but now it's their bestselling car This is happening across the industry as automakers try to cash in

on their brand value to produce more mass-market cars If you consider a half-million dollar V12 Ferrari commuter car mass-market even at a regular price point manufacturers are making a range of vehicle sizes especially for SUVs where it's not unusual for a single brand to have four or five

different model offerings from compact to full-size SUVs with several different trim and drivetrain options for each including full internal combustion hybrids and EVs within the same model The end result is that across all price points car manufacturers are making more cars which are

being updated more often while having to adhere to more regulations across more markets with more competition from more startups with more funding than they really should have Brands are having to allocate a lot of money to R&D to stay relevant and if they can't keep up even big global brands

like Nissan have quickly lost market share Now not every car company has the luxury of selling their cars at a loss so this growing business expense is being passed along to customers The inconvenient truth about new technology is that sometimes it's kind of crap Toyota has become the

world's bestselling car brand largely thanks to their legendary reputation for reliability Generally Toyota develops cars very slowly which means that models have long production runs and even if something is a bit outdated they will keep it around as long as it's reliable The combination

of reliability and the very fact that their cars
don't normally look that different year-to-year	has also helped them maintain very strong
secondhand prices which doesn't directly help
the company but it does mean that it has a die-hard
customer base that won't drive anything else but

even legendary Toyota has not been immune from
this disruption sweeping the car market they have
had to move with the times and phase out a lot of
their big lazy inefficient but extremely reliable
engines and replace them with smaller more highly
strong alternatives this change has caused several

extremely high-profile engine failures which have
tarnished the brand's invincible reputation now
by the numbers Toyota's reliability is still
class-leading but a viral video of someone's
new $30,000 Corolla burning down on the side of
the highway sticks with the average consumer more

than the numbers do now apart from the people
that are happy to lease the newest car every 2
years this market is not great for anybody most
car buyers just want a simple reliable car to
get them around most companies want to provide it
to them even the investors are playing a billion-

dollar game of Last Man Standing and it's all
because some industries just don't need to be
disrupted now some former employees here at how
money Works have abandoned me to start their
own channel and they have actually made a video
that shows the result of this disruption in every

industry I am sad to see them go but their new
videos are really good so I want to see them do
well definitely check it out and make sure to like
and subscribe to keep on learning how money works

Have Car Companies "Innovated" Themselves Out of Business

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How Money Works

Widespread and expensive changes in the car industry over the last two decades.

New competitors from China and South Korea.

Self-driving technology and tighter regulations.

Hundreds of billions of dollars in investor money, making adaptation difficult.

Rapid technological change makes cutting-edge cars quickly redundant.

Jaguar's rebranding and ceasing car production to rethink its product lineup.

Jaguar's past reliability issues and poor value for money.

Jaguar's bankruptcy as a symptom of wider industry issues.

Shifting market dynamics for electric vehicles

Ford and Volvo walking back their pledges to transition to fully electric fleets.

Sanctions targeting cheap EVs from China.

Decreasing EV subsidies and increasing tariffs.

Lower-than-expected consumer demand for EVs.

High percentage of current EV owners intending to switch back to ICE vehicles.

Tesla hitting a plateau in new deliveries.

Rivian and Lucid Motors losing money on every car sold.

Established automakers struggling to compete.

Fisker's failure due to lack of after-sales service.

More frequent updates due to regulation changes.

Significant increase in the number of car models available.

Automakers producing more mass-market cars.

Increased production costs due to regulations, competition, and R&D.

Toyota's success due to reliability and slow development cycles.

Toyota's strong secondhand prices and loyal customer base.

Toyota's engine failures impacting its reputation.

Viral videos of failures having a greater impact than statistical data.