Ratcliffe, as a result of the taxation of his money made at Ineos, is a tax exile.
The Grenadier is to be built abroad.
An interesting thought about tax rates that are too high. Tax an entrepreneur out of the country then whine about his new factory not being in the country.
B-b-b-b-but Spud said they wouldn’t go! It’s not fair!
eg https://www.t*xresearch.org.uk/Blog/2019/11/03/we-can-do-without-the-wealthy-their-taxes-and-the-denial-of-opportunity-that-they-represent/
Imagine actively wanting to get into the notoriously capex-heavy, unprofitable and overcrowded automobile industry tho.
Aye. But I’m still not buying one.
The Grenadier, which is strongly reminiscent of the old Land Rover Defender, has boxy bodywork, a steel ladder chassis, beam axles with long-travel progressive-rate coil spring suspension (front and rear), and is to be powered by BMW six-cylinder internal combustion engines
So it’s based on a car Jaguar Land Rover could no longer turn a profit from, using technology that every Western European government is promising to ban in the next few years, and being run by a guy who’s new to the car business, at a time when we appear to be heading into the worst global depression in living memory.
Dunno. Obviously Jim Ratcliffe is a bright and insanely successful man, but this sounds more Delorean 2.0 than Tesla 2.0
Sounds like he’s building a vehicle take you through the crash of technological civilisation & out the other side. Options for retrofitting armour & machine gun mounts? Seems remarkably far sighted.
We do it my way. Fear is our ally. The gasoline will be ours!
Given that much of the design engineering for the Grenadier is being done overseas by Magna Steyr, as well as it having a foreign (BMW) engine, you can question how much UK value-add there would have been even if they had stuck to the Bridgend factory plan.
Indeed I think you can argue that if you want to contribute to the UK economy, a Slovakian made but UK engineered Land Rover Discovery, with a UK made engine, would be a better choice than a UK made Grenadier.
He did wrap himself up in the flag over this project, a “new Land Rover,” and all that guff. Maybe it even started out with good intentions in that he did want to build it in the UK, but now he’s buggered off, and you could be forgiven for being annoyed with all that spiel.
I wouldn’t buy one of these things now in the same way that I would not buy an MG, after the Phoenix consortium got it’s hands on Rover, made out like bandits, and two years later, the Chinese had the sheer cheek to show up at Autosport International having asset stripped the place, laid everyone off and even shut down the old dealer network. This despite reassurances from multiple polished horseshitters, all singing off the hymnsheet, that none of this would happen, which down on planet Earth, everyone knew it would.
Someone had even quietly keyed it on the stand.
“Wanna buy our Chinese car? Oh, shame you can’t afford one because you don’t a have a job.”
Steve,
“So it’s based on a car Jaguar Land Rover could no longer turn a profit from, using technology that every Western European government is promising to ban in the next few years, and being run by a guy who’s new to the car business, at a time when we appear to be heading into the worst global depression in living memory.”
I don’t know. He seems to be trying to make a serious, no-compromise off-road vehicle and maybe there’s a market for something like that, a niche. Maybe in their work, they’ve not been happy with the vehicles they can get and seen an opening. It’s not going after the Chelsea Tractor market.
Tesla is just a mad idea. Car making is mature and saturated. Toyota, Honda, VW have been doing this for over 70 years. The cars last for 150K miles without much trouble. The build quality is great. And they know motors, so Tesla has no real advantage. Other than a few impressionable weirdos who think Elon Musk is Tony Stark, it’s never going to happen. Women want safe, reliable cars. That means serious sober people running the show, not some guy who smoked dope on a radio show and called a cave rescuer “pedo guy”. At some point, the Tesla bubble is going to burst, properly burst, and it’s going to be biblical.
“Indeed I think you can argue that if you want to contribute to the UK economy, a Slovakian made but UK engineered Land Rover Discovery, with a UK made engine, would be a better choice than a UK made Grenadier.”
It will certainly keep the breakdown agencies and garages busy.
BoM4 – he’s talking about producing 25,000 a year. Is there a market to sustain that? Mebbe. Seems too many cars to be “niche” (Aston Martin builds about 5,000 a year) but not enough to be mass market (with all the economies of scale that go along with that), but I’m no Jeremy Clarkson so who knows?
Car making does seem like a great business to lose money in. GM – with massive resources, experience and a global sales, marketing and distribution network – couldn’t turn a profit from its ownership of Opel/Vauxhall, and IIUIC Tesla only looks viable if you cross your eyes and hope they’ll keep getting subsidies forever. Even with billions of Uncle Sam’s cash, their net profit is less than 4%.
Maybe Jim Ratcliffe has the secret sauce to make this work, but the combination of likely high retooling and startup costs, French unions, the global slump in demand for cars, the endless fuckery of EU and Yank environmental and safety regs, massive competition on already crowded forecourts, and the likelihood he won’t be allowed to sell any ICU vehicles within a decade doesn’t sound like a great combination. Otoh, if you’re a go-getting billionaire it’s probably a lot more challenging than snorting coke off the pneumatic buttocks of Instagram models on your yacht. So good luck to him.
I do like the war chariot idea tho – probably a lot easier to defeat roving gangs of post-apocalyptic splatterpunks in a big heavy 4×4 than in Clive Sinclair’s C5.
Steve,
You might well be right. I just don’t know that end of things. Maybe he’s being optimistic.
“Car making does seem like a great business to lose money in. GM – with massive resources, experience and a global sales, marketing and distribution network – couldn’t turn a profit from its ownership of Opel/Vauxhall, and IIUIC Tesla only looks viable if you cross your eyes and hope they’ll keep getting subsidies forever. Even with billions of Uncle Sam’s cash, their net profit is less than 4%.”
They run on the tax credits. They also had a big lift from being first and all these weird fanboys buying them.
But sales are collapsing in Europe as people opt for the VWs. Personally I’m not one of those weird fanboys and if I wanted to spend £40K on a car it would be something that made slutty fake tanned girls take an interest (because there is literally no other good reason to spend £40K on a car).
I have some passing familiarity with this company;
https://www.atalantamotors.com/
Apparently the chap behind it is stonking rich, retired early, and fancied trying to revive one of the early motoring marques. There is clearly a market selling niche motors to rich middle a aged blokes.
The Morgan motor car company occupies a similar space in the market, although both of them are more akin to coach building and hand crafting rather than hi-tech mass produced modern vehicles.
If you look on Autotrader there is a strong secondary market for the old Defender so there is definitely demand out there.
Of course the question is whether it can be manufactured economically enough. I reckon with modern manufacturing techniques it should be feasible for a company to produce cars on the scale that they are looking at and make a profit. The trick is to have a flexible, motivated work force and the right mix of automation and a keen eye for cutting costs. Seeing as they’re making it in France that probably means they’re screwed then…
“It will certainly keep the breakdown agencies and garages busy.”
Thats exactly what I was going to say. After about 50 years of Land Rover vehicles on this farm I went off reservation for my last 4×4 purchase. LR are just too unreliable, and having lost the Defender from the range they’ve lost the last bit of class they had. The Range Rover is a blinged up pimps car, the latest Disco is an anonymous jelly, and all the other models are interchangeable hairdressers cars. The Defender was the only thing keeping LR alive as a true off road brand. Now its all just suburbanites driving them, and not a speck or mud or cow shit to be seen. Their quality control was always a bit iffy, but they at least had some true off road DNA in the Defender. I wouldn’t have a current LR model now if you paid me. I’ve a couple of classic Defenders, I’ll get them completely restored, they should see me out.
A friend who is amused by my interest in Land Rovers passed me a cutting from Farmers Weekly. Apparently I could buy a rebuilt Defender with a ginormous Chevy V8 for only £180k.
P.S. We had a Toyota Land Cruiser once. It was far more reliable than our LRs. On the other hand some bugger stole it.
(All local opinion was that it was stolen by pikies. Racist bastards, eh?)
Come to think of it, why doesn’t Ineos man buy the car factory in the Moselle, dismantle it and reassemble it in, say, the Isle of Man? I mean, if he wants to make political points wouldn’t that be the way? Or get a zillion pound subsidy from the wee besom and reassemble it in Scotland.
“Tesla is just a mad idea.”
Dumb.
“And they know motors, so Tesla has no real advantage.”
Dumb.
“Tesla only looks viable if you cross your eyes”
Dumb. Teslas are good cars. Perfect for the niche.
“Maybe Jim Ratcliffe has the secret sauce”
Here’s where he could differentiate himself from Musk.
“There is clearly a market selling niche motors to rich middle a aged blokes.”
Exactly.
“I reckon with modern manufacturing techniques it should be feasible for a company to produce cars on the scale that they are looking at and make a profit. The trick is”
. . . for Ratcliffe to keep his damn hands off it. Musk had double ought zero experience in manufacturing. He jumped into the California Tesla plant, and made all sorts of directives. By someone with no experience in manufacturing. He made a thousand mistakes, mistakes that others already knew not to do, learning how to do mfg OJT. His company; his choice.
BUT, he squandered his massive prior franchise in premium electric vehicles. Had he hired experienced manufacturing management (he might have), and LEFT THEM THE FVCK ALONE, he could have OWNED the segment he created. But his ham-fisted management of the company caused years of delay in production. Leaving the segment open for penetration by Mercedes et al.
Ratcliffe can succeed, but he can fail.
Steve, not being Jeremy Clarkson may be an advantage. He laughs at his inability to judge motoring success. Some of the cars he’s panned have gone on to be best sellers…
France has various advantages for manufacturing. A reliable electricity supply for one, and because they’ve always had horrendous unions/labour laws, they’re far more advanced at manufacturing automation than most places. Add the French government’s love of sweetheart deals and lax observation of most EU regulations, it’s not that daft a place to go for niche stuff.
Given the dumbness of Tesla has come up, here’s why I’m holding onto my TSLA stock…
Tesla is in a far better position than a lot of people like to make out. They are a software company that also happens to make cars. The first year or two of production of their vehicles is absolutely shocking because they essentially prototype as they go, but they have enough hardcore fans who will buy the newest model to keep the demand there while more regular punters are willing to wait a couple of years for the product to be “finished”. The early Model S were awful, but the 2015+ have pretty decent regular panel gaps, etc. Similarly with the Model 3, which is a whole new scale of manufacturing: the first ones were shocking with fit/finish problems, paint problems, you name it, but the ones that they’re building now are fine. I wouldn’t touch a current Model Y with a barge-pole but they’re still selling all that they can make, and given past performance I’m confident that the bulk of the manufacturing problems will be fixed by the end of next year. “Experienced [car] manufacturing management” is not the answer because the whole point of Tesla is that it’s using software engineering techniques in hardware manufacture. The experienced manufacturers might allow a product revision every year, but Tesla is doing incremental changes all the time. A significant chunk of their income — and >100% of their profit — comes from selling their EU emissions credits to Fiat-Chrysler. I’d be worried about this if it weren’t for the fact that their operating profits are quite reasonable and their losses are all due to capex which they could easily reduce if subsidies/regulatory credits stopped rolling in.
VW have the opposite problem to Tesla: they are a manufacturing company that is trying to avoid doing software by outsourcing it and (failing to) integrate the outsourced product. If VW — or Mercedes — were actually doing the software themselves and learning how to do it better (like Tesla are with manufacturing) then I would be far more confident about their futures and more worried about Tesla’s. As it is, they haven’t learned that if you don’t own the code base then the product isn’t yours and that in the move toward electrification, the car will become more like the computer because the complex oily bits have gone away, and the winner will be the one who owns the high end where all the profit is. Apple may not have a dominant market position by unit sales in any of the markets it operates in (exc. iPad possibly) but they do make nearly all the profits in the consumer hardware market because they’ve successfully integrated hardware and software. Tesla have worked this out (although they could do with some UI lessons from BMW), I believe
VolvoGeely are starting to, but the Germans have not.@Matt:
And you think that’s a good thing?
10-4, Arthur. Years of delays, squandering their ownership of the segment.
“The experienced manufacturers might allow a product revision every year, but Tesla is doing incremental changes all the time.”
The experienced manufacturers will get product out the back door.
Nick – True, and personally I do love a reasonably priced car.
Gamecock – “Teslas are good cars. Perfect for the niche”
Sure. But Musk doesn’t want to be niche, he wants the mass market.
Matt – “Apple may not have a dominant market position by unit sales in any of the markets it operates in (exc. iPad possibly) but they do make nearly all the profits in the consumer hardware market because they’ve successfully integrated hardware and software. ”
Yarp, but. Apple is wildly successful because of two things:
1) Successfully positioning their brand to command premium prices for hardware
2) Owning the platform (iTunes, the App store) and rolling in all that sweet software and subscription moolah.
Option 1 is already a thing in automotive manufacture (tho I think Aston Martin’s profit margins are a lot thinner than the fruit company’s).
Option 2 – how is that going to work in the car business?
Might just be a failure of imagination on my part, but I can’t see the equivalent of an App Store for vehicles. Tesla has (presumably) great software – so what? How can they monetise it, and what’s to stop Samsung and Kia, or Google and GM, or Apple and Mercedes, eating their lunch? The barriers for entry to the software biz are lower than manufacturing, and car brands are inherently less sticky than the fondleslab ecosystem people use for entertainment and communication. Will drivers be willing to pay for some sort of software subscription service to drive (or let the software drive) their cars? Mebbe, but I reckon it’s a tough sell.
Apple has a very enticing walled garden that devoted users don’t want to leave, but I dunno if you can ever transpose that to the car business.
Has Aston ever made an annual profit? They’re famous for losing their current owner’s money and frequently being sold on for a pittance.
@Arthur Teacake
the whole point of Tesla is that it’s using software engineering techniques in hardware manufacture
And you think that’s a good thing?
No worse than “keep making this thing we know is dud because it isn’t time to change the model year yet”
@Steve
You appear to have a blind faith in advertising. People might buy something at a premium price once because it’s an aspirational brand, but they buy it again because they like it. Apple’s USP is not the App Store — which, granted, makes billions but is small change for the fruit co — but the successful integration of hardware and software, and owning the whole product. Exactly the way that Aston Martin doesn’t.
Tesla are building their own factories to build their own design of batteries. They’re writing their own software. As far as possible they are owning the “whole stack.” Sure, other automakers have the potential to do this but so far they aren’t, and all the time that they aren’t they’re losing ground. This is the way that Tesla is like Apple.
If the South Korean chaebols didn’t hate each other (and the divisions within them weren’t squabbling like the Balkans) then they might get somewhere but it would require Samsung and LG and Hyundia-Kia to all work together in a proper joint venture. Geeley-Volvo have a chance, and Toyota have been making leaps in UI/UX recently, but nobody else shows any inclination of the scale of integration that Tesla is doing.