There are two prevailing theories on how you can reset the auto industry in the United States America. First is to let car makers realize the importance of outsourcing key component systems and abandoning traditional dealer and major car manufacturers should rule in a globally consolidated auto industry.
But neither one makes sense. Take the case of Tesla Motors, co-founded by entrepreneurs Elon Musk and Marc Tarpenning, the company was able to integrate new technologies and design advances. But continually manufacturing their cars with their current system just won’t work as they are not able to produce in mass volume. Small volume results in high prices that would be very hard to compete with large auto companies.
Their current model, the Tesla Roadster sells at $101,500 dollars. And that is at the price range of an ultra-luxury Porsche Carrera. Entrepreneurs must be able to see the value of how mass-market cars are sold. Otherwise, they will be losing so much.
On the other hand, FIAT and Chrysler want to approach the industry in a globally consolidated manner, where they believe that eventually, only five or six large automobile companies will serve the mass market. Under this theory, the capacity to produce in excess units would be eliminated as uncompetitive assembly plants shut down production. The production would then shift from high-cost to low-cost areas as part of the global restructuring process.
However, these theories are only good on paper. It doesn’t make sense in reality because they are a special case with enormous political unit. As you can see, struggling companies were recycled instead of giving them a quiet rest. Government agencies just won’t allow letting their champions die – they protect these automakers including investors who believe on the brand’s relevance.
Although most of them might pioneer in the use of modern technology, unless they start to produce in mass that would be the only time they can take out their life support.