“This car is going to change the world”.
That’s what I said after going for a test ride in a Tesla Model S in 2014.
It was the most impressive car I’d ever been in. The acceleration was insane. I bought shares in Tesla that day.
I knew Tesla was an electric car prior to the test ride. But it wasn’t until after the test ride that I knew what an electric car was.
I said to the Tesla employee…
“So there’s no engine block, no intake manifold, no exhaust manifold, no muffler, no spark plugs, no spark plug wires, no distributor cap, no…” when he cut me off and said “Correct. None of those. And about a hundred or so more parts you haven’t listed yet.”
What I also said that day was “I wonder what the Big 3 will come out with to compete with it?” Seven years later we are just starting to find out.
I am concerned my fellow Metro Detroiter that we are screwed. Ford, GM, and Chrysler (Stellantis) waited too long to get into the electric car game and all three are going bankrupt or will be a shell of the company they are today by 2028.
In turn, this will bankrupt Metro Detroit.
I’ve read and watched many articles and videos about Tesla from a investing and manufacturing point of view this past year with titles like “Tesla Will Bankrupt The Big 3”.
I think they are right.
Two videos stick out the most.
Your Move OEMs…Who Will Survive by Sandy Munro of Munro & Associates in Auburn Hills.
Future Of Transportation by Tony Seba from RethinkX.
If you have not been paying attention to Tesla I’ll do my best to bring you up to speed.
Tesla Model 3 is the best selling vehicle (gas or electric) in Europe. #2 in the UK. Model Y might be top 5 in US in 2022. They have a three month to one year long waiting list on their cars.
Tesla Energy is ramping up. Tesla Insurance is getting started. AI/Robots too.
They resemble Apple more than Ford. They are a “you might as well” company. As in, “you might as well buy the car, solar panels, and Powerwall to store your energy.”
Tesla is taking on the Automotive, Energy, Roofing, and Insurance industries. You could say the Government too.
Tesla sold 35,000 vehicles worldwide in 2014. They sold 936k vehicles worldwide in 2021. Estimates are 1.6 million in 2022 as two new factories (Texas and Berlin) go online in 2022.
Big 3 will be lucky to make 1 million electric vehicles combined by 2024. There will be over 4 million Tesla’s on the road by then.
The only reason why the Big 3 are going electric is because of Tesla.
What About Metro Detroit?
All the videos and articles compared Tesla to the Big 3. Barely a mention of the workers and cities the Big 3 are in.
My attention turned to my fellow Metro Detroiters who work for the Big 3 and parts suppliers. Dad retired from Ford. My two uncles retired from GM.
How many people work for these companies? What wages do they bring to MD?
What about all the UAW Retirees whose pensions are paid with profits from the Big 3? No profits. No pensions.
What would that do to city and county government budgets in Metro Detroit?
I started looking stuff up.
Ford, GM, and Chrysler employ 90,603 people combined at 28 locations in Metro Detroit at an average annual salary of $60,000.
Parts Supplier Jobs and Induced Jobs.
95 of North Americas largest parts suppliers have addresses in Metro Detroit. GM works with 1,985 parts suppliers in Michigan. 712k people work in auto jobs in Michigan.
Each Big 3 automotive job supports 7 indirect jobs (3 supplier jobs and 4 induced).
Lets say 660 companies are in Metro Detroit and all 271,809 employees (90,603 Big 3 jobs x 3) earn $60,000 annually.
Induced Jobs are retail, restaurant, teachers, Doctors, cops, garbage men, etc. I gave all 362,412 employees (90,603 Big 3 jobs x 4) a $40,000 annual salary.
UAW says there are 580,000 retired members worldwide. I’m assuming 20,000 still live in Metro Detroit and get $15,000 a year in pension.
Here we go.
$36.5 Billion in wages
All supported by the auto industry in Metro Detroit.
There would be no coming back if all of that went away.
All Tesla’s made since 2017 have cameras that have collected over a billion miles worth of real world data building their full self driving platform. If you added up what the Big 3 have done with their autonomous partners it would not come close to Tesla.
Tony Seba is predicting you will not own a car within ten years of the government allowing autonomous cars. It will not make economic sense to own one.
This is what I’m looking towards.
He estimates an average family spends $9000 a year on transportation. With Robotaxis (Transportation As A Service – TaaS) you’ll spend $3400 a year on a subscription service with Tesla, Ford, etc. Annual transportation savings of $5600 ($466 per month). A huge raise.
And because of that the following things will no longer be needed in Metro Detroit.
The Detroit Auto Dealers Association (hates Tesla because they do not have dealerships) represents 200 dealerships from all brands. Estimate 75 employees at each dealer.
Searched “Oil Change Shops near Metro Detroit”, etc. in Google Maps. Subtracted 5 pages of results to keep it conservative.
Estimated 5 or 6 people worked at the rest of the places and salaries.
$1.296 Billion in lost wages
All gone within ten years of Robotaxis being approved. Some sooner with electric cars.
Big 3 + Parts Suppliers + Robotaxi locations x 2 for Induced Jobs locations.
$37 Billion in annual wages gone.
771,866 jobs lost.
8748 locations abandoned.
Tony Seba says Robotaxis will create a “land bonanza”. A real estate boom due to not needing everything listed above. We could knock down those things and build new houses, apartments, or green spaces. Parking lots will not be needed either.
Sounds great for crowded cities like New York, Chicago, or San Francisco. Metro Detroit isn’t crowded. We’re spaced out.
There are 40 square miles (Disney World) of abandoned land just in Detroit. There isn’t a lot of large vacant parcels as the city was built for 2 million people in the 60s. Its now at 600k. There’s a lot of stuff laying around between other stuff.
How much land bonanza in Metro Detroit are we talking about if all of those factories, Robotaxi affected, and indirect jobs go away?
Big 3 list how many acres each location takes up. Estimated 10 acres for each parts suppliers location. One acre for each Robotaxi and induced job location.
We are looking at a “land bonanza” 3/4 the size of Disney World just in Metro Detroit.
None of this includes the already vacant industrial complexes in Warren, Mt. Clemens, and other cities. We could potentially have two Disney Worlds of abandoned land in Metro Detroit.
Half of this happened? Or a quarter? Or an eighth?
2,300,000 WF is current MD workforce.
Would 96k people losing their jobs at roughly the same time be enough to sack Metro Detroit?
What industry as large as the auto industry is moving in and taking over those buildings?
Who’s retooling these places?
Who’s spending millions of dollars to clean up these places?
Don’t we already have hundreds of empty factories laying around?
Will Tesla buy out one of the Big 3 or parts suppliers?
Who’s coming to save the Big 3? Tesla is the #1 company for Engineers to work at. SpaceX is #2. Ford is #12. GM is #15. Chrysler didn’t make the top 30.
Who’s buying all of the gas powered Big 3 cars (21.5% of their biz) being leased in 2021/22 when leases are up in 2024/25 in the used car market? Gas powered cars will be worthless.
(By then, people will have learned electric cars have near zero maintenance and operating costs. In turn, millions of gas powered lease turn ins will go un-sold resulting in massive financial losses for the Big 3.)
Are the people who financed a gas powered car on a 7 year loan in 2019/20/21/22 through Ford Credit, GM Financial, or Chrysler Capital going to continue making payments in 2024 when they realize the ownership benefits of an electric car outweigh gas and that the resale value of their gas powered car is $0?
And if they don’t continue paying wouldn’t that result in millions of gas powered cars being taken back by the financial arms of the Big 3? Wouldn’t those cars also go unsold? And wouldn’t that mean TENS OF BILLIONS of dollars in financial losses for the Big 3?
***Do not buy a new gas powered car. In 2025 it will be worth as much as the 20 year old VCR I have in a box in my basement. It will still work. But you’ll have to give it away at a garage sale as no one will want to buy it.***
What if 50,000 homes go up for sale at the same time due to job losses? Who’s moving in? Its gray and cold six months out of the year here.
What if 10,000 homes go into foreclosure? At $3,000 annually in property taxes that’s $30,000,000 in lost annual revenue. Can local governments in Metro Detroit survive without it?
Would cities survive knowing they have to lower property taxes as values drop?
Would the people who bought houses in 2021 at inflated prices stay in their homes even though they are severely underwater?
The savings from not owning a car with Robotaxis ($5600 annually) will not happen at the same time as electric cars. Is that future savings enough for people to ride it out?
Will the organizations who gave Detroit $800 million (Grand Bargain) during the bankruptcy give them $800 million again? Fool me once…
Will the artwork the DIA kept now have to be sold if they don’t get another Grand Bargain?
Dare I ask. Would Jobbie Nooner still go on?
Most importantly. Would the Ford family sell the Detroit Lions to save their company?
We’ve got a lot of stuff going on here.
Well We Can Build Electric Vehicles Too
This is what my uncle (retired GM employee) said when I mentioned Tesla a couple of years ago. He is right. GM built the Bolt and Hummer.
The problem is they are not going electric like Tesla. Three differences stick out.
- Gigapress – One Gigapress replaces 300 robots and drops the cost of each chassis by 40%. IDRA in Italy makes them. Tesla has years worth of orders. Big 3 couldn’t get one for a couple of years.
- Marketing – Tesla spends $0 on advertising, marketing, promotion, and public relations. Big 3 EACH spend $2 Billion a year.
3. R&D – Tesla spends almost $3,000 per vehicle.
If the Big 3 want to survive they will have to copy what Tesla is doing. How else are they going to compete on costs?
Each company spent $20 Billion on advertising the last decade. At $5 Billion a piece, each company could have built two Gigafactories instead of advertising.
Every Advertising/Marketing/Public Relations job for the Big 3 will be the first to go. I’m guessing many are in Metro Detroit.
And they will have to buy many Gigapresses. Which replaces robots and people. Many of which are in Metro Detroit.
Collapse Is A Process. Not An Event.
Chrysler is saying 40% electric by 2024. GM all electric by 2035. Ford says 50% electric by 2030.
None of those will work. They need to be 100% electric today.
But they can’t.
Mostly because they waited too long. And also because they have to continue selling profitable gas powered cars to limit the amount of money they need to borrow to fund the electric transition.
This is known as the Osborne Effect. 2% of the Big 3’s sales are electric. 98% are gas.
Just because Tesla pulled off mass producing electric cars does not mean the Big 3 will pull off mass producing electric cars. Tesla almost went bankrupt themselves a few times.
Ford, GM, and Chrysler are essentially starting brand new companies with a hundred years worth of baggage. And going up against a company that has a ten year head start with no baggage.
Tesla will build and sell 2 million cars a year by 2023. Maybe 4 million by 2025. Those customers are not coming back to the Big 3.
Big 3 cannot afford to lose more market share.
Maybe Toyota, VW, or a combo of other automakers mess up their transition to electric (or goes bankrupt first) and customers buy Big 3 electric vehicles.
But it does nothing to stop the loss of manufacturing jobs at the Big 3 and suppliers as there are still not as many parts that go into electric cars.
There’s about 18 moving parts in an electric car. There’s hundreds in a gas powered car.
Job losses are inevitable.
The 2008 recession was about debt. Yes, auto jobs were lost. Once the debt was liquidated things got back up and running. Cars were built the same way.
This is a structural change to how we live. Not a debt cycle. There is no long term future for many of those jobs.
Once charging stations are built. (Tesla has 30k). Once chargers are installed in garages. Once Kroger has a solar powered charging station in the parking lot. All of the concerns with going electric will cease to exist.
And who’s waiting there? Tesla.
What started the 2008 crisis of the Big 3 was gas prices going over $4 a gallon which pushed people away from large SUV’s and trucks which the Big 3 were and still are heavily invested in.
Gas prices are nearing $4 a gallon and people are moving away from gas vehicles all together. Neither of which the Big 3 are prepared for. But Tesla is.
I think the Cybertruck is going to be the death of the Big 3. Its going to turn heads. When people start comparing electric trucks they will see the Cybertruck specs and get it.
Its bad ass. Its incredibly utilitarian. The tri-motor version will be faster than a Porsche. Bullet proof windows. Estimated 500 miles of range.
Frame and body are made out of stainless steel. Won’t scratch. Won’t rust. Kind of like how a 40 year old Delorean still looks brand new.
Cybertruck would be the truck you take to Mars.
If Tesla fulfills their promises the Cybertruck will be passed down from generation to generation.
There are 1.2 million reservations for the Cybertruck with plans to start production in 2023 and build 300,000 a year. If all 1.2 million orders are kept Tesla will sell everyone made til 2028.
GM and Chrysler are in trouble.
Especially Chrysler. They won’t have their first EV til 2025.
On Dec 1st, 2021 Stellantis (Chrysler) CEO Carlos Tavares said the costs to go EV are “beyond the limits” of what the auto industry can sustain.
He has no problem though making $30k in profits building the $88,000 Grand Wagoneer that gets 15 mpg. Even though they knew about Tesla a decade ago.
GM CEO Mary Barra said in 2018 that they would have 20 electric models by 2023. They have five. Only two (Bolt and Hummer) that you can buy in 2022. Other three start production in 2023.
What they are saying and what they are capable of doing are not the same. They are lying.
Hopefully the Ford E-Transit, GM’s Brightdrop, and eventual electric Ram Promaster sell so well on the commercial side (Tesla currently doesn’t have vans) that it keeps the companies afloat to fund the domestic side. But damn. They are gonna have to start cranking them out.
What About Local Governments?
I don’t think my fellow Metro Detroiters understand how tied into gas powered cars our local economy is. Just one of the Big 3 going down will crush local governments budgets.
Half of Detroiters in 2018 weren’t paying property taxes.
Wayne, Oakland, and Macomb have some of the highest property tax rates in the US.
Detroit has the fourth highest residential and highest commercial property tax rates of any U.S city.
In July 2023 the City of Detroit will have to start making annual pension payments of $202 million (20% of their budget). Apart of Detroit’s 2013 bankruptcy case the city was given a decade off from those payments.
Wayne, Oakland, and Macomb have $1 Billion in unfunded retiree benefits. Most cities in MD are only 50% funded.
Detroit Parking Department brings in $16.9 million annually from tickets, meters, and fines.
Royal Oak estimates $12.3 million over five years.
Birmingham brought in $6.7 million annually pre-Covid ($3.8 million during).
All cities parking revenues drop to $0 with Robotaxis.
Property Taxes and Debt
Oakland, Macomb, and Wayne County are all forecasting property values to go up (might be true with inflation) for the next three years while simultaneously having expenses go up.
They also have some serious debt. Macomb at $243 million. Wayne at $3.9 billion. Oakland at $633 million.
City of Warren has $550 million. City of Sterling Heights has $502 million. I couldn’t figure out Detroit’s budget. It looks like $1 Billion.
Most shocking was my little 1.47 sq. mile City of Huntington Woods with $50 million.
There are 132 cities in the tri-county area. Huntington Woods is one of the smallest.
Lets say the other 128 have $50 Million each. That’s $6.4 Billion.
Add that to the four cities above and you get $8.507 Billion.
Add that to the counties debts and you get $13,283,000,000.
Again, what happens if 50,000 homes go up for sale due to job losses? Or 10,000?
Look at the taxable property values GM and Chrysler paid on in 2019 versus 2009 in Warren.
What happens if the City of Warren loses their #1 and #3 property taxpayers? Is Sterling Heights with multiple Big 3 factories in the same boat?
In 1951 the State of Michigan passed Act 51 which created the Michigan Transportation Fund. Its two primary sources of revenue are fuel taxes and vehicle registrations. Money is distributed to municipalities to maintain the roads. 1/3rd of the $3.4 Billion comes from Metro Detroit.
Estimates from the State Of Michigan are that each municipality will receive more over the next three years. Probably true with inflation.
But gasoline and diesel taxes are going to be closer to $0 by 2030 then the $1.4 Billion they bring in now as electric cars and the Tesla Semi hit the road.
The $95 million from used car sales tax will fall off a cliff when Robotaxis hit the road. There will be zero reason to buy a used car at that point.
$2.345 Billion gone.
Which leaves us Vehicle Registration, Income and Sales Taxes, and Weed.
Quick. Everyone get high!!
Where is that $2.345 Billion going to come from?
And remember. We need $3.4 Billion plus road millages (my city has 5) on property taxes to maintain the current shitty roads in Michigan. What is that? $10 Billion?
$625 Million of the $1.1 Billion sales tax on gas goes to public schools. (Proposal A moved a large portion of public schools property tax revenue to the sales tax.)
Where is the $625 million for the schools coming from when the gas tax goes to $0 by 2030?
Michigan added a registration surtax of $135 for electric vehicles to make up for the gas tax not paid. Does that become $1000 in a couple of years?
Do income taxes double? Do we make weed taxes…higher?
Do they dare implement a vehicle mileage tax along along with the others?
Do they eliminate the mileage write off on taxes and use the mileage you provided to tax you?
Act 51, unfortunately, has created a dependency on government.
Much like nearly every government program ever created it starts out with good intentions and ends up being a colossal financial disaster.
Governments do not build roads. Governments finance roads. They hire a private contractor to build the roads. And add a little on top of that financing to pay themselves nice salaries for doing a job well done.
Back to Huntington Woods. Pg. 67.
90% of my cities road revenue comes from Act 51. In the past decade we’ve had five road millages passed because Act 51 didn’t provide enough funding. I spoke out against one in 2020.
Act 51 represented 10+% of road funds for most cities I looked at.
By law, my city, as of today, has raised taxes as high as it legally can forever. The only legal way it can have another millage is if property values go up.
We are a “no growth” city. Its been built out since the 70s. There are no commercial industries to levy taxes on.
Which is what Sterling Heights, Warren, and Detroit become if one of the Big 3 go under. No growth cities. Those plants become massive liabilities. Like the Packard Plant.
Back to the matter at hand.
Who’s registering vehicles when Robotaxis come around? I’m not.
Who’s registering cars if 96k people lose their jobs? Who’s getting high?
Unfortunately we are not getting Robotaxis the same time as electric vehicles. Instead of 10 cars doing 10k miles a year we would have 1 car doing 100k miles a year. Roads would last longer.
On Jan 1st, 2022 the gas tax in Michigan will increase annually according to the rate of inflation. Noticed any inflation lately?
The rising cost of gas will force people to electric cars sooner. Tesla is waiting for them.
The amount of Tesla’s in my city has doubled over the past three years. There’s at least 8.
There’s one Ford Mach-E. And one Rivian truck owned by an employee.
Its right there. I see it everyday. This is going to happen.
Area Of Concern
When reading through City and County budgets there was not one mention of gas usage going down. Or the impact of electric cars. Or Robotaxis. Or the Big 3 possibly failing.
They do not see what’s coming.
I see zero scenarios where the Big 3 gain market share.
I see zero scenarios where the Big 3 stop losing market share.
I see zero scenarios where city and county governments in Metro Detroit do not start taking financial hits in 2024 because of what Tesla has started.
You’ll have to excuse me if I missed something. Some county and city budgets were 200+ pages long. I focused on summaries, forecasts, debts, and auto related items.
All I’m doing is sticking a shovel in the dirt. What I’m seeing from the surface is not good.
It would be different if it was one factory making $55 DVD players. But we’re talking about dozens of gigantic factories from some of the worlds largest corporations located within 70 miles of each other building $55,000 cars.
Does The Next Recession Start In Metro Detroit?
Ford has $161 Billion in debt.
GM has $110 Billion in debt.
Stellantis has $38 Billion in debt.
Safe to say the parts suppliers in MD have $50 Billion combined in debt.
50,000 homes in MD with $200k mortgages equals $10 Billion in debt.
City and County governments in MD have $13.283 Billion combined in debt.
That’s $382,000,000,000 in debt being serviced from addresses in Metro Detroit.
A cascading effect of missed corporate, residential, commercial, and government debt payments if one of the Big 3 or dozens of large parts suppliers go under.
Wouldn’t that create havoc in the financial markets? Would banks go under?
And this doesn’t include credit card, student loans, car loans, and other debts people in MD have.
A financial shit show.
Tens of thousands of people are about to lose their jobs in MD as the Big 3 scramble to keep up with Tesla. At no fault to the employees. This will be on the executives for failing to pivot 100% to electric cars in 2014.
UAW has admitted the shift to electric cars could force 35,000 jobs to go away. They also believe the full transition is decades away. They are wrong.
Its as if the Big 3 and local governments are expecting the switch to electric cars to be this 10+ year process where they will have time to react with small changes. And that the Big 3 will be the ones leading the electric transition so everything will be ok. They are wrong.
Massive revenues lost on gas taxes, business taxes, property taxes, income taxes, sales taxes, and parking fees in every city and county in Metro Detroit.
Every negative thing said about Tesla in the past decade has been wrong.
Three years ago it was “Tesla will be bankrupt by the end of the year”. Tesla is now one of the worlds most valuable companies.
A battle between technology and government is brewing in Metro Detroit.
Bosch is laying off workers and closing factories in Germany that make parts for gas powered cars. Orders are disappearing. Workers are protesting outside Bosch factories.
Remember how the Tesla Model 3 is the best selling vehicle in Europe? Consumer preferences are rapidly trending towards electric cars.
Are Metro Detroiters going to continue supporting socialism when their Mayor or the Governor says they need to raise income, sales, and property taxes to fund roads and schools from the loss of tax revenues?
Or are they going to read The Privatization of Roads & Highways. Or watch School Inc.
And then say. “You messed up. No more taxes. We need something different.”
LOL. We both know you’re going to continue supporting socialism.
“We Didn’t Do Anything Wrong, But Somehow We Lost.”
This is what Nokia CEO Stephen Elop said in 2013 at a press conference. In 2007 Nokia held 51% marketshare of the worlds cell phone business.
What also happened in 2007 was Steve Jobs went on stage and introduced the iPhone. Google followed them that year with the Android operating system.
Nokia did not think anyone would spend $600 on the iPhone when their phone cost $100.
Nokia’s marketshare of the cellphone / smartphone industry in 2013 was 3%.
Nokia went from 51% to basically nothing in six years.
This is what is happening to the auto industry. Especially the Big 3. Everyone guessed wrong.
And because they all guessed wrong they are now playing the biggest game of catch-up in the history of business.
How It Ends…Starts?
The winding down of building gas powered cars is where the Big 3 are most vulnerable. Its because they decided decades ago to outsource parts instead of keeping as many as possible in-house.
By 2024 the Big 3 will have to get on the phone with their 1,785 suppliers in Michigan who supply parts for gas powered cars and tell them that they will no longer be buying parts from them.
Imagine being Gary of “Gary’s Gaskets” who’s company makes one head gasket for the Ford 5.0 motor which go into the F-150 and Mustang.
He gets told that the 2,000,000 head gaskets Ford orders from him a year will drop to 0 by 2025. And per their contract he has to honor warranty work til 2030. Five years after he stops receiving orders.
What are you doing if you’re Gary?
You have one year left of business. You also know you can’t borrow more money from your creditors to expand/grow/start something new as you’d (probably) be committing fraud since you knew orders were about to go away.
Will Ford buy you out since they need your gaskets? Maybe. But then they will have to take on more debt to buy your company.
Thelma and Louise it til the end?
Or declare bankruptcy and say something like “it was a good run.”
What happens if Gary calls it a day?
Hundreds of thousands of F-150s and Mustangs cannot be completed without the head gaskets. The assembly line grinds to a halt as Ford scrambles to get gaskets from someone else while burning through cash reserves.
Same for GM and Chrysler.
It could be something as simple as a $.17 head gasket that topples the Big 3.
1,785 suppliers. Hundreds of necessary parts in a gas powered car.
This is like trying to parallel park cruise ships in a 30 mph wind in a crowded harbor.
Remember, Gary’s been selling 2,000,000 gaskets a year for 20 years. He pays him employees based on those sales. His debt level is based on those numbers. $.17 head gaskets only works at 2,000,000.
Because at 1,000,000 gaskets he would have to double the price of his gasket to $.34 to pay his employees the same wage and to service his debt. And so does the other 1,785 suppliers.
What also just happened at 1,000,000 orders vs 2,000,000 orders for all suppliers? The cost to Ford to build a gas powered F-150 just doubled. Economies of scale (for the first time in a century) are now working against Ford.
And the price of a $50,000 F-150 just went to $100,000. Remember, Ford has the same issues with employees and servicing debt too.
Are you, the customer, going to spend $100,000 on a gas powered F-150 when you could spend $60,000 on a fully loaded Cybertruck. Or even $60,000 on the electric F-150 Lightning?
For $30,000 more you could buy the Tesla Solar Panels and Powerwall with the Cybertruck and save $10k versus the gas powered F-150. And now your house turns into a power plant.
Or Ford never calls Gary. But Gary starts noticing his orders go from 2,000,000 in 2022 to 1,500,000 in 2023, and 500,000 in 2024.
Gary calls Ford and asks him why orders have dropped. They can’t give him a straight answer. Gary realizes the transition to electric cars is happening five years faster than Ford told him.
He declares bankruptcy the next day. Setting off the events above.
My gut tells me this is why the Big 3 say they are going to keep building gas powered cars til 2030. It gives their suppliers time and keeps panic levels low in the cities where the plants are.
And that there is just going to be an event like Black Monday in 1977 in the Steel Valley where 5,000 people were immediately put out of work.
Because of Gary.
Which the Big 3 can then say “we didn’t see the transition to electric cars happening that fast“. Even though they sure as hell did.
The scope of this is mind-boggling.
This is looking like nearly every Detroit Lions game I’ve watched over the past 30 years.
4th quarter. 6:45 to play. Down by 17.
They might score a TD. They might even make a defensive stop and kick a field goal to have a chance to tie it up.
They still lose though. The score might say the Lions kept it close losing by 7.
But everyone watching knows it was over with 6:45 to play.
Not Just Tesla
All car brands are going electric. A race to be #2 is on. With electric cars having fewer parts it makes it easier for new competition to jump in. What happens if Apple gets into the mix?
Arcimoto, Nobe, and Aptera’s electric three wheelers are going to sell.
I’ve been riding my electric bike nearly everyday for five years. Even in the winter. I have over 2200 miles on it. I use it for 90% of my two mile or less trips. There’s 60% life left on the original battery.
I’ve saved over 120 gallons of gas riding it. And not paying gas taxes. Or car registration fees. Or car payments. Or insurance. Or parking. Because of it we’re basically a one car family.
The days of families needing 2, 3, and 4 cars in their driveways are almost over.
Selling cars. Financing cars. Servicing cars. Selling parts.
That’s been the Big 3’s business model for decades.
AC Delco / Motorcraft / Mopar and dealerships are all going away or will be much smaller by 2028.
Remember, electric cars have near zero maintenance and 18 moving parts.
Are you going to spend $50 on a part for your VCR and pay someone $100 to fix it?
No. You’re not. Same goes for gas powered cars by 2026.
“Drive it til the wheels fall off” is going to be replaced with “Drive it til there’s a $1000 service bill”.
So how is the Big 3 going to replace billions of dollars in annual revenue from selling parts and servicing cars? And how are they going to do it fast?
Half of their business model is about to go extinct.
The change from gas to electric needs to happen. I’m all for it.
I eat a liter of exhaust fumes following cars out of the school parking lot on my electric bike after dropping my kids off. It does not taste good.
Transportation is about to change.
Which the Big 3 are not ready for. Nor are local governments.
50+ years of terrible politics in Metro Detroit with major influence from the UAW and Democrats are about to be officially exposed.
Those who vote for politicians who raise taxes. Those who push hard for every road and school millage to pass. Those who want the zoo, art institute, and other millages added to property taxes.
Your day is approaching in Metro Detroit.
You will finally understand what happens when you run out of other peoples money when your mayor says “As you know. We lost a major employer in the city recently. Because of that we need to double your property taxes.”
Then you will understand. But not until that time. That’s the tragedy of the situation.
Don’t believe me? Huntington Woods for the response. (Pg.29)
Sterling Heights and Warren both mentioned how Proposal A is making it hard to maintain services because they can’t raise taxes to keep up with inflation.
Remember, we are at this point when the Big 3 and suppliers are still around.
You can bet your ass that politicians all over Metro Detroit are looking for ways around Proposal A. When they should instead be saying “We need to eliminate everything besides Police, Fire, Water, and Sewer”.
Even if my free market loving Libertarian utopia were to happen tomorrow property taxes would have to be the same.
Why? Because we still have to pay down the debt. We would get the same property tax bill without the services. And then have to wait for a market to form and then pay for those new services too.
You would think City Council’s who intimately know about Proposal A and the restraints it has on property tax increases would remind their constituents before every State and Federal vote that “If you vote for this person who wants to increase spending they will cause more inflation which increases costs to the city.”
No one seems to notice. No one seems to care. Everything is awesome.
I get this false sense of security from people who live in the suburbs that it “Won’t happen here. Only in Detroit.” The majority of factories and offices that remain for the Big 3 and suppliers are in the suburbs.
The Big 3 were able to hide behind the UAW and Democrats for decades. Chrysler was bailed out twice. GM once.
Not this time.
Tesla Model 3 is #1 American Made car. Ford Mustang is #2. Tesla Model Y is #3.
Tesla’s are more American made than the Big 3 cars.
How on Earth are the Big 3 and UAW going to ask for another bailout when Tesla is cranking out 1.6 million cars a year by the end of 2022?
Biden and the UAW are not helping. He’s a turd. He was a turd as VP. He was a turd as a Senator.
When he went on stage to announce the electric Hummer plant was open and said “GM was leading the way” he was lying his ass off. They are not close to Tesla.
People do not like him. And yet, GM brought him up on stage. Along with the head of the UAW promoting union jobs.
Are they going to thank him when they lose their jobs? His inflationary policies are not helping them.
The 2008 bailouts of GM and Chrysler are still fresh in peoples minds. Ford might get a pass because they didn’t take a bailout.
But people are tired of the pandering from the Democrats and UAW and might get a Tesla on those grounds alone.
I Hope I’m Wrong
I really do. And it was a big waste of time. I apologize if it was.
Please. Go fact check me. Show me what I missed.
Show me where Sandy Munro and Tony Seba are wrong.
Show me where my free market loving Libertarian ass has incorrectly interpreted local government budgets and how the impact from losing these companies, workers, and auto related revenues is not going to make a difference.
Maybe I’m off by 200k people who will be affected and $10 billion in debt in my estimates. Hell. Make it $100 Billion. That still leaves $282,000,000,000 in debt and 571,866 employees in Metro Detroit. Still screwed.
I don’t want this to happen. My life is in Metro Detroit. Things were just starting to show a sliver of hope in Detroit prior to Covid.
But I get the feeling words like layoffs, spin-offs (Ford just did), buyouts, mergers, and bankruptcies are going to be heard more frequently in Metro Detroit.
Every UAW and Metro Detroit municipality retiree should be watching this intensely. There is a strong chance your pension will be $0 by 2030.
I don’t think Detroit has hit rock bottom yet. Which is scary to think. And the suburbs are going to get a taste of it too.
Every metro area in the US is going to benefit immediately from the switch to electric cars and autonomous vehicles except Metro Detroit.
It might happen slower here as there is brand loyalty to the Big 3. And people will wait for their electric cars to be made. But there is zero brand loyalty outside of Michigan.
The only way I see Metro Detroit getting through this quicker is by getting Government out of the way. Voting trends suggest there is little interest in that.
If Sandy Munro and Tony Seba are right then Metro Detroit would be in the middle of a financial shit show by 2025 with a start date in late 2023.
Lets end this on an absolute fact.
If any of this happens. If shit truly does hit the fan.
There is no way in hell the Ford family sells the Detroit Lions.
I mean. Why mess up a perfectly good thing.