Every industry has its share of pros and cons. While we all know how tough the automobile industry is, we don’t give much thought to how auto manufacturers survive in business. Fierce competition, raw material unavailability, budget constraints and host of other factors, make it difficult for automakers the world over, to do business. Sharing a snippet from James Dysons’ book on how his company failed in its attempt at making electric cars, Tesla CEO tweeted his opinion “Car production is hard. Production with positive cash flow is extremely hard”. Our very own Anand Mahindra also acknowledged this tweet and replied in the affirmative, adding that they have been doing so for decades and it is now a way of life for them. This tweet gained 3800 plus likes and a plethora of comments.
— anand mahindra (@anandmahindra) September 7, 2021
In a follow-up to his own tweet, Elon Musk expressed his opinion on how carmakers function. Reigning carmakers sell their products at low or zero true margin, and most of their profits come by selling replacement parts, out of which 70%-80% are past their warranty stage. According to him new car manufacturers lack the infrastructure needed to carry out sales and services. Also, it is difficult to manage on zero true or low profit margins for them.
The two auto giants may disagree on a variety of subjects and have different opinions, but this is one thing that has them on the same page -agreeing that car production is hard. Though a reply from Elon Musk is awaited, a lot of people had interesting responses to this. Many took to the platform and expressed new vehicle ideas. Others demanded more models from both the companies.