The start of the 2020s was supposed to be when disruptors such as electric car startups, ride-hailing companies and tech giants would start to surpass the century-old traditional automakers.
These relics from the Stone Age -- companies that design, engineer, build and distribute cars -- were on the verge of extinction, we were told. What I have seen lately has proved that these companies are a lot more likely to survive than most of the disruptors.
The status quo is here to stay because no matter how much innovation changes things -- and I'm a huge fan of innovation -- there is no getting around the most basic business principle: your long-term future depends on your ability to make money now. For a number of years this golden rule was ignored, but reality is starting to return.
A sign of this came when Dyson abruptly canceled its plans to enter the automotive arena with a premium electric car. Dyson's car project was interesting because it was different than most other EV startups. First and foremost, Dyson, a company renowned for its pricey-but-popular vacuum cleaners, hair dryers and fans, is not a cash-starved startup.
The company, which turns 29 years old this summer, generated 4.4 billion pounds (5.2 billion euros) in revenue in 2018. In addition, founder James Dyson was not looking to become rich by moving into EVs. The 72-year-old self-made man ranks No. 110 in the Bloomberg Billionaires Index with a personal fortune valued at $12.2 billion.
On top of this, Dyson did not seek fresh market capital to finance the car project. He pumped in about 2 billion pounds of his own money. Therefore, when he wrote to employees in October to tell them the Dyson car was dead and he had failed to find anyone to take over the project it was a wake-up call. It signaled that the high cost to enter the automotive industry is probably going to cause a lot more casualties.
China's Nio is close to collapse. Byton had to be absorbed into FAW. Faraday Future and Lucid may never even get started. Tesla has, so far, been an exception. So has Amazon-backed Rivian, which will not only make its own cars but also share its electrified chassis with another investor: Ford Motor.
Croatia's Rimac Automobili is following a similar path, supplementing its development of EV supercars by sharing its technology with investors including Porsche and Hyundai. Despite this success, CEO and founder Mate Rimac admits that his company has "been on the brink" often and only gives his company a 30 percent to 40 percent chance of survival.
Separately, Uber and Waymo are well behind with their plans to offer driver-less robotaxis on a large scale. That means the Level 4 autonomous cars that were supposed to start appearing this year probably will not arrive until after 2030, leaving the future of those businesses at risk as well.
"The truth is, barriers to entry in autos remain high. Making cars is hard. The move to EVs will be expensive but will probably be led by traditional OEMs. There will be less disruption than feared," Bernstein analyst Max Warburton wrote in a recent note to investors.
While Warburton expects traditional automakers to survive for a long time, Mate Rimac is pragmatic about the future of automotive startups: "Every year in Geneva a new company appears and then you never hear about them again."
An automaker CEO confidentially gave me a view that epitomizes what I think we will see in the new decade: "The financial markets were convinced that anyone could enter the car business and be profitable. This is a huge lie. This is a tough business for grown-ups, with very little room for kids." Or, as he nicely summarized, what we are likely to witness is "The revenge of the Flintstones."