Frankfurt Motor Show - are we missing the joke ?

If 488VS has KERS as predicted and all new models from 2019 are hybrid I think Ferrari has "hedged" the joke.

 

Very true. Things are switching extremely fast. Part of the public opinion is changing and ostracizing the ICE - see the ban on some cities (diesel and old petrol cars) or the fact that most premium parking spots are now for "green vehicles".

Some of current automakers might be pushed to the corner, but it isn't easy to think electric/hybrid when you carry decades of legacy on ICE and part of your engineers grew and studied during a different context.

Ferrari is seen as the pinnacle of the ICE (engine and racing pedigree). Will the brand manage to continue to be the pinnacle during this coming electric/hybrid/fuelcell era?

 

I think you ask a very good question

I think you ask a very good question. I know a lot of analysis I've read sees the coming death of the ICE engine and even car ownership in cities. Im not sure about how slow or fast the process will be for changes but Ferrari will have to be nimble.

 

Interesting observation and questions.

While Ferrari does use ICE, I don't look at Ferrari as just another maker of ICE.

Perhaps its helpful to make an analogy to watches. When digital watches came out, I am sure the big Swiss marques must have been frightened. (never mind now with the Apple watch). Here is a new technology that is more accurate than their technology, and more simple to build and requires less maintenance. Does this sound like the selling points of EVs over ICE? It does to me. YET.... the watch industry looks pretty healthy to me. I think it turned out those predicting the demise of the Patek, and even Rolex, were missing some things. First, a wrist watch is actually something people form somewhat of an intimate bond with- it goes right on your wrist. Such things are about subjective matters as much as objective- maybe even more about subjective. Subjective can be things like the status a brand confers. Or the romance of knowing you are now part of a discerning group who wear this brand (you can laugh but I think this is a factor). And then there is the pure artistry and fashion of the exterior: Putting some digital silicon on your wrist has far less appeal than putting the work of artisans.

No analogy is perfect, but I think this does apply to Ferrari. There is no doubt in my mind that the engines they build, each and everyone, is a work of art. It is not a digital quartz movement. It is the finest movement. It is the beating heart of the machine. It is primal, because at its core an engine is harnessing one of the elements: fire. And this is a chance for you to harness these primal explosions as part of a larger machine you control. As we have less and less direct control over things in our lives- so much is done for us- I think there is a tremendous appeal to controlling a machine. And a machine built by artisans.... that is a dream. Yes I know there are parts of the modern Ferrari that are mass produced, but the engine is still made by hand in several critical areas.

I think when people see giant SUV, after giant SUV going by, especially with only a driver and no passengers, they might think: why? Yet my experience is *most* people that see a Ferrari know it is special and its something to be celebrated. In the way that we know a Patek is special because of that super complex movement, so true it is for Ferrari.

I actually think the Apple Watches of the world end up making the Pateks even more special as they provide even greater contrast. So to I think for Ferrari and ICE.

I think at its core Ferrari is selling you a dream and part of that dream is that primal experience.

As to everyone else, I think they are selling you transportation. And I actually disagree a little when it comes to these companies. They are not stuck in the past. Sure, there are M5s, S63 AMGs, and Cayenne Turbos- pure ICE oriented vehicles. But, every one of these companies has a robust EV program as well. They know they have to. I don't think the average person driving a 3 Series BMW really cares if its a straight 6, an inline 4, or an EV. (I do! but alas I am just one).

So I actually think the future for Ferrari ICE is bright- maybe it has to have some hybrid element- but so be it if that is the price to keep the NA V12.

 

Jerry the analogy you made with watches is a very good one and an example of the symbolic values of cars. Presently cars embody freedom, autonomy and power and the car that we own says almost as much about our social position and aspirations as the clothes or the watch we wear. In an article I read a while ago the author said that car ownership was for much of the world a mark of status in the way that owning a horse made you a knight, mentioning that the coming revolution threatens far more than the vehicle manufacturing industry. If cars do come to be valued only for their usefulness, not as means of ostentation, the motor car would become only for the rich, as useless, if still as loved, as the private horse now is.

 

I understand your analogies but in my opinion, the current situation the automative industry is new and odd.

Horse is a species with millions of years, Man domesticated it several thousands of years ago and used it for transportation and sport since. Probably will continue to be used by some until extinction. Environmentalists aren't chasing horse riders...maybe only some PETA people do

Watches have its function and some (traditional and luxury) are also used as art/decoration. Watches (even the spring motion ones) don't need to follow emission laws and user's neighbors won't complain about watches noise. There's a minority (I am one of them) that still uses wristwatches even though today we have clocks everywhere - mobile/car/kitchen-oven you name it. Maybe for the younger generations wristwatches will become even more redundant.

Most of our governments are weak (my opinion only) and legislate according to public opinion (no strategy). Ten years ago did some of us thought that old cars would be forbidden in some cities or parkings? Did we imagined that diesel engines would be at risk in some countries? Did we imagine current strict noise regulations - even at racing and tracking?

Most of us are observing restrictions/signs of what is coming - in parking spaces allocation (best parking for electric/hybrid), car inspection (MOT), taxes (charging more ICE vehicles), etc..

Up to know, electric/hybrid vehicles offer is limited to some specific companies (Tesla) or some niche lines of the mainstream brands (BMW i3 for instance). Once the mainstream brands have the most of its products based on the electric technology (or similar), these brands will start lobbying towards this new technology in order to sell these new cars. This will accelerate even more the transition and tilt the public opinion even further.

If I was an automaker manager, I would be very wary of this situation.

As a side note, my father was a heavy smoker (he quit 10 years ago). I remember when traveling by plane in the 80's and 90's that part of the plane was reserved for smokers. Of course that during the flight the cabin would be full of smoke... Today, flights are smoke free, no smoking is allowed inside public buildings, around some buildings smoking is restricted and also in restaurants and bars. Also smoking isn't allowed inside cars in some countries if kids are inside.

I guess public opinion changes very quickly. Automotive context will change very quickly too, I hope Ferrari is prepared for what is coming.

 

Very good points Ricardo. Right now we haven't the faintest idea what the far future will reserve us in terms of individual vehicle transportation however, I think that in the more near future we can predict that vehicles just with a ICE will tend to disappear. At least for the next decade hybrid technology appears to be the strongest candidate to succeed the current single ICE car's motorization. The transition to this technology seems to be straight forward since it combines the best of both worlds. With hybrid we still have the ICE and the sound coming through the exhaust combined with electric motors whose presence in most circumstances isn't even noticed. Emission and consumption wise hybrid cars comply with the present fundamentalist legislations and as you mentioned that's probably manufacturer's most detrimental and restricting factor.

Independently of all the evident advantages of hybrids , personally I'll continuo, until they let me, sticking to my Ferrari with a single ICE V12.

 

Great analysis of the current situation. Now, who dares to forecast what's coming in the next 10-30 years?

 

Excellent posts, please keep them coming. Very thought provoking!

Makuono, very good about the emissions and also our governments. I think whatever the emissions issues are surrounding personal transportation, I do not think if you could put all the sports cars together in the world they would amount to very much. But you are right about perception. Excellent example with smoking.

I think for most cars, they will be reduced to transportation appliances, and it will be different kind of social utility that takes precedence. So, imagine a current prestige company, let us imagine Mercedes. I think the allure of Mercedes might be more about the clubs and other perks being a "subscriber" to the Mercedes "service" provides. When you visit another city, you can be assured that your automated Mercedes will arrive at the airport, take you to the Mercedes hotel (owned or affiliated), and then you will have access to various locales whilst at that location. It will be 100% user convenience. And it could be these companies end up chasing for association "desired users" - people with a lot of social media status.

I think there will always be those who simply enjoy to drive and when you are out of the (likely) automation required city centers, you will still find people who are driving their own cars. It might be more and more at private tracks- similar to how you often find horse riding at private facilities (though I do see people actually still riding horses in more rural areas).

I think nearly every city center is going to require "zero emission" vehicles within 15 years. This means at some point in that time, its likely all new Ferraris will need to have some electric propulsion component because this way they can be used in ZE mode.

So I actually think the future for Ferrari is positive. I also believe thinking such as we are exploring here is likely (my opinion only) a part of why Ferrari is presenting itself as a lifestyle brand. All these companies have to move beyond being "just" cars. To come back to my original point, Ferrari was never "just"...

 

That is exactly the question I ask:

Suppose if tomorrow all the governments decided: no more ICE anywhere. You must drive zero emissions vehicles. Period.

What is the value of all the ICE powered vehicles on the road right now? We would experience a massive economic calamity.

No one wants that, so we are on a slow progression.

I can tell you in the US, one of the ways the deprecation is handled is with some leasing companies (BMW) keeping residual values unnaturally high- thus smaller lease payments. Its like when a company says $5k off our latest model. The financing company is willing to eat the depreciation because they are allocating marketing dollars to the leasing operation.

 

Old cars are loved, they will be grandfathered in. Engines are more popular than ever on US television in 2017.

I equate this to the niche market of high cost high fidelity audio, which draws a lot of current from the wall. Most people want cheap and convenient and they listen to mp3s. Yet when they hear the real thing, a great room and a great system, they wish they could listen on the good systems all the time.

Every industry goes high end and low end in time, and Ferrari has the high end position, the ideal position. This is why more cars per year and a SUV (that's a truck) makes no sense at all.

Ferrari makes under 10,000 cars a year and in my opinion they should double down on this ceiling. They really need to stay under the eco radar in terms of volume. We can argue that 11,000 is not much more than 9000, but the 10k barrier is a good place to make a stand as a boutique company. It feel less significant at 4 digits.

Staying small is safety. Lower volume is higher prices. LdM has this right.

Stay small, make cars that have a tie to racing ... ICE, ICE w KERS no matter ... and stay on top. There is always a place in people's hearts for Ferrari ... unless RACE and Sergio blow it with cliche ideas.

 

The analogy to watches, especially self-winding/automatic ones, is a good one. Hybridization is definitely way better than full EV. I'm okay with hybridization as long as it helps the survival of naturally aspirated ICE.

 

A few facts (some of them might even be right!) to help our thinking:

• ICE is still the most efficient way of producing energy - electricity loses far too much between creation and being turned into motive power.
• If all cars were electric our national grids would have nowhere near the ability to handle the current draw required
• Nuclear is the best option currently (excuse the pun!) for delivering carbon free electricity in large enough quantity
• It takes around 30 years to commission a nuclear power plant and there are not enough in planning to handle a full EV fleet, especially if the wasted journeys driverless cars would bring are taken into account
• Covering the globe in nuclear power plants is not without its own inherent risks and irritates many of the same lobbyists who want to see carbon emissions reduced
• Battery technology is still quite a way away from being able to deliver a solution for every journey, so range issues will still persist for some time to come for at least some users
• A study in Sweden reveals that there are only decent CO2 savings with EVs if the production of electricity in a particular country is CO2 efficient - in Sweden there is a meaningful whole-life saving, in nearby Latvia or Lithuania there is not
• Even in Sweden, to achieve those net savings you have to take the best case scenario in terms of journey usage and battery life cycle - both somewhat questionable
• The main effect of large-scale EV usage would be to move the production of CO2 from the city to the power plant and battery factory - guess who this works best for? The Chinese
• CO2 and emissions regulations have been used in Europe as a barrier to entry for foreign car makers, including the many Chinese vehicle manufacturers Europeans have known about for a long time (I have a lot of Industry knowledge in this field), however, the tables are turning because China will be forced to embrace hybrid and EVs to solve the pollution catastrophe in its cities
• With European, American and Japanese makers invested in ICE there is a structural problem in the industry - battery cars put the profit in the hands of the battery producer and away from the mainstream maker, so a new scenario would develop where Europe and America would need a defence against low emission vehicles from China
• Chinese makers, being forced into EV, are investing in their own battery companies, which makes even more sense when you realise they have less investment and technology in traditional ICE, so structurally they are becoming better prepared than the grand old manufacturing names - through my work I have met presidents of various Japanese car companies who have made this exact point to me
• In the long term there is a political element to the development of all this, which is notoriously difficult to predict - on the one hand, I could imagine the west would seem happy to reduce dependence on carbon and potentially weaken Russia, on the other hand its own valuable and competitively advantaged motor industries depend on ICE based technologies, at least in the short to medium term. An interesting conflict of interests.
• No mainstream producer produces its own batteries and battery management system (the key and difficult technology) so a complete conversion to EV tomorrow would bankrupt all the major and well-known car brands
• When we went from horses to cars (as someone mentioned earlier) one of the benefits cited was the lack of emissions..... (that is actually true!)

So, when you add much of that up, there are a few things we can reliably predict IMO. ICE is not dead because hybrid technology will be necessary to manage many of the issues listed above. Assuming that is correct, the infrastructure for delivering and producing gasoline must stay in place, at a quantity that doesn't render it uneconomic for the consumer. Vehicle based CO2 is something like 12% of global emissions, whereas power stations are more like 60% so there will come a point where vehicle emissions are seen to be under control and a focus on non-nuclear, non-carbon electricity production will become much more critical if the agenda is to genuinely improve global emissions.

As with anything complex and having multiple, conflicting and wide scale global interests, a balanced approach usually wins out over time.

My prediction for the next 10 years - hybrid is king, for 10-20 years, hybrid and EV, more towards EV if a breakthrough in technology can be found. For 30 years out, new technologies and world events will make whatever we think we see now irrelevant. For example, fuel cell could be sorted in that time, plus hundreds of other ideas. Maybe someone will figure out a way to turn water into motive fuel (hydrogen and oxygen remember) for the ultimate in ICE and zero emissions!

I already know that the legislation for 2021 through to about 2025+, based on current ICE technology will only require an increase in hybrid/EV sales to around 30% of the total market in Europe. That gives us an indication of the pace of development, unless of course there comes a customer preference for hybrid/EV and the percentage goes higher quicker. And if that happens, selected premium ICE-focused manufacturers will be even safer because legislators will ease up.

 

Thank you for posting all these very interesting facts. Trusting your deep knowledge of the automobile industry and it's trends, from your future prediction the good news are that the ICE/hybrid technology will allow the ICE engine to go for at least up to two decades. In Europe where emission legislations are already very strict and tend to be even more fundamentalist, the number of existing cars with ICE I presume is over 200 millions units. The substitution of a complete car fleet of that dimension by lower emission cars is a gigantic task and unless there will be irrecusable government incentives to buyers it will certainly take many years to do. In some European countries governments already indicated deadlines to eliminate all sales of ICE and when those legislations will start being implemented, our present Ferraris, may be with the exception of Laferrari, will be in the group of the ugly ducks. My only hope by than is that the ICE Ferraris will be given by legislators a status of special cars with high artistic and historical value and, won't be highly penalized with taxes or freedom of movement restrictions.

 

Excellent post Lukeylikey, thank you.

I would add something to your list, while not a fact yet, it is likely to happen: ICE will become far more efficient via turbo and other technologies. I've read that ICE could become even more than 2x more efficient in the next 15 years.

If I remember the stats correctly, gasoline/ petrol is the most dense energy source we have. Per unit of mass it is far far more energy dense than what you can achieve with a battery. But our way of turning that dense energy into motion is only about 30% efficient (currently)- so the other 70% is lost to heat. Compare to the electric motor, which I think is something like 90% efficient, with only 10% being lost to heat.

The lesson I take from this is that there is no free lunch.

While I would not dispute anything you say, I think there are at least two sides to this discussion: 1- the facts; 2-the opinions of decision makers/ voters/ the market place.

Again, thanks for taking the time to share your knowledge with us. Very impressive!

 

Yes, I agree - if petrol engines become more and more efficient, hybrid versions of them could likely be a better solution than EV when considering all requirements, even over the long term. Although you say only 10% is lost to heat for an EV, from creation of energy to vehicle motion, I believe electricity is far more inefficient than petrol. Mainly due to the energy lost during its creation, transportation and storage. Imagine if petrol engines improved 50% in efficiency, then the progress towards a full EV fleet would be very slow indeed and most likely never actually happen. I think Western and Japanese makers are depending on this.

One thing that disturbs all these theories is the motivations behind the pressure groups. Some people suggest that there is an anti-wealth and anti-consumption undercurrent to many environmental pressure groups. If that proves to be true, there may be pressure applied to governments even when the logic for further reductions in ICE are not merited. Then it would depend on government and legislators' ability to defend the logical position rather than bow to pressure. This adds further unpredictability to the outcome. However, the one thing that really persuades governments is when whole industries start to collapse with damage to the economy and massive unemployment. Trades Unions are some of the loudest voices you ever heard and I would back governments to lean that way very strongly.

 

Musk is working on this, as are others. Solar roads, etc. are not far away. The Sun is the big energy in our solar system, and soon will be our main source. Soon as in ... 30 years?

Moon and tides are a reliable source also, as over 50% of the world is near water.

"Some" ... as in the gas and coal industry lobbyists you mean?

The motivation is pretty simple. Global warming is no longer in doubt ... except by those with an economic interest in denial.

 

Thanks Lukeylikey,
I think those are good points. I think if you are going to look to the whole life cycle on the EV side then you have to look at the same on the petrol side.

My observation of these pressure groups is they do want to cozy up to the anti-consumption issues- there is some commonality there. But I think their support may be broad, but its not deep. The problem I see with using people with these views to underwrite their movements is many of the people I have observed who say they are anti-wealth / anti-consumption are the first to run out for the latest iPhone... its the classic "do as I say".

I say if you really want to protect the environment, a car loaded with over 18,000 battery cells full of rare earth materials probably isn't the answer...

 

Global warming is not in doubt. But the human race's production of CO2 being the primary cause of global warming has not been widely debated enough in my view. That debate is consistently and repeatedly shut down with incendiary language such as 'denier' - that makes me at the very least suspicious. This is an issue that is fundamental to the world we bequeath our children and grandchildren. I want to see it discussed in a balanced and non-partisan way and I personally don't feel that has happened in a robust enough way. For example, global temperatures were much higher pre industrial revolution, and during the industrial revolution, when no one considered the environmental impact of mechanisation and CO2 output was massive, global temperatures began to fall - those are commonly accepted facts. There is at least a question there as to why when CO2 output was massively increasing, global temperatures were falling?

Lobby groups insist on pressuring governments to introduce taxation on high output (traditionally larger and more expensive) CO2 vehicles. Governments duly oblige. The tests are flawed, the measurement of true CO2 impact is not considered and lobbyists and the public's understanding of the technical situation is not clear. The motor industry has spent countless billions on trying to improve test performance, both legally and illegally, with the test not even considering whole life CO2. Yet the lobbyists are satisfied by this action. Why? It doesn't solve the problem - not even close. Why are we not focussing on mass power production, which is far dirtier and a much higher proportion of CO2 output globally? Maybe I don't read the right magazines but it seems to me that pressure on the motor industry and aviation industry is far more vocal than on the energy industry.

I am highly suspicious of all this - I'm not sure I believe that if we had a global fleet of zero emissions vehicles the problem would be much closer to being solved - do you? And if there is even a slight doubt about that, for the sake of future generations we have a responsibility to consider the global industrial cost of forcing cars to emit massively lower CO2 when there are also other priorities that resource could be spent on, such as shortening journey times, increasing safety, better planning of our environment and far more incentive and resource being put into cleaner energy sources.

 

I was reading that for many years ICE researchers around the world have been trying to crack a combustion method called “Homogeneous Charge Compression Ignition” but it never left the laboratory. However the implementation of such a method could make the ICE 20 to 30% more efficient than the present best engines. Last August Mazda announced what until now seemed to be just a theoretical unachievable goal, and presented a new engine that marries the best of diesel and petrol. The big difference with this new ICE is that under certain running conditions, the petrol is ignited without the use of spark plugs. Instead combustion is set off by the extreme heat in the cylinders and by compressing air trapped inside, with the same method diesel engines use. This new engine named SkyActiv X can be up to 30% more efficient than Mazda’s best existing engines and that’s an extraordinary achievement and also an enormous step forward because this technology will make the ICE a much more efficient machine without the need of hybrid in order to comply with the very tight future emission laws. According to some specialists, today’s fuel economy could be double by 2050 and an important part of that achievement in cars will come also from areas like aerodynamics and weight reduction.