Sandy Munro’s dire warning

[Stray Kat]

I suggest you take a look at this if you can make some time. 
 

Love to hear your thoughts afterwards. 

[silvrsvt]

IMO The one issue I see is that they are blending EV and HEV sales together. 

 

I think that it will take at least another 5-7 years for the general public to actually completely embrace getting an EV and the associated infrastructure to be there to support it, even though the way you live with it is different then an ICE car.

 

Tesla's biggest issues are this:

• Trouble launching new products
• Keeping current products updated, esp. when the competition is launching similar products and if legacy makers keep the 5 year MCE cycle. 

Toyota is late to the EV game and GM seems to be making promises without coming out with product and they to me seem to be hurting in the HEV market-Ford seems to be able to add HEVs to its current lineup without much trouble and I'm expecting them to offer a HEV in every product by 2026.

[Footballfan]

40 minutes ago, Stray Kat said:

I suggest you take a look at this if you can make some time. 
 

Love to hear your thoughts afterwards. 

There are drawbacks for doing deals with the devil.  In the 50s and 60s the worst thing you could be labeled was a communist- it was kind of like being labeled a child predator today.  It was one thing for an American company to enter the Chinese market to make a buck.  Now, in the name of greed, the OEM's supply and production chain is so intertwined with China that it will take years to decouple them.  Now we have companies like gm that sent import Chinese crap like the Buick Envision to the US while they have excess capacity here.  

[kyle]

Was waiting to see this pop up in conversation after watching it a few days ago.

 

My take is he has a lot of valid points and should be respected. Not sure who is going to be around in 10-15 years from now, but there will be casualties. I think the big 3 will make the transition since consumers still need trucks and this will power their profits for years to come.  I would think Mazda and Mitsubishi have to be the most vunerable. Don't know the European market well at all and can't comment on those brands, but VW, Daimler and BMW are not going anywhere. 

 

Tesla is defying so many things it is crazy and their valuation is off the charts and allows them to have access to so much cash it is insane. Would not bet against them anymore, like I would of 3 years or so ago, but think their biggest challenge is Elon Musk is the company and if anything happened to him, what would that company look and act like? 

[jpd80]

1 hour ago, Footballfan said:

There are drawbacks for doing deals with the devil.  In the 50s and 60s the worst thing you could be labeled was a communist- it was kind of like being labeled a child predator today.  It was one thing for an American company to enter the Chinese market to make a buck.  Now, in the name of greed, the OEM's supply and production chain is so intertwined with China that it will take years to decouple them.  Now we have companies like gm that sent import Chinese crap like the Buick Envision to the US while they have excess capacity here.  

It’s much deeper than that. The west has literally trained up China’s automotive engineering and development over the past twenty years, they’ve given them everything they need to know but the cleverest part was China channeling resources into new era BEVs. Now they control the bulk of parts supply chains as well as the bulk of battery development and production facilities, all the pieces are in place….

 

 Detroit never saw Japan coming in the 1970s, they basically sleep walked their way into handing over a huge section of the market because it was not a major profit earner for them. The similarities now are spooky, Tesla’s compact car and utility command prices that were just not possible with ICE based vehicles unless they were more premium brands with commensurately lower sales targets.

 

It’s like that eerie period before a storm hits, that serene period where everything seems normal but it’s not. So now we play the waiting game wondering if GM and Ford will miss the moment and be gazumped by a whole bunch of newcomers that were never on their radars. I think that’s the crux of Sandy’s video, we’ve seen this movie before and still Detroit hasn’t learned it’s lesson.

Edited November 26, 2021 by jpd80

[rperez817]

Thank you for sharing this video Stray Kat sir. Munro has always been one of the most brilliant minds in the automotive industry, and his checkers vs. chess analogies in the video is a great way to explain the current and future state of that industry to laypeople.

 

Explanation of Altman Z-Score. Munro mentioned this at 5:21 and 21:45 in the video. Altman Z Score - Z TABLE

 

Scores for Big 3 U.S. automakers as of November 2021.

• General Motors, 1.32
• Ford, 1.10
• Tesla, 23.18

Scores for Big 3 European automakers.

• Volkswagen, 1.22
• Daimler, 1.54
• Stellantis, 1.20

Scores for Big 3 Japanese automakers.

• Toyota, 1.81
• Honda, 1.81
• Nissan, 1.38

 

 

Edited November 26, 2021 by rperez817

[FordBuyer]

2 hours ago, kyle said:

Was waiting to see this pop up in conversation after watching it a few days ago.

 

My take is he has a lot of valid points and should be respected. Not sure who is going to be around in 10-15 years from now, but there will be casualties. I think the big 3 will make the transition since consumers still need trucks and this will power their profits for years to come.  I would think Mazda and Mitsubishi have to be the most vunerable. Don't know the European market well at all and can't comment on those brands, but VW, Daimler and BMW are not going anywhere. 

 

Tesla is defying so many things it is crazy and their valuation is off the charts and allows them to have access to so much cash it is insane. Would not bet against them anymore, like I would of 3 years or so ago, but think their biggest challenge is Elon Musk is the company and if anything happened to him, what would that company look and act like? 

 

Review out today from CNET on the Model Y calling it unsafe to buy and drive. Phantom braking is the culprit when cruise control is engaged. Also lane keeping assist is unsafe. Other problems were water intrusion in a car wash and seats showing wear after 3 months. All this for $70,000. Phantom braking at 70 mph would scare the bejabbers out of me. Also will not be trailing behind any Tesla in the future on freeway. 

[Stray Kat]

35 minutes ago, FordBuyer said:

 

Review out today from CNET on the Model Y calling it unsafe to buy and drive. Phantom braking is the culprit when cruise control is engaged. Also lane keeping assist is unsafe. Other problems were water intrusion in a car wash and seats showing wear after 3 months. All this for $70,000. Phantom braking at 70 mph would scare the bejabbers out of me. Also will not be trailing behind any Tesla in the future on freeway. 
 

Remember if you’re blazing the trail you’re the first to suffer the slings and arrows.

The exact same thing has happened to Ford when developing things like mass market aluminum bodies or twin turbo V6’s replacing V8’s  

 

Tesla will get this right eventually. Make no mistake there are forces in the industry and the media lined against Tesla because they are a disrupter. Remember the Tucker?

[rperez817]

13 minutes ago, Stray Kat said:

Tesla will get this right eventually. Make no mistake there are forces in the industry and the media lined against Tesla because they are a disrupter. 

 

Yes sir Stray Kat. You are correct that negative media attention for Tesla has been and continues to be at a level far beyond that for incumbent automakers with similar safety and quality issues. Though much of it is Tesla's fault. Sadly, Tesla has adopted bad habits from the traditional American auto industry regarding quality (or lack thereof), and Tesla really shot itself in the foot with how it has promoted Full Self Driving to customers.

 

But I agree with you, Tesla will get this right eventually. Their continued expansion in China and Europe depends on it. 

[FordBuyer]

48 minutes ago, Stray Kat said:

 

Tesla will get this right eventually. Make no mistake there are forces in the industry and the media lined against Tesla because they are a disrupter. Remember the Tucker?

 

So are there other.makes that go into all out emergency braking mode at freeway speed when there is nothing in front of them? My Escape has all the 360 assist features and has never done this. Only time was wife drove into garage too fast and emergency braking came on before she touched wall. Saved the house. 

 

Ironic that Tesla being big shot technology company can't get this right and safe. Seems to me Musk is hell bent on pushing production at the expense of safety. He needs to slow it down and work on quality control. He has these production numbers he pushes his plants to achieve and raises prices practically every week. Meanwhile, you get this stark, minimalist interior and unsafe cruise control. 

[rperez817]

21 minutes ago, FordBuyer said:

Seems to me Musk is hell bent on pushing production at the expense of safety. He needs to slow it down and work on quality control.

 

Elon Musk may be forced to do that sooner rather than later if IG Metall trade union is successful in setting up a works council at Tesla's Gigafactory 4 in Grünheide, Germany. Election committee selection for the works council could happen as soon as next Monday, November 29. IG Metall @ Tesla (igm-tesla.de)

[Gurgeh]

1 hour ago, FordBuyer said:

 

So are there other.makes that go into all out emergency braking mode at freeway speed when there is nothing in front of them? My Escape has all the 360 assist features and has never done this. Only time was wife drove into garage too fast and emergency braking came on before she touched wall. Saved the house. 

 

Ironic that Tesla being big shot technology company can't get this right and safe. Seems to me Musk is hell bent on pushing production at the expense of safety. He needs to slow it down and work on quality control. He has these production numbers he pushes his plants to achieve and raises prices practically every week. Meanwhile, you get this stark, minimalist interior and unsafe cruise control. 

 

I've only heard one other make with this problem, but it is very specific. There's some talk on the Mercedes boards about emergency breaking kicking in on the highway if: 1) you have speed limit sign reading engaged, 2) you have adaptive cruse control going while engaging a feature that automatically keeps you at the speed limit, and 3) you pass an offramp with the slower off-ramp speed sign posted too close to the highway and the vehicle reads it. So then, the car slams on the breaks from, say, 65mph to try to get it down to the offramp's posted 35mph limit.

[mackinaw]

3 hours ago, Stray Kat said:

Tesla will get this right eventually. Make no mistake there are forces in the industry and the media lined against Tesla because they are a disrupter. Remember the Tucker?

 

Tucker is a poor example.  Forget the Francis Ford Coppola movie.  Tucker failed because:

 

"Rather, the collapse of the Tucker Corporation can be attributed to two problems. First, lack of financial planning and refusal to utilize conventional loans scared away venture capital. Second, the S.E.C.'s determination that preselling car features was illegal left the Tucker Corporation financially bankrupt."

 

https://openprairie.sdstate.edu/econ_pubs/3/

[akirby]

Quote

Professor Altman himself noted that recent data has shown that zero—not 1.8—is the figure at which investors should worry about a company's financial strength.

 

[Trader 10]

7 hours ago, silvrsvt said:

Toyota is late to the EV game and GM seems to be making promises without coming out with product and they to me seem to be hurting in the HEV market-Ford seems to be able to add HEVs to its current lineup without much trouble and I'm expecting them to offer a HEV in every product by 2026.

Ford is able to add HEV’s to its current lineup, they just can’t make enough for anyone to be able to find one. 

[jpd80]

7 hours ago, rperez817 said:

Thank you for sharing this video Stray Kat sir. Munro has always been one of the most brilliant minds in the automotive industry, and his checkers vs. chess analogies in the video is a great way to explain the current and future state of that industry to laypeople.

 

Explanation of Altman Z-Score. Munro mentioned this at 5:21 and 21:45 in the video. Altman Z Score - Z TABLE

 

Scores for Big 3 U.S. automakers as of November 2021.

• General Motors, 1.32
• Ford, 1.10
• Tesla, 23.18

Scores for Big 3 European automakers.

• Volkswagen, 1.22
• Daimler, 1.54
• Stellantis, 1.20

Scores for Big 3 Japanese automakers.

• Toyota, 1.81
• Honda, 1.81
• Nissan, 1.38

 

 

One thing that strikes me as odd with the Altman Z Score is that it treats all automotive debt as the same.

 

In Ford’s case, it’s different in that the majority of its debt is held by Ford Credit as customer financing that

earns Ford a tidy sum each quarter. 
 

 

[akirby]

1 hour ago, jpd80 said:

One thing that strikes me as odd with the Altman Z Score is that it treats all automotive debt as the same.

 

In Ford’s case, it’s different in that the majority of its debt is held by Ford Credit as customer financing that

earns Ford a tidy sum each quarter. 
 

 

It also doesn’t  take into account brand loyalty and future investments,  Rivian and Tesla and Lucid have a huge investment in sales and service where the legacy mfrs only have a small investment.   Look at F150 lightning vs Rivian vs Cybertruck.

[sullynd]

3 hours ago, Trader 10 said:

Ford is able to add HEV’s to its current lineup, they just can’t make enough for anyone to be able to find one. 

Huh. (Checks driveway.) Found it!

[Flying68]

My thoughts. 

1. Munro is approaching crazy old man territory when it comes to Tesla. I didn't watch this video but I did watch one where he went off on NHSTA for dating to look into the safety (or lack there of) of autopilot and FSD. He is blinded by the gee whizz factor and seems to have lost his sound engineering judgement and ethics which would dictate that you don't release beta software into the public which when it fails can cause death.

2. Tesla's Z score is entirely driven by their insane market capitalization driven entirely by zealots without regard to actual fundamentals. 

[rperez817]

14 hours ago, akirby said:

It also doesn’t  take into account brand loyalty and future investments,  Rivian and Tesla and Lucid have a huge investment in sales and service where the legacy mfrs only have a small investment. 

 

Then the legacy automakers are in an even more precarious position in terms of financial stability than their Altman Z scores indicate.

[mustang84isu]

Feels like a desperation video.  I think Sandy is losing OEM customers, so now he has basically hitched his wagon to the Tesla YouTube crowd to stay relevant.  The guy's credibility has really taken a tumble the last several months.

[fuzzymoomoo]

37 minutes ago, rperez817 said:

 

Then the legacy automakers are in an even more precarious position in terms of financial stability than their Altman Z scores indicate.

Bullshit. If that was really the case being shut down due to covid for 3 months last year would have bankrupted at least one of them. Instead profits not only continued but actually grew as we came out of it. 

[mackinaw]

52 minutes ago, mustang84isu said:

Feels like a desperation video.  I think Sandy is losing OEM customers, so now he has basically hitched his wagon to the Tesla YouTube crowd to stay relevant.  The guy's credibility has really taken a tumble the last several months.

 

Munro does like the sound of his own voice.  He also declared the BMW I-3 "the most significant car since the Motel T."  Can't buy it in the U.S. anymore, it's been discontinued.  

[mustang84isu]

3 hours ago, mackinaw said:

 

Munro does like the sound of his own voice.  He also declared the BMW I-3 "the most significant car since the Motel T."  Can't buy it in the U.S. anymore, it's been discontinued.  

 

He also made the major mistake of lumping Ford Credit debt in with automotive debt.  A portion of his video is him railing on how stupid people with MBA's are, yet he makes this classic noob mistake that invalidates half of his arguments.

 

People like Sandy are so gaga over Tesla's stock price ("you're stupid if you don't buy it"), but they don't understand basic fundamentals of how a company is valued.  Sandy pumping Tesla shares near all time highs will lead his sheep to slaughter next year when we have one or more interest rate hikes that will pummel overvalued tech and EV stocks.

Edited November 27, 2021 by mustang84isu

[jpd80]

7 hours ago, mackinaw said:

 

Munro does like the sound of his own voice.  He also declared the BMW I-3 "the most significant car since the Motel T."  Can't buy it in the U.S. anymore, it's been discontinued.  

He also admitted that all work now being done by his company is for electric auto companies,

that kinda implies that the traditional automakers are not requiring his services, is he projecting anger?