By on October 13, 2015

Uber At Igby's In Cincy Circa April 2014

John Martin, Nissan North America’s senior vice president of manufacturing and supply chain management, had some harsh words for Tesla on Friday. According to him, Uber — not Tesla — is the real disruptor, and what Tesla is doing now is relatively easy, Automotive News reported.

“Lot’s of people are calling Tesla a disrupter. They are not,” he said while arguing that building a performance vehicle that’s priced over $100,000 is much easier than manufacturing an electric car for under $30,000.

And what about Apple and Google? Martin doesn’t foresee either of them getting into the auto manufacturing business anytime soon.

The reason: The profit margin in building cars is too low to interest the technology giants. While cars typically return 10-percent margins, those companies are used to 30 to 40-percent margins from their products.

But, Martin really drove home his view on Tesla.

“People ask me: ‘When are you going to compete with Tesla?’ And I ask them, ‘When is Tesla going to compete against me?’”

As for Uber, Martin sees them as a bigger threat as they are a service provider with significantly lower costs than a manufacturer. Uber is mixing it up in the taxi space and pushing the taxi industry as a whole to evolve.

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47 Comments on “Nissan Exec: Uber, Not Tesla, a Bigger Threat...”


  • avatar
    qfrog

    This from an executive at Nissan, you know the NYC taxi supplier… is interesting.

  • avatar
    Felix Hoenikker

    What about the Tesla battery gigafactory? Isn’t this supposed to dramatically lower Li battery prices and make EVs mainstream? IMHO, the leaf is still priced at least $5K too high to compete effectively with the Civic, Corolla, Cruze etc.
    Until the price of the battery pack drops another 50%, EVs will remain niche vehicles.

  • avatar
    Pch101

    Tesla demonstrates that if you put a really big battery into an EV that you get more range and higher losses. Everybody already knew that, which is why other automakers have avoided that approach.

    He’s probably overly concerned about Uber. Most Millennials will end up leading lives in the ‘burbs once they have kids, which means having the ubiquitous pair of cars.

    There is a trend toward New Urbanism that is probably here to stay, but it includes only a subsection of the population. And it probably won’t appeal to most of those with kids, leaving it to the younger crowd and the older DINKs.

    • 0 avatar
      VoGo

      I think that where Uber scares automakers is the combination of an Uber type service with autonomous cars. Regardless of who manufactures the cars, Uber would own the customer relationship, which would give them the catbird seat in the industry.

      • 0 avatar
        Pch101

        I suspect that the concern is that Americans will reduce their driving.

        That poses two problems. The obvious issue is that cars don’t need to be replaced as often if they are driven less. The less obvious point is that brand loyalty tends to wane as ownership periods increase. That leaves the automakers with fewer purchases and higher defection rates (which increase marketing costs, which reduce profit) simultaneously.

        • 0 avatar
          VoGo

          Exactly.
          If Uber can take care of my commuting and shuttling the kids to sports practice, then I only need a car for pleasure and/or spur-of-the-moment errands. So my family can go down from 3 cars currently to 1. And the Uber cars can service multiple people, and I really don’t care what brand they are, because I am working while in the car.

          • 0 avatar
            heavy handle

            There’s no way Uber can take over most commuting duties without autonomous cars. They would need too many drivers, and they would need to pay them fast-food wages.

            The thing about fast-food jobs is that they are entry-level, low-skill, short-term and flexible. Uber drivers need to finance a car, and they can only work for one employer. That’s a limited pool of potential employees; not enough to drive everybody’s kids to school every morning.

      • 0 avatar

        I don’t think Nissan or any other OEM cares who they sell cars to. You and me or Mr and Mrs Uber driver.

        What they are really scared of is lower demand since many millennials will not own a car. Fewer cars sold = big problems for the car industry.

    • 0 avatar
      PandaBear

      That depends on where you look. In the US, yes people move to the burb after they have kids. However Europe, Asia people tends to live in the urban area and if Uber can reduce semi-public transport cost from the current taxi price to say double of bus or metro, then no one would need a car anymore.

  • avatar
    CoreyDL

    He’s right. Tesla has managed to gain a standard bearer image on electric cars, while at the same time being a niche, bit player.

    Mr. Musk is just brilliant at PR.

  • avatar
    Richard Chen

    Don’t forget that Uber recently hired away a good chunk of Carnegie Mellon University’s robotics lab, which previously won DARPA challenges with their autonomous vehicles.

    http://www.nytimes.com/2015/09/13/magazine/uber-would-like-to-buy-your-robotics-department.html

    • 0 avatar
      Toad

      IMHO Uber has a narrow window of time before autonomous cars supplant much of the need for Uber, or at least allow Uber to be duplicated easily by other vendors. When you eliminate (or substantially reduce) the need for a driver the barriers to entry for specialty car service apps is not that high.

      With autonomous vehicles the drunk/disabled/distracted can have their own car that more or less drives them around. Those without cars can use a car hailing service that will come to them.

      • 0 avatar
        VoGo

        Uber is at the forefront of autonomous car research, and will own the customer interface. Once you own the customer, it’s game over.

        • 0 avatar

          Uber’s motivation for autonomous driving is to eliminate the Uber Driver. Human drivers are a liability and somewhat unreliable; *and* to top it off they want to be paid!

          Uber want to develop their own autonomous system that interfaces with their ride matching platform and they no longer need to share revenue with drivers, its all theirs.

          Uber already own the customer. It’s the bloody drivers that are keeping their costs up and growth down.

  • avatar
    slance66

    I don’t see how Tesla is a threat. Does anyone think they can make better electric cars than BMW or others once they put their mind to it (as BMW is doing)? No chance. The threat from Tesla is around direct sales, not the car…that’s real.

    Uber is interesting, and could be legislated out of existence tomorrow. But as with expensive technology equipment, the trend is toward consumption “as a service”. Right now, Uber fills only a tiny slice of the need for cars. I think they have big challenges to change that.

  • avatar
    probert

    While uber and zip and the like are certainly competitors to car ownership paradigms, he misses the entire point of Tesla’s significance. Simply put, no-one would be talking abut electric cars if it wasn’t for Tesla.

    I’d also suggest that a few short years ago the thought of happily paying over $100,000 for an electric car would have been unimaginable.

  • avatar
    SCE to AUX

    Q: “When is Tesla going to compete against me?”

    A1: Now, because Tesla’s $75-140k cars are outselling your $35k Leafs.

    A2: 2018, and I might be first in line for a Model 3. (Former Leaf driver).

    • 0 avatar
      Quentin

      I suspect that by the time Tesla gets around to releasing the III, it will be a lot like a similar vintage Leaf with a prettier face.

      • 0 avatar
        mcs

        >> I suspect that by the time Tesla gets around to releasing the III, it will be a lot like a similar vintage Leaf with a prettier face.

        Yes, but Nissan doesn’t have the charging network that Tesla has.

    • 0 avatar
      jkross22

      Those 35k Leafs aren’t 35k. 35k – 7.5k Fed incentive – state incentives – Nissan incentives. The fully loaded Leafs are really 25k or so.

      You believe a 25k Leaf is being cross shopped with a $65k Tesla? Oh my.

  • avatar
    Lou_BC

    SCE to AUX – your comment does illustrate the failure of EV’s to penetrate the car market in any significant volumes. People who want to save the world and buy 35k Leaf EV’s most likely can afford the 75-140k Tesla. If I’m in the market for a compact/subcompact commuter urban runabout I’d rather get a Micra for 10k or Versa for 14k. The majority or buyers are going to be very price sensitive.

    • 0 avatar
      mcs

      >> People who want to save the world

      That’s not the only reason people buy EVs. Sure, the Micra and Versa are cheaper, but you’re getting a much crappier drive-train. However, I do realize you live in an area that’s not exactly EV friendly, so I understand your position.

      • 0 avatar
        Lou_BC

        mcs – I was passing through Mission this weekend on my way to Maple Ridge BC and spotted my first Leaf sitting in a driveway plugged in.

        I’ve seen a couple of Tesla’s in my bi-annual visits to the GVRD.

        Most Prius’s/Prii I’ve seen are taxi’s. In my hometown Prius also has become the default taxi unit.

        A Leaf would be okay in my hometown but nothing else. The closest town to mine is 100 km away. The next closest is 135 km.
        What would it’s range be in -35C with the heater on full blast?
        I’ve noticed one EV charging station if front of our “Public Health” facility but that’s it.

        • 0 avatar
          SCE to AUX

          On my former ’12 Leaf with the resistive heater, range at -23C was about 60 km, during its third winter in the Pittsburgh area.

          Newer versions with the heat pump do better, and most people only discuss brand new batteries. Mine was degraded about 13% by then.

          • 0 avatar
            Lou_BC

            SCE to AUX – thanks for the input. Always nice to have first hand information.

            EV’s as they currently stand are great for shorter commute high urban density regions with more temperate climates.

  • avatar
    APaGttH

    Completely agree, Tesla is not a disruptive innovator, it is an evolutionary innovator.

    …An innovation that improves a product in an existing market in ways that customers are expecting…

    Automobiles already exist. Electric powered cars have existed for more than a century. Modern production electric cars were built a few times since the 70s – the failed EV-1 the most current example (just because it failed, doesn’t mean it doesn’t count on the historical timeline). Tesla is not creating a new market for automobiles – they’ve improved upon it.

    Uber on the other hand is a disruptive innovation. Uber has created a new market in on-demand transportation (along with Lyft) that could overtake the existing markets (traditional taxi and livery business model) and make it obsolete.

    One could argue that the horseless carriage was an evolutionary innovation. The development of mass production of the automobile, instead of hand built coaches, was the disruptive innovation that enabled putting an automobile in every garage, ending the horse drawn era.

    • 0 avatar
      Lou_BC

      Taxi operators require a commercial driver’s licence and cars require insurance for commercial use. Has anyone challenged Uber on this or the legality of unlicensed drivers and uninsured (for taxi service) vehicles?

    • 0 avatar
      SCE to AUX

      I think you minimize Tesla’ disruptiveness.

      In 2003 (the year of Tesla’s founding), people weren’t expecting an electric performance sedan with 250-mile range to appear from an unknown American automaker. It was anything but inevitable.

      You make the Model S sound like someone just threw some batteries, motors, and wheels together, and out came a car – a car that Porsche, Audi, BMW, GM, and others are trying to emulate. That sounds fairly disruptive to me.

      • 0 avatar
        heavy handle

        People are saying the same things about Tesla that they were saying about Amazon 15 years ago: “they’ve never made a profit,” “anybody could do it,” “wait till the big players release their own version, they will blow Amazon/Tesla out of the market.”

      • 0 avatar
        APaGttH

        You’re not understanding the differences between:

        Evolutionary innovation
        Revolutionary innovation
        Disruptive innovation

        Building an electric car is not “disruptive.” It is a car. It has an “engine” (albeit electric), it requires “fuel” (stored electricity), it has seats, and an accelerator, and a brake, and four wheels, and brakes, and cargo storage, and windows that roll up and down, and meets all required DOT standards for a motor vehicle to be registered and driven on US roads. It still requires maintenance and has consumables (less than an ICE vehicle). The use of electric propulsion in a car is not disruptive – the technology has existed for over 100 years. A long list of makers are working on electric cars with 250 miles range that the masses can afford. Several makers have electric cars today, and a couple sell in note worthy volume (Leaf comes right to mind).

        There isn’t anything here “disruptive.” Tesla has said they would share patents to anyone (remember) and their network. So in other words if Ford wanted to build a Tesla based vehicle they could – the only barrier to entry is their own R&D using the road map of the Tesla patents. That isn’t rocket science, buy a Model S and take it apart (which I’m sure has already been done by every maker).

        Remember Back to the Future? Roads? Where we’re going we don’t need roads.

        That would be an example of a disruptive technology.

        The Tesla line are evolutionary – they are still cars.

        Fully self-driving cars where the auto maker also takes on full liability, and say the person operating it pays usage by the mile back to the auto maker? That would be an example of a disruptive technology.

        It isn’t to disparage what Tesla has done, but not every innovation in a space is “disruptive.”

        Your own reply makes the point that Tesla is not disruptive. They’ve been around for almost 13 years now, and they have yet to not only put anyone out of business, they haven’t even been a blip on any companies sales and performance targets.

        You can’t suggest the Fiat e500, Volt, Leaf, eSpark, Energi Fusion, C-Max, or ePrius competes with Tesla in any way or matter. None of these vehicles are luxury cars, not even close. None of them are CUVs either, can’t seat 7, and come in price points that are 1/4 to 1/2 of a stripper Tesla.

        Now if the Model S in its package was being sold at $30K each MSRP – I would give you that is disruptive.

        One area where you could say Tesla could be disruptive today is not their products, but their channels. They are definitely disrupting the traditional dealer model — but until volume increases the judge and jury is out.

        As for Amazon and 15 years ago? Every analyst was falling over themselves declaring brick and mortar dead industry walking and Amazon was constantly on the lips of companies disrupting the brick and mortar market. It took longer than thought, but the Internet has lived up to its expectation.

  • avatar
    Lynn E.

    Fascinating.

    A while back posters on this web site were hoping the large Ford rear drive cars with V8s and stick shifts would stay around. Now many of the posters are assuming Uber, (far simpler) electric cars, and autonomous drive are inevitable.

    I like the change in what posters here are writing

    My electric car doesn’t drip fluids and my garage is cleaner. In a few years when I need a new car battery the old battery will still have enough capacity to be used for home energy storage.

    • 0 avatar
      Lou_BC

      Lynn E. – there still is a bunch of posters who’d want large V8 stick shift rear drive cars to be around.

      Accepting what is inevitable is often completely different than what one wants.

      The Serenity prayer sums it up rather nicely:

      “God, grant me the serenity to accept the things I cannot change,The courage to change the things I can, And the wisdom to know the difference.”

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