Europe's car industry crash

Welcome to the Euro Intelligence Podcast. I'm Wolfgang Monschau and with me, I'm Susanna Monchink and Jack Smith. Today we'll talk about cars. In the week when EU leaders meet for an informal summit in Belgium to discuss Europe's competitiveness and the car industry is of all industry probably the industry where Europe's competitiveness squeeze is at its most dramatic. This is where output is falling. This is where strategies are collapsing. This is where the threat from China in particular is at its most acute. Jack, where are we now? Where we are now I think is that companies in the EU, you know, are auto firms in the EU, fundamentally they're struggling with one big strategic question which is how they manage the shift to electric cars and there are multiple components of this, right? There's the question of how they actually do this, you know, how they actually manage the different supply chain processes, how they manage software, battery technology and so on and so forth. With the extent to which you pour resources in this, the extent to which you develop things, these things in house versus outsourcing them to other companies and so on. You know, you have these practical questions for the car companies, but over and on top of this you have the question of, you know, demand in the European market, how quickly demand or slowly demand will be shifting towards electric cars. It's definitely shifting towards electric cars, but the question is again, how much or how little you have the question of how these European companies perform in export markets while this shift is taking place. Again, export markets where this process of transition might be going more quickly or more slowly and then finally and I think most significantly you do have this question of what to do about competition from China because you have a number of newer, mostly newer, really sort of electric first car companies that have come in from China, they've made really significant technological advances, often both in battery and software technology. Their cars are often quite of it cheaper than the European models. They're already posing significant problems for European car companies that are active in China, increasingly they're looking to come over to Europe. There's a bit of a complicated domino effect going on here, which I'll explain a bit later, but they're increasingly looking to come over to Europe. Now, one of the companies that really sort of put a lot of their chips in on the strategic shift towards electric cars was still antists. So still antists itself as an entity is only a few years old. It's basically the merger between what was Fiat Chrysler, so an Italian American auto group and Per Joe, a French one with this merger, the previous CEO, Carlos Tavarez, embarked on this very aggressive strategy, both of cost cutting and of investing heavily into the transition into electric cars. Now, what still antists has found out for a couple of different reasons is that this is not going how they planned. So last weekend, the company took basically a significant write down to about 22 billion euros against their pivot towards EVs, the pivot towards EVs, which they're now pivoting away from, increasingly moving towards a slower and more gradual path to EV adoption towards hybrid cars and such. So I think that a component of this too for still antists especially, and why it hit them especially hard was that still antists has a very large North American business. North America's been an important export market for European automakers and still antists have both been exporting cars over to North America and dissembling them there. They've been hit by the Trump administration's reversal of a lot of pro EV measures. Basically, this is the sort of domino effect. What we've been seeing increasingly is that Chinese car companies, the market in China for electric cars, especially, is a really, really competitive blood bath. So they've been increasingly trying to move over to Europe in order to eke some profitability out because their lower costs mean that they can sell these cars basically for more than what they could sell them for in China and make more profit off of this. By doing this, the ones that can be successful in Europe can partly avoid this sort of battle royale that's going on in China between the electric car makers. Now, increasingly, I think what you've seen are European car makers looking at the Chinese car makers coming in thinking, oh, we need an exit strategy now. When the Biden administration launched this big green industrial policy push with the inflation reduction act, they saw this. It wasn't just the car makers. It was various other European industrial companies. They saw this and they said, great, this is a market that we can go into. And this is a market that we're also going to be relatively safe from Chinese competitors in. So let's go into it for those who were involved in electric cars, in wind turbines, so on and so forth. The Trump administration's policies have really, really complicated this calculus. And now it increasingly looks like they're sort of stuck in a corner with nowhere to go because the US was kind of their escape strategy. And they no longer have that available to them. So either you end up back in Europe where you've got this increasing competitive pressure from China, or you're stuck there with to put it very, very mildly huge policy uncertainty in the United States. I think this divide between Europe and the US is coming up big time in the car market in Stellantis. And the assumption behind that that group was that the two markets, the US market and the European market would continue to converge and that this would create one big transatlantic market for the cars. Now, if the US now goes towards more combustion engines and actually we see the clients, the customers of Stellantis, they want more combustion cars. Therefore, Stellantis had to reproduce one of his lines of his combustion car models for the United States. And it's for them also the only branch or the only part that actually produced a profit for last year, whereas the European markets were still in the red zones. So here we are with a strategy that produces first-elementers profits for combustion cars and deficits for electric cars sitting on this fault line. If Trump continues to double down on this anti-climate and pro combustion engine cars, if this continues, there is no electrical growth market there anymore. Then everything goes back to Europe, all the knowledge that has been acquired goes back to Europe and they're going to meet them in the Chinese competition. I mean, we've seen Stellantis also cancelled one of those battery exploration projects they had with Samsung. So they're canceling a couple of projects that were pushing them towards the electrification and rolling on the other hand out platforms or ref configuring the platforms in the US to actually cater for the combustion car engine. So the question is, do we see a partitioning of the world as we see it? So we have the China Europe focus on electrification and we have the US focus on combustion car engines. We also have the EU India trade deal that actually also emphasizes that European car makers could sell their combustion car engines longer to India than under our climate change targets. So this is probably only the first that the canary in the coal mine I can imagine that there are other car makers that will be affected by the split or the divergence of markets into combustion car markets and electric car markets. Yeah, this is probably an issue that might also change over time. The main pressure towards the electric car is not climate change target. The main pressure towards electric cars is the consumer demand and the consumer demand comes from things like the self-driving car and the future. It comes from features that electric cars offers that combustion engine cars cannot offer. Therefore, one should not think of it as purely in terms of climate change. Obviously, climate conscious consumers would naturally trend towards the electric car. But the idea that Europe can export its fuel driven cars to the United States or India, it might look that way today. I don't think it's just a policy issue. I think it is very much a market issue and I think that is what the European car makers completely misjudged. If you look at their plans in China, the Europeans have been putting a lot of investments into their Chinese car plans. In the hope that there would be a very strong, persistently strong market for combustion engines. That market has now been trounced by electric cars and the European shares in that market has also fallen. Obviously, the European total market shares have fallen quite dramatically as the Chinese are absolutely unwilling to buy European electric cars. I think one has to not just point fingers at governments here. It's the industry that misjudged both the market and the technology. You mentioned the electric battery joint ventures. Virtually all of them have failed. There's the North-Wold thing in Germany. The company went bust. All these joint ventures have been in trouble. There's still a few around, but they're not making money. It's been a series of disappointments. They underestimated the task how difficult it would be. It would be naturally more difficult for Europeans. I think there was never a chance that the Europeans had to be truly competitive in that era. They could have had a chance to be truly competitive in the software area, which is the next big thing. This is the next battle they will lose because they're not collecting data. The Europeans have the data. If they had started to collect data 10 years ago, when the trend was already starting to occur, when the technology started, let's just say, eight years ago. The AI model, the transformer model, was launched in 2017. That was the moment when AI took off. It takes a decade, maybe two decades of data collection to get this going. But Europe has these incredible resource of motorways cities, difficult urban areas, much more suitable in many ways for data collection, than the block cities of the United States or the modern cities of China. If you wanted to collect data in Europe, that would have actually been a very ideal place. If we had the legislation in place for data collection, if we had made the investments for this, and if we had debt to actually let these cars drive and collect data, this is still not happening. The data collection is absolutely crucial in this area. This is the next big thing where we are failing. It's partly again the industry. Mercedes and BMW are collaborating on the self-driving car, and the strategy has been, we'll do the motorways only. Because yeah, it's easier. It's linear. You're going in one direction. You have no cars coming the other direction. The task is technologically easier by an order of magnitude. Because you're looking at the head, you're looking at the mirror when you overtake. It is incomparably easier compared to cities where you have parking cars, where you have children running out, and you have dogs on the street. It's very difficult to say to you by comparison. But that's where you need to start to collect data. So the Europeans are losing this. And when they talk about competitiveness, we've been talking about European obsession with competitiveness forever. This is obviously a matter of competitiveness if you industry no longer competes. But the issue isn't that when people talk about competitiveness, it sounds like we are costing too much money, or our workers cost too much money. That isn't the issue here. The issue is that the industry has bet on the wrong technologies. It has misjudged the market. And it has also misjudged regulation. Because we have to remember the EU regulation. Isn't just some bad bureaucrats imposing regulation on a good industry. Regulation in Europe is written by the industry. They were sitting on the table. The 2035 target wasn't the Greens imposing their views on an industry. On a poor industry. That was not the case. The industry was very confident that it couldn't meet the targets. And they're totally misjudged in the situation. And the way I think this is decline. And decline is not measured in terms of how many cars we make in Europe. And I'm reasonably confident that the Europeans will continue to make cars. But I don't think the Europeans will earn the big money with cars as they used to. Because that was the main economic purpose of the car industry. It gave rise to services. It gave rise to suppliers. It gave rise to an entire ecosystem. And often industry that accounted for, I heard a figure of around 8% of GDP in Europe. This is absolutely mind boggling for a single industry even in its network with its network effects. And it's not because we're making the cars. It is because we're making the money with the cars. And it's the money that we're making with the cars which nurtures this ecosystem. Yeah, and then on top of that 8% figure you have to induce sectors. Even outside of manufacturing that link heavily into the car industry, banks that finance car companies and suppliers, professional services firms that mostly resolve around, revolve around providing services to the auto industry and so on and so forth. It's the network effect is huge. I think too, there was a broad, even when there were these four ways into electric cars and things didn't go well, I think there was also a pattern of learning the wrong lessons in the process. So one thing that I think about, for instance, is a carry-at. So when VW finally did decide that it was going to try to get into electric cars in a big way, it decided that it was going to develop the software itself and that it was going to have its in-house software development subsidiary carry-at. Doing this. Now, if you go into it and read a little bit more about carry-at, the initial experience with at least was that it was a real mess. And the lesson, I think, that a lot of industry observers in Europe took from this was look at what happened with carry-at, look at what happened with VW. We don't want to repeat that. However, I think to a certain extent, I mean, I think there are lots of things with how VW dealt with carry-at that you can knock, but I don't think that you can knock the principle of trying to do it yourself and opening yourself to the risk of failure initially in the first place, expecting that you are going to go and develop your software and that you can prepare perfectly for it and that it's going to go right the first time, is like expecting that you can win an Olympic Golden Downhill skiing by watching a bunch of YouTube tutorials. You have to be prepared for the fact that you're going to put money into this, you're going to try and you're going to fail at it. But as you say, well, okay, this software is where the value add in the industry is. And if you want to capture that value as a company, you need to be prepared to get in there and do it yourself and you need to be prepared to take these risks. I think why we're seeing this backtracking is because it's easy for incumbent industrial companies to revert and to backtrack. I mean, to a certain extent, they have internal pressure both from their shareholders, from governments, from suppliers to backtrack when the going gets tough. And it's comfortable to have these fallback positions. I think it's a very different situation if you're a relatively new company, or like BYD is, and like BYD in China, a company that actually grew out of the battery, the battery sector itself and not out of previous auto manufacturing. But it's easy for these companies to sort of take the principle, if I listen to consumers, what consumers want, and I've given them a faster horse. It's easy for them to do it. It's just a lot harder structurally, financially, organizationally and politically for these incumbent companies to do it. And this then raises a bigger issue for politicians and institutions in Europe, which is the issue of whether these incumbent companies, largely by themselves, can actually do this in the first place. Are they well placed to make this shift happen? Or are they just organizationally, financially, culturally, beholden to inertia in such a way that it's going to be very, very difficult? I think your software example is very, very fitting. It's also a cultural issue. If you look at Volkswagen, for example, Volkswagen is run by the Porsche clan. It's Kahn Chairman Oliver Blommer. It's part of the wider Porsche family. He was also, or was until recently, chief of Porsche as well. Previously it was fairly non-PA. He was not directly previously, but with some distance previously it was fairly non-PA. He famously said, "There is no space for electric cars and my garage." And the culture of this man-cred, he was sort of the godfather of the German. The car industry related to the Porsche, part of the Porsche clan engineer, brilliant engineer by the way. He was quite a successful manager of EW and that period, late 90s, 2000s. But like so many of them, they are mechanical engineers, very confident, arrogant, you might even say. And somebody developed another technology. And even, there were German engineers that developed other technologies. It's not only the Chinese that there were actually smart Germans who tried to actually get their company to adopt new technologies and they were completely brushed aside because the establishment, the mechanical engineers basically prevailed against them and their whole climate of these companies has been very much anti-software. So when Volkswagen suddenly discovered that they needed to do software, they started to call themselves a software company, which is quite ridiculous. You would not confuse VW with a software company when you just walk inside the Volkswagen headquarters. This is not a software company. These are people who wear ties. These are people who have security around the entrance. This is people who are basically caught off from their workforce. This is a very traditional hierarchical German company. And they are run, they were used to be run. What would have needed is quite rare that industries reinvent themselves. You see this, you know, the industry, I know quite well, it's the newspaper industry. The newspapers didn't invent the social media. You see it in the newspapers, they're all complaining about AI virtually every day, or cryptocrons, all these modern things. It's sort of something. And you can see it's a cultural thing. It's very difficult for an industry to move from one to the generation to the next. Very impossible. Codec did it briefly. They developed sensors after they did film. They developed sensors. But then they're not in the forefront anymore. They got blown away. IBM, they made the transition from the typewriter to the computer. But they are no longer in the top league. They're no longer one of the top companies. And it's quite rare indeed. And you know, I'm making just the observation and the car industry. The German car industry is not different from the French or the Italian one. They all, this is a clan. I mean, it's the Italian kind of story. I mean, the Ferrari family, the Fiat family. I mean, these are old families and who used to run these industries very much like the pH and portions of this world. And they're all pretty much they hang out in the same kind of social side. And this is not their world anymore. And I mean, I have to sort of see this. Now, when it comes to the software, and I think the bit that they all get wrong is that software doesn't work like hardware. Software is not proprietary. So while I completely agree with you that you have to try and you have to fail. And that's absolutely right. When it comes to like AI, you don't reinvent the wheel. This is what the French and the Germans are trying to do right now. They're trying to get their own models going, you know, having, you know, failed to do this in the past. Much easier to take what's in the market and and layer your own models on top of the existing models rather than try to recreate the entire infrastructure. But it's the thinking and this is also the engineering thinking. What they do is they get patents. And, you know, the Europeans are actually still the world champions and patents in many many of the sectors. But, you know, you and this is how often, you know, business consultants measure competitiveness is through them of patents. And the Germans were always relatively high up in the competitiveness ranking because of those patents. But software doesn't it's not patented. Many of the modern developments are not patented. And this is what I think where they where they where they go wrong. This is a completely different business model, requiring very different management and and it's no longer this proprietary technology on which the car industry has pretty much rested forever. You know, they invented this, they patented this. They had, you know, exclusive rights to produce and share of profits that when others imitated them. The software doesn't work like that anymore. I think it's going to be very difficult to change these existing cultures without without allowing some serious sort of creative destruction. We're talking about culture in the production side of the car industry. But I think there's also a culture in demand. And I think there the green politics actually plays into it because it's not only that the green politics is sort of helicopter in the imposed on on the public. I think there's also very much is in line as a culture of phenomenon that customers who are conscientious choose the electric option over the combustion car engine as long as they can rest assured that the network of the charging stations are enough for them to actually not have to worry about whether or not they're running out of battery. I think that was the early experience we had with our phones, right? In the early days of the smartphones, the batteries were running out quite quickly and that caused a lot of anxieties amongst the users and the better the technologies became the more it ease what customers to use and actually buy them. And that was the big shift in the consumers market. It's not only a question of price when you look at what car you want to buy. It is also a question of how familiar and the whole history, the whole stories about these cars, they still somehow linger in the background. If you grew up in the fears and your parents had fears and or or or or Ferrari or whatever, it's also a symbol of it's a cultural symbol of achievement and the past that is sort of lingering around quite a long time. Mercedes has a reputation worldwide, reputation of building accident cars even though some of their models of their modern models did actually not perform to the same standard but the reputation was still out there. So there's a reputation about European cars. I think that will linger on beyond the question of whether or not electric cars will will be the the wiser choice or the more greener choice or the more the conscientious choice and where the Chinese cars come in and become and become relevant. We also see this. The US consumers now turn back to the combustion car engine. Probably relieved that Donald Trump gave them the green light for this and not under under Joe Biden where they all sort of had to figure out how to like these electric cars. But although the guys with the pickup trucks and driving around in big pocket spaces and just driving around the vast landscapes in the US, for them there is not a natural choice to turn into a electric car and they probably also have sort of a persistent bias towards these old pickup trucks because it's it's part of who their identity was built on. This guy who just goes into this pickup truck to to to to get stuff and build a DIY at home or on his range or something like that. There's a little bit of a dream scenario in there what what the the consumer wants to be in not in cities but outside and then in the rural areas. And I think the same goes for Europeans. So what Europeans are well how they are how they drive because they drive have also stories with it. A BMW driver is a completely different type of driver than the the Mercedes driver. There are lots of stories about it and there's no such story about the Chinese cars so the identities have yet to build to be built. Who who is the person who is buying a BYU car. It's like it's like when you're on the on the streets it was a reflection of a society the ways that people drive the the way the cars they choose. It was many cosmos of what the society was about and I think this is something that will continue to be that way as long as mobility plays the role as it does. And even if you have Chinese competition coming up and even if the US and the European choose different preferences. Yeah I remember the smell of metal and oil. Is it something that no Chinese car can emulate. I always think of Chinese cars as cars for people who don't like cars. And there are a lot of people this is the thing. It's not a dumb it's not even an insult. There's a lot of people are changing as well. The cultures are changing. I mean you we spent time in Germany and we see it's different from the UK. The young generation in the UK there are lots of young people who as they turn 18, 19 don't even think of getting themselves a driver's license. In Germany that's not the case usually. In Germany everybody you know my certainly our generation it was the normal thing to have your driver's lighting ready ready for your 18th birthday. That is not the case anymore and certainly not the case in the UK but there are rural areas where that is the case in obviously America's rural areas. Maybe the 2035 thing was a bit too inflexible. There are differences. When you are in the rural area and I think it's different for agriculture when you need the trucks. The pickup truck became a bit of a thing. I mean people always had trucks before this agricultural people had rather unromantic cars like trucks and tractors and the stuff and I think they would have continued with diesel. The difference today is that you see pickup trucks in big cities which make no sense at all. I think the consumer will shift. I think this will shift in Germany too when you see the decline. I mean I recently reported Mercedes being the leader in the luxury car market and this is how it worked for that company. They were by far the biggest market leader in the upper, the super upper royalty CO type segment of the market and this car that they produced falling in sales to below the level of BMW which has never happened before. BMW was also strong in that segment but Mercedes was the unrivaled market leader there. They sold twice as much as everyone else and that's no longer the case and you see there are shifts and culture shifts and tastes. They have modern software companies. Their CEOs wouldn't have cars in front of the company. It wouldn't have the same, it was a sort of thing that in an industrial company in Germany even if you're not in the car industry. The CEOs would have, the board members would have the upper class of the Mercedes range and then the next level the department heads would have the next class. It was a real class society that was reflected in the cars. Modern companies don't work like that anymore and I think that's sort of the tragedy of the industry there. The culture is changing. Yeah I mean I think with reference to Europe we're looking fundamentally you're looking at a place where even though there are certainly going to be people who need cars with very long ranges or high performance or so on even further into the future. The vast majority of Europeans live in or near an urban area and they use their cars if they do use them daily in the first place for relatively short commutes or running errands that easily and comfortably fall within an electric cars range. Most Europeans would, if at all, only take a car journey that would exceed a modern electric cars range a few times a year. As well I think really across Europe the trend of people just not driving at all or driving later into their lives is very real. One very small part of the French budget that was just passed that was not very much discussed outside of the country but was very heavily discussed inside of France was phasing out the use of employment learning credits to fund lessons to get your driving license. So this was basically not reported at all anywhere outside of France but was heavily heavily reported. Probably one of the single most reported aspects of this budget in France itself. Now to give you an idea of this, so the way that this works right is that over the years of your working life each year based on what you're earning you put a certain amount of contributions in along with your employer to a learning account and what you can do eventually is you can redeem these credits against various different types of professional learnings if you wanted to learn programming, if you wanted to do a language course so on and so forth. You might have to pay a bit in regardless of how much you put in but you can use this against it and as a cost-cutting measure what the French government basically did was they largely got rid of this for lessons and programs that were supposed to go towards obtaining your driver's license. Now something like close to a quarter of all credit CPF so for you know like learning credit expenditures in the system were for driving lessons intended to get a full license. What this tells you is that there's quite a substantial number of people in France who did not get their licenses as early as they could and left it to the point in which after you know after they entered the workforce and you know in many cases several years after they entered the workforce. It's not uncommon to find people my age in France in their early 30s who don't have a driving license and don't need a car. Of course this gets rare rare as you get outside of Paris in the big cities but you know I think increasingly this is this is becoming the case. It's a matter not not just of people with people's abilities but also just of cost. The upfront cost of driving lessons, the upfront cost of owning a car, the ongoing cost of maintenance and so on and so forth. So it's a really big shift that's taking place and because it's taking place relatively slowly and because we're an increasingly old continent where society and cultural views are increasingly informed by old people it sort of masks this a little bit but this is happening. Also as to the point about as to the point about people's cultural attachments to their home car brands I think in Europe this is very real in the sense that if you're if you're like you know driving around in France you know and see your Chambéry you'll see plenty of Renaes. You go to the other side of the Alps in Churren and you're in Fiatville. It's a very market shift when you're actually in these places but I think there's a relatively simple solution to this which I think is the way that the industry is heading in Europe anyways which is basically joint ventures with these Chinese companies. So you'll still have something that goes to consumers as a branded Renault or a branded Fiat but it's going to contain a pretty large amount of Chinese stuff like you know Chinese batteries Chinese software so on and so forth. Then you have a situation where okay well maybe the big car companies can survive albeit a much reduced form by doing this but then what happens to the entire network what happens to all of the different suppliers especially given that electric cars are far less mechanically complicated than a combustion one. What happens to the value add you know that these European companies have versus the Chinese ones? That's not just a matter of you know the proprietary technology that's simply a matter of a software fair. The experience that we have with household devices as well like vacuum cleaners we used to go to a repair shop and then they would repair the vacuum cleaner no matter which which brand it was because they just have the knowledge to do so because it was mechanical. Nowadays it's a completely different experience they have to send it in to somewhere where this particular or they have to ask for a spare part because it's just so specific to it's like all compartmentalized and it's they no longer can repair these things as they used to do and I think the same happens with the cars and especially if you go to an electric cars even more so than the mechanical cars where things are so specific to the brand that you can make a service and I think when we talk about services it's also where the consumer's confidence comes in. I mean if I if I can trust that I can get the spare parts or the maintenance stuff done in my local garage then of course I feel more reassured as if I buy a brand that has not a strong footing in my ecosystem where I would be one of the first pioneers to buy this car in my in my friends groups or in my neighborhood and where my garage has never heard of it and doesn't know how to access and how to actually sample any spare parts at all. So I think there it's not only a question of charging stations if you make that transition towards the newer cars it's also a question of familiarity how familiar are these brands and how does it match with the skill set of the services that they actually come that are more important once the vehicles will get older. I think one difference as we go forward will be that the electric car will blur the clear distinction between public transport taxis and private transport because people might just you know it will become naturally cheaper with electric cars to hire taxis could use your own electric car if you have one to and let it let it basically self-drive and offer a taxi service so people could you know use the friction that we that we generate by parking our cars in front of our house or in a garage can be significantly reduced if these cars were able to pick up people for a significantly reduced cost especially when there's no when there are no drivers needed for this. So this is like this is going to be a different product where I think we have to see this I think the branded product and I think you know I think yes we in the immediate future we will still talk about yeah the run over the Chinese engine I see the same it's still a car made in Europe but this will that comes a point when when it is a different product and I think once you talk about taxis you know branding doesn't matter as much less for taxes for example you know look in London or in the United States the taxi have brands they're on brands it's a different brand from car brands and nobody you know in different in Germany maybe but nobody in London would say oh I want to I want to Mercedes taxi or I want to I want a Tesla taxi it's just that whatever the brand is they they use and these these taxes will probably be much more suited to the traffic suited to the the environment then the car is the car has a difference it's built for a different purpose than the taxi so I think this is probably what we are underestimating that we still think of cars as cars and that we still think of car companies as car companies but you know they what you see in China is that a lot of the companies Jack mentioned this they're not car companies they're there's those are the mobile phone makers the battery makers they come they come from a different you know ecosystem and I think this is this is the bigger the bigger challenge that this is you know a different a different product and a different industry but we take a taxi that's a very different thing because it's just a one off but if you invest in the car it's it's it's your car and it has parts on aspects of identity I think one of those things I mentioned before it's it's really about whether you are conscientious consumer or not this is one of the big things right I mean I remember there was this film with Russell Crowe where you wanted to get his wife out of prison and to do so he he wanted to rob robbers so he went in there and rob but then when the police tried to figure out who killed these robbers the drag traffickers the thing that put the inspector on his track was the fact that the car that was used there was a Toyota Prius and so what gangster would drive Toyota Prius that did make sense and and I think as long as we have the mindset that there's a conscientious consumer who would prefer a green and environment and do the good things and the ones like the gangsters or the ones who actually don't care you have a social shift between these two that will not so easily be blended even if you have taxis that actually offer a different way of looking at things or even if the products are assembled in a different ways it still is about stereotype or it's not stereotypes but about the type of markets you create and identities that are touched with it. I think as well I'm getting on to the taxi thing I think what's very noticeable here if you take taxis a fair bit in Europe is that first of all they're shifting over to electric much more quickly than the regular consumer is doing so. Secondly lots of these brands that many consumers wouldn't even touch are increasingly common there like in France I don't think I know anybody who has like a BYD car but it's happened multiple times that I've gotten an attack and it's been a BYD people don't care as much about that and already you can start to see that this is increasingly becoming the way that things go and whilst people are still making investments and buying the car you have to wonder okay as the self-driving technology comes along more and the cost of these taxis as the cost really really crashes will people still be wanting to do this because of course even if it's an electric car buying one represents a really significant financial commitment and certainly you know just taking a rubber taxi instead in the future whether it's possible is much more flexible and for many people who don't need to be making these journeys that often probably significantly cheaper that I think is the way that the world is increasingly going and the question for politicians and really for society in Europe is can we carve out a place in this world with the existing corporate structures with the existing institutional structures that we have increasingly I think that the answer is is no that you need to try and do something different that's exactly what China did it is tried to do something different that's where it's gotten to similarly with AI technology the US has structures that allow these new companies to come into place much more easily to gain the capital that they need and the result of that is that you have a lot of resources flowing into this these companies can afford to burn cash until they have products that businesses and consumers will actually want to use it's a huge thing and we have to think about whether we're prepared to do this and I think what I notice in the political spectrum is that there's there's there's almost nobody I mean Matt Macron was the last example and even he was a very mild example of this there's almost nobody who's who's going to say to people well look this is going to be disruptive and initially a lot of you aren't going to like it but this is really the way that it's going to have to go you don't see anybody who's really prepared to say that instead the message is always well things have to change but really the things that have to change are somebody else's problem and not your problem that's the case both for mainstream politicians and the populists that you see popping up in Europe that they say okay well your job is going to be totally fine the company that you work for is totally going to be totally fine it's it's somebody else somewhere else and they're going to have to deal with this and not you increasingly we'll have to say well I think quite frequently about Tomassi de la Padoosa's book The Lepard where it takes place in the middle of the research he meant to in Italy and at one point one of the characters a young man who's aligned himself with with Giuseppe Gennabaldi says to his uncle well if we want things to stay the same and things are going to have to change and I think that's increasingly the message that politicians should be trying to drive through but pretty much nobody has the political courage to do so I think this is a good comment to end our podcast on indeed for things to stay the same things have to change we've talked about the car industry it's probably our first podcast where we only talked about the car industry but it's not just the issues we talked about are not confined to this industry so we will back with more thank you for listening until next week