AAH #718 - Sandy Munro Talks Trump, Musk and EVs

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Speaker 2: Right back in the faddle doing another show, and we got Sandy Monroe here. Actually wait to get into this stuff.

But Garry, usually you've got a trivia question to know.

Speaker 3: This.

Speaker 4: You've been doing really well lately, so maybe this one will be a little trickier for you. But you got

you got Sandy sitting here. Yes, this could be this

could be a problem. Okay, So you know I've been

asking you questions mainly about domestic vehicles. I'm gonna switch

this up for this week.

Speaker 2: Okay.

Speaker 4: So this vehicle went into production in Germany on November seventh, nineteen fifty seven, in today's November seventh, so it's a celebratory day for this vehicle. It ended production on April thirtieth,

nineteen ninety one. Now the plant it was manufactured in

is the plant that currently builds the VW ID three, ID four, ID five, OUDQ four E Tron and sportback Etron.

Over the life of this vehicle, there were fifty seven to ninety one, right, three point seven.

Speaker 2: Million vehicles.

Speaker 5: That way.

Speaker 2: That doesn't even think that because this would have been built in Germany, right in Germany, and if it's building VW things, it had to be a VW vehicle. I'll

give you a clue.

Speaker 6: No, no, well, there you go. That makes it a

lot easier. We don't have to train.

Speaker 2: Yeah, I mean, the only thing that comes to my mind, and I'm pretty sure it's wrong, is the kougol Wagen that Volkswagen made, but that actually started in World War Two during that and then the only other thing I want to throw nah, I don't know. I don't know.

Speaker 4: When I tell you, you guys are going to say, oh, what Trabant.

Speaker 2: Oh in East Germany.

Speaker 4: Oh, I didn't want to give that part up. But

in I mean Germany, in Germany in nineteen fifty seven, there weren't East and West.

Speaker 2: So if I were to say that that, yeah, no, we probably would have right, good one though, gary very good one.

Speaker 6: And basically you'd have to be a communist in order to buy one. I mean when when they opened the

market goodbye.

Speaker 2: Yeah. My favorite story of that plant, which was what

was the name? No, there was another plant where that's okay.

So anyway, when the wall came down and everything like that, and uh, I didn't General Motors take over that plant?

It was uh Anyway, I remember a group of journalists went to where they built the Trebons and there was a U shape in the assembly line. You know, the

line took a ninety degree, a ninety degree ninety and carried on again. And they said, why did you build

the line like that? And they said, oh, because the

roof leaks and leaves it and so we we built the subbly line around where the roof leaks, and we just put a big bucket there. So anyway, there's my

Trebont story.

Speaker 5: That's a good Trabont story.

Speaker 2: Makes it so sandy. We got a zillion things to

talk about here. But look, we just had presidential election.

Speaker 5: Who won?

Speaker 2: Yeah, yeah, that's right. As if you don't know.

Speaker 4: But if form the Elks Club down the street.

Speaker 2: Yeah, so Elon Muska is definitely going to be something to do with this Trump administration. You got a great

relationship with Elon. What the hell do you think is

going to happen with the Trump administration, especially with Elon playing some role in it.

Speaker 6: Okay, so number one, I know that being a Republican prior to the election was very unpopular. I can tell

you that for sure, because I kept my mouth shut a lot.

Speaker 5: I think that.

Speaker 6: Trump is going to make us a lot of money.

I think that industry is going to have a breath of fresh air.

Speaker 5: I think that.

Speaker 6: Elon Musk is very very good at spotting inefficiencies, and he once he gets it into his head that he wants to do something, he does it and he don't stop.

I think it is the old expression, and I believe that this could be a giant turning point. We've gotten.

We've gotten a little too far to the left. As

far as I'm concerned, I don't really care. I don't

want another Russia. Okay, we don't want to be in

that kind of a situation. I don't even care a

whole lot for the stuff that goes on in Europe.

I think it's wrong when you deprive people with the satisfaction of doing a job.

Speaker 5: Then you're you're a thief, You're you're you should be arrested.

Speaker 2: Let me analogy on some of the stuff. So, for example,

Trump says he's going to get rid of all the subsidies for electric cars. You're a big proponent of electric cars.

To me, that would destroy the market, it would cripple it.

Speaker 6: I I think that a lot of things were said, but at the end of the day, Trump is going to have to rub his chin, have a look at what is this going to actually do to the country.

And I think from then he's going to say, well, I I can't do that, and and that's what.

Speaker 2: So do you think some of that was just campaign rhetoric.

Speaker 6: I think I think if he's got Elon Musk on his staff, it's going to be pretty hard for him to say, oh, we're not gonna we're not going to subsidize electric especially when you're looking at what's coming down the pike. If we don't do it, we'll be steamrolled

by the Chinese Sandy.

Speaker 4: But let me ask you, so, Okay, Elon made his bones, as it were, without subsidies. Okay, people wanted those vehicles,

they bought those vehicles. They didn't have tax incentives. They

wanted the vehicles, they bought them, right, so now you have the situation where, yeah, his models do get some tax credit, but you know, by and large that isn't what makes Tesla Tesla, right, and the tax credits weredown to the benefit of Ford and General Motors largely, right, Yes, And if we look at the number of sales that they have in terms of electric vehicles, it's comparatively small, you know, and especially if you were to compare it against an F one fifty or a Silverado or a

you know, suburban, right. I mean, so if you're Trump

looking at this, it's like, why are we giving all of this money for something that is comparatively small and Elon doesn't really need it?

Speaker 6: Well, Elon doesn't need it because he was an early adopter.

So when did you hear about Tesla first?

Speaker 5: What year.

Speaker 2: Two thousand and eight or nine?

Speaker 6: I think I started hearing about him in twenty twelve.

It took a long time for me to find out about him, and really and truly I didn't care. But

at the end of the day, he started off with a little dinky car made for a certain market. He

learned a lot. Then he moved up. He went from

a roadster to the Model S and I can tell you for sure. We brought one in, We tore it apart,

looked at it, quint a piece of crap, but he learned from it. Then he brought out the X and actually, Matthew,

your buddy over at Caarsoft, he brought one over, had us tear it down and look at it. And the

guys that Chrysler asked us, hey, do you think we should buy one? And know why because there's nothing here

for you.

Speaker 5: Nothing.

Speaker 6: This car is extremely expensive to build, it couldn't possibly fit the Chrysler lineup, and I'm not here to steal your money. And so every time he made a step,

he got a few buyers, and he had a lot of enthusiasts and a lot of people wanted to put money into that place. So he's had since let's just

say your number, let's just say is two thousand and eight up till now look at that backclog of engineering, making mistakes and figuring out how to fix them, making your own batteries, making your own stuff. We used to

have big arguments about outsourcing. I have never been a

fan of outsourcing. Outsourcing manufacturing means you're going to kiss

your ass good by period. Same thing with frames or

body on frame. Oh no, no, we can't do that

because in nineteen fifty six somebody did a study. They

did a study in nineteen fifty six, and if you want to make a nineteen fifty six car, yeah, it works fine, But if you're making an electric car, it doesn't work. In fact, now even now we're looking at

people who are designing cars that are hybrid or whatever, and what are they doing. They're going on a body

on frame. So at the end of the day, a

lot of the stuff that we've been kind of like drifting toward based on all the smartest consultants from the East coast you can get it turned out to be a giant incorrect assumption, and now we're paying for it.

So we design an engineer good products in the US, and we know how to build them in the US, but we don't know is what they doing in China and what they should be doing with electric vehicles. And

when we tear them apart and look at them, it's kind of it's obvious. This was the B team. Well,

you know we're going.

Speaker 5: To make big V eights and stuff like.

Speaker 6: Well, the B team got the assignments and they gave their best, I'm sure, but it's just like looking at something from Tesla in say twenty fifteen, twenty sixteen, maybe something like that. It just takes a long time to

pick up on all the nuances, all the different aspects.

And when you have suppliers that are giving you one hundred and fifty little boxes that you can communicate with and it'll give you a signal out, but you don't know how it works and you don't have little intentas on it like what Elon has. So you're doing over

the air type of transfer of knowledge and stuff like that.

Software down loans. Look at the ID four how many

how many people got an OTA on an ID four?

Speaker 5: None? Why?

Speaker 6: Because you can't. You have to go back to the dealership.

They plug in And that was another genius move. That

was another Uh, I can't remember the name. Well, I

wouldn't tell you the name if I remembered or knew it, but but that was that was, Hey, we'll make them come back to the dealership and then you know, maybe they'll buy something else and we'll charge them for putting a plug into the Oh man, I'm telling you this.

Elon was being beat up all the time. Because he

couldn't find suppliers. Then he finally figured out how to

do it himself and he makes more money at it.

Speaker 2: Yeah, well, two things. I mean, Number one, a lot

of suppliers didn't want to deal with them because their volume was so low early and they were like through it.

And that's a key reason why Tesla started doing things in houses. They couldn't get anybody else to do them.

But back to the election, back to Trump, back to Elon for the moment. Another thing that Trump has talked

about is putting import tariffs on everything coming in to the country. Let's stick with cars though. I mean, the

Europeans are having a conniption right now because they think that they're going to get slapped with tariffs. So are

the Japanese, so are the Koreans. But I'll say this,

probably something like ninety of car dealers are Republicans. They

voted for Trump, and anybody who sells imported cars is going to be hop and mad if the president starts to put tariffs on these things. So what do you think.

Speaker 6: I think Trump is a guy who is kind of into business, and quite frankly, I hear what lots of politicians said, right not just Trump, but all the other guys and gals out there, and he all said all these things hoping that it would resonate with somebody. So

they go over and pull a little handle and and give them the vote. What happens during this paranoia time?

I I think I think a lot of that's going to vanish. Putting tariffs. You were around when the Japanese

came out? What happened home buy American? Oh you need

road hugging? Wait, that one was my favorite. You know,

don't buy the Japanese junk, buy our stuff instead. And

my dad was right there, Oh, no way would he buy a Rice Berner.

Speaker 5: Okay.

Speaker 6: What happened four years later? Well, you know that Toyota

is pretty pretty nice, pretty impressive. Things change, and quite frankly,

I think that I think that what Trump's going to do is say this is a meritocracy and let the let the best product win.

Speaker 5: That's what I believe is going to happen.

Speaker 4: So so okay, when when he was in office the first time, we had the Section two thirty two restrictions put on like aluon coming from Canada, which I never thought of Canada as being a threat to our military, but I could be wrong, you know, to John's point, I mean he's you know, said we do this across the board. And the guy who runs Troy to North

America was in town yesterday for Automotive Press Association meeting David Chris, and he was making the point of like, look, you know, the camera is one of the most American built cars of any It's in cars dot COM's top ten.

You know, the content is he goes, he goes, but it's ninety percent. He says, there's still that ten percent,

which is a real problem for us from the point of view because you know, our suppliers may be somewhere else and you know that is going to really have a complication in terms of our ability to price these things.

So even if you know you have a you know, and you look at Ford in general motors where they're on the list, I mean, they're way down the list, so they've got a lot of stuff that's coming from elsewhere.

Speaker 5: So you know this.

Speaker 4: You know, even minor teriffs can be completely distorting of the market. And as your countryman andrews Adam Smith said

way back when you know it's like.

Speaker 6: Tariff's no good, No, We've already tried that a number of times. Isolationism doesn't work. It's never worked, and especially

not in the US. And I didn't move across to

the across the border from Canada to the United States so that I could get more foolish things happening. And

I'm telling you right now it's going to be. It's

like anything else.

Speaker 5: You know.

Speaker 6: They do don't give Olympians, guys that participate in the Olympics, they don't give them a special break because.

Speaker 5: Well, he's Greek.

Speaker 6: I mean, after all, it was invented in Greece, so he should get a two three steps. And everybody keeps

saying the same thing, Oh, we need to catch up. Okay,

let's use that analogy. So our boys are here at

the starting line. We're the Chinese, they're fifty. It's one

hundred yard dash. They're at fifty yard line. How are

you going to catch up? Because by the time you

take off, they're taking off as well. We didn't start

early enough. There was not enough foresight by whoever was

around in those days.

Speaker 5: I mean.

Speaker 6: The two with the three of us, know I spanned from twenty fourteen to twenty twenty in China. What was

I doing with all my basically all my best designers.

What was I doing? Teaching the Chinese how to design cars?

And in the case of Mark Ellis, teaching them how to design batteries, battery lines, electric motors, whatever they needed to do.

Speaker 5: That was what Mark.

Speaker 6: That's what Mark brought to the party. He did fourteen

fifteen lines all by himself or factories, I should say, oh, by himself. We didn't want it. We didn't want it.

He was an American company that couldn't sell battery lines in the United States, and he went over there and did it. And I've told the story like dozens of time.

I was. I was in Shanghai Automotive and they have

this unbelievable coffee shop and a waiting area and I was there waiting to get a latte or something. The

next thing I know, two great big hands are around my back and it squeezed me in air. Monroe, what

are you doing? And I turn around and here's some

guys from Britain And I look around and here's guys from DMW, here's guys from Bentley Rolls Royce, here's from I mean, everybody I ever knew. It seemed like it

was Old Home Week and they had their own bar, so when I came to Shanghai, i'd go and visit him in the euro bar or whatever they call it.

Speaker 5: Yeah, it was.

Speaker 6: They were paying huge amounts of money to get the knowledge, to get the knowledge so that they could bring out a vehicle that would be impossible to beat. And that's

what that's where we are now. And we have what

basically three or four years that's it. We've got three

or four years of real knowledge, real background, because five years before that is when you start making the car.

And now we put them out and we thought, oh this don't work. That wie, hey, I can't make this

work because we're buying it from this guy but not that guy.

Speaker 5: And on and on and on. They're got to.

Speaker 6: I don't know how they're going to catch it, but I know one thing for sure. Putting tariffs is not

going to help. It's not going to help them out.

And if you want to give subsidies, then you can give them to people to try and Cox Cox electrical cation in but ain't going to it's not going to.

Speaker 5: It's nothing. It's not going to be going away.

Speaker 2: So here we are now. The industry in the US

has put in tens of billions of dollars, not just you know, the Detroit automakers, others doing the same thing to build electric cars to market. Demand is not enough

to match how much they've invested in this. TV sales

are growing, they're fastest growing segment, but they're not growing fast enough. What's your advice to the industry right now?

To the legacies?

Speaker 6: Quite frankly, the biggest problem that electrification has is the misconceptions that have been put out range anxiety. If you want,

you can get a car with nine hundred miles on it and nine hundred battery miles on them, these batteries will only last ten thousand or twenty thousand miles, and then you've got to buy another big bat All this shit that was put out people bought it, they really did.

Speaker 5: And I'm not going to do that.

Speaker 6: I'm not going to get stuck with this electric car and it'll just sit in the backyard and rod or maybe it'll blow up it.

Speaker 5: It doesn't work that way.

Speaker 6: But the marketing campaign against electrification was far superior to the one that you know, buy an electric vehicle, and until the automotive companies come together, well especially Forward and General motors, until they come together and start letting the buyer know, hey, you know what, that stuff was crap and we don't know where it came from, but it wasn't from us, because deniability is a big thing.

Speaker 5: And here's what we're going to do. Here's here's what,

here's what the real truth is.

Speaker 6: I got a guy who's got who's got a Model Less with almost a million miles on it. The only

thing I woke up that wore out was brake pads and shock observers and the springs and stuff. At the

end of the day, the suspension took a beating, but the car still works. So I asked them, I said, well,

what's the what's the efficiency of the battery? Says all

it's about seventy five percent. Well, it doesn't have any guts.

Home grows great, it doesn't. It doesn't go as long.

But I mean, we're making a huge amount of money off these things. And if you go to California, go

and get an uber or or a taxi or whatever.

These guys are not stupid. It's cheap, really cheap to run.

To run an electric vehicle versus a gas vehicle. It's

there's no oil changes, there's no radiators, there's nothing. I mean,

it's I don't know why these kinds of these bits of information aren't getting out to the general public. And

unless they are, unless they do come out and they come out from the Fords in general motors, for sure they'll they'll die. You can't you can't win by feeding

people stuff like like I said, one of the one of the posters that I've got somewhere, it says buy for road hugging weight because everything that was manufactured in the older get a big V eight and the Japanese are coming over with the four cylinder engines that just kicked the daylights on everything.

Speaker 5: I think that they've got to start thinking.

Speaker 6: Totally differently, like fire everybody in marketing and move to something else.

Speaker 4: So let me ask you, so you know you're one of the smartest people, like no, I'm serious anywhere when it comes to manufacturing.

Speaker 2: Okay, And.

Speaker 4: John has mentioned many times in the show of the three five percent advantage that the Chinese have in terms of being able to you know, whether it's supplying parts or vehicles or so on, and so, do you see the possibility of traditional manufacturers being able to turn their manufacturing systems over such that they would be competitive.

Speaker 5: Dot dot Yeah.

Speaker 6: Okay, so the big thing is you can do that, but you're going to have to make one huge change.

You're going to have to try and internalize a lot more because if you don't, you're so there's not much difference in the labory between the guys on the line at Ford or Chrysler or General Motors or whatever and the folks over here in the tier ones. Tier two's

are a little cheaper, but tier ones are about the same.

So what's the difference. Well, the difference is that these

guys gave up, they walked away. They sold all the

profound knowledge they add to somebody else. Now getting back

into it is hugely expensive. Chinese don't work that way.

They like vertical integration, just like the Japanese do, just like the Koreans do.

Speaker 5: We got fed a bill of goods.

Speaker 6: A long time ago. Getting to the point where you

can be manufacturing wise equivalent would mean that you have to have depth of knowledge in those things, and quite frankly, the depth of knowledge was it's not there. You have

to go to the tiered ones and tier two sometimes to find out how to make this thing. So if

you design it the same as what you've done in the past and then hand it off to somebody else, they'll figure out how to manufacture it. But those savings

are never going to be applied to you. I think

that outsourcing. And I was on your show and everybody

I can remember at least one guy saying something about, well, say you really, you're really behind the curve here. If

you send it off to Mexico, look at how much money you'll save. And then I'd say something like, don't

save me any money. I can't afford it. And that's

kind of what it boils right down to. They saved

enough money to go out of business. You can't save

yourself save money enough to save yourself into prosperity.

Speaker 5: It don't work. It doesn't work that way.

Speaker 2: Yeah, but you know, to bring the stuff in house at this point, like you's.

Speaker 6: A massively expensive massive it's impossible. It's not possible. So

you're going to have to do something, something to something to change the way that things are done.

Speaker 5: Now.

Speaker 6: You can do hard negotiations and whatever, but you got to remember, if you're a tier one and you're making seats I'm not going to make your seat frame any different than brand X, brand Y, brand ZE. It's going

to be pretty much the same because I got equipment and I got to make money, and it's going to be similar to that. Seatbacks are a little different. But

seaframes on the bottoms.

Speaker 2: What's wrong with that?

Speaker 5: Though?

Speaker 2: I mean, a supplier who sells to everybody is going to have more economy.

Speaker 5: Of skill, makes more money. Tier ones or OEMs.

Speaker 2: Right now, it's it is switched. It used to be

the tiers. The tears are getting clobbered right now.

Speaker 6: Well, I know one thing for sure in tearing apart domestic and European products compared to what I see when I look at a Chinese vehicle or a Korean vehicle when it comes to the electron or a Tesla. When

it comes to the electronics, there's a huge difference, and that difference also really cuts into profitability. They they aren't

using old crap. They they're developing their own chips. They're

making things happen and their software runs. That's the other

thing that's a problem. Communications. In order to make self

driving cars, you have to have edge computing. Everything has

to be wicked fast, and can Bus. Boy, you're going

to get a lot on this one here, I'm sure.

But CANbus is not fast. Oh yet it's faster than

a second. Yeah, that's not fast. And Elon woulded he

put in that Ethernet ring and fast.

Speaker 2: That's the way to go, no question about it. And

I would agree with you. When it comes to electronics software,

you want to bring as much of that in house as possible. But I would argue that commodity parts that

the customer doesn't see or care about. So what if

you source that from a supplier. Well, now, if it

requires electronics to run it, no, you're smarter as the car company to write all that software. But if somebody

wants to weld together metal to make a seat frame, what the hell let them go do it. Okay, but

but okay, the the.

Speaker 4: You know, internal software development. I mean, we've seen in

the last several months the top digital people at the company saying I'm not so interested in working in a car company anymore. And they've only been there for a

matter of months. So how do you get the talent

to do that? I mean, so, you know, to the

point of Tesla, they were in you know, Silicon Valley.

So gee, how hard does it you know, to get somebody who's interested in?

Speaker 5: Everybody there?

Speaker 6: Everybody's got a research center in Silicon Valley. The big

thing is you were just mentioning somebody wants to weld up a seatrame. I would never dream of designing a

seat frame. I made it a metal, Okay, I used

that it.

Speaker 2: So if I'm not a mold, you want a plastic.

Speaker 6: Well not, you can't use plastic either, but you can use die cast die cast aluminum. So it takes about

a second and I'm got it done. There's no Well,

then there's no. But they don't want to make that

big change. They don't want to move from where they

are to where they might want to be because, well, do you realize how how much more costly it is for aluminum? Well, yeah I do, but I've already done

the evaluation based on not just the weight of the cost of the materials, what about the quality? What about

the ability to reproduce it over and over again, absolutely perfectly every time? How about the I mean on and

on and on and then what is weight worth? Well

in China's worth?

Speaker 5: Okay.

Speaker 6: So one of the little expressions that that I had when I was teaching how to do things over in China.

Every engineer one gram every day, one gram every.

Speaker 2: Day, take one gram out of whatever you're working on.

Figure out how to take a grand weight.

Speaker 6: So at the beginning they might have a quilo there, no problem, this will be. But you know what, after

four or five months, it gets really tough. And what

happens when the situation is really tough, people get really smart engineers. When they're backed into the corner. That's when

the brain starts moving. It doesn't move. If it's all

just make one like that one, you're never going to get any You're never going to get rocket chips to the moon. When you say just make one like that one,

well that was good enough. I'm sure it'll be good enough.

Speaker 5: Now. As soon as you've got that attitude, you're going

to lose. So how do you change that attitude?

Speaker 6: If that's that has to come from directly from the very top, you can't. You can't make that like again,

I go back to China when I first went there, and the guy who's the president and probably a huge investor as well, coming into the workshops and whatnot, saying, you know, we've got to work really hard and listen to what he has to say.

Speaker 5: And I know.

Speaker 6: You're feeling uncomfortable about this, but yeah, he had on and on, because when the president comes in and he starts telling you that kind of stuff, people pay attention.

Speaker 5: People now know it's important we don't do that.

Speaker 6: We have this myriad of people in between lay as management.

The layered management doesn't happen a hell of a lot at well, it doesn't happen at Tesla very much, but it doesn't happen quite like that when you get into the Chinese factories and you'll have a whole bunch of people sitting there, you know, ready to listen to what you have to say. And we would classify, well, that

guy is a supervisor, that guy's a director, that guy's a manager, that guy. To them, they're all the same.

They just they're there to build the company, not to further their career. And that's what kind of happens in

the big companies. You know, what's the what's the fastest

way to get promoted in the Big three?

Speaker 2: On?

Speaker 5: No, No, you can't do that. One word I'd say profits, No,

what No, that's the word.

Speaker 2: No.

Speaker 6: All you got to do is say no. There's no risk.

You've already got it sitting there. You'll never make a mistake.

All you got to do is say no. And that's what.

It doesn't take long to figure that one out. If

you say, hey, I'm going to take a chance, you just kissed your ass. Good buy, and that's the way

it works. So you just say no, no, no, that's ridiculous.

I'm not going to waste my time on that. So

what do you waste your time on? Promoting yourself for

that next big promotion? And that's the problem. There's too

much HR telling people, well, you know you're going to be a vice president one of these days, or a director or a manager whatever. HR at Tesla, there is none.

There isn't any.

Speaker 5: Because you don't want to.

Speaker 6: I don't want to have people competing to try and who's going to get the best job. I want to

produce product. I don't care about Charlie who's got a

Michigan ring and black hair and six foot seven. I mean,

I don't care about that stuff. I care about can

you put a car out on the road that that's going to make us money?

Speaker 2: So that's Hey, look, we got to take a commercial break.

Give a shout out to our great sponsors, Bridgestone and Board Warner, and we'll be back to talk with Sandy wood row more after that.

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Speaker 2: Let's do something big, get put together. Okay, we're back

talking with Sandy Monroe about all kinds of things in the auto industry.

Speaker 4: Uh so, so, Sandy, So you were at the WEE Robot event. Tell us about the event and then we'll

get into the products that were there.

Speaker 6: Well, there were a lot of people that were invited to that event. More than I thought. I thought it

was brilliant. I I've never seen so much technology that

works in one spot in my whole life. Now I

read I read some of the reviews, and I wondered, where did these guys go? I mean, I don't I

don't understand it. What I saw and what some of

the writers saw wasn't the same thing. I saw robots dancing,

I said, design robots I worked on. I worked on

robots from the very beginning, from what you called unimates.

I mean, I know where they came from. I know

how hard it is to do a lot of stuff.

And here's these robots dancing and handing out gifts. I mean, uh,

I was totally blown away by that. The model to

Oh no, no, Sandy, you don't have it correctly. That's

the that's the robo vehicle or whatever they're calling it, the little turbo cab, robocab.

Speaker 5: Okay, really you think that's what it is? Uh? I

think you're full of shit.

Speaker 6: I looked at I looked at that, and I found out what the price was. With no steering wheel, no brake, pedals,

no nothing in the car except for the driving.

Speaker 5: The driving. It can do it all by itself.

Speaker 6: It's gonna who's going to pass up? Which which Who

wants to learn how to drive? Who wants to go

and get a driver's license. When you're gonna have one

of these things, you buy it, you get in it and tell it where to go. I mean, as soon

as I looked at it, I didn't see robo taxi.

I saw a model too, that's what it was supposed to be.

Speaker 2: Yeah, that's what I said too. In fact, what I

said is why not throw a steering wheel and some pedals in for people who want that?

Speaker 5: Yeah, and you can.

Speaker 6: You can do that because it's just electric, a couple of wires basically and a steering wheel. But at the

end of the day, that's not what a lot of people saw. They had an image of what they wanted

to see and it wasn't there, and when they didn't see it, they had to throw it under the bus that speaking of buses, robovan or whatever they call it, I'm telling you what.

Speaker 5: That blew me completely with a huge fan.

Speaker 6: I love the way it looks exactly well. My house

when I was single was deco. I'm I'm really into

that look. And when I saw that thing, I upeed

my pants. I was hoping for a van, but that thing,

it's blow away good. It's the best I've ever seen.

And when I saw they said that you can get twenty in there, I saw fourteen people get out of that thing, and then the ones jumoke, I can't remember. Wow,

you know, it's only about an inch off the ground and blah, and somebody should Hey, they got this new thing.

Now you blow it up like a balloon, and the and the car goes up and then you and the car goes down.

Speaker 2: Just like the lowriders. Yeah, but you know that what

they showed was a twenty person one, right, you could shrink that down. You could make that a four passenger.

Speaker 5: Version, exactly right, exactly.

Speaker 2: I saw that and I flipped, you know the same thing.

My reaction was, Wow, there's the future. Okay, so Sandy.

So if somebody could look at that and.

Speaker 4: Either of them okay and and say, well, isn't this, in a sense mechanical vaporware. I mean you said you

saw a lot of technology there. I mean, what is

the underlying technology for these vehicles?

Speaker 5: Well? Software?

Speaker 6: So you've got you've got some really cool products, no question about it. But what makes them cool is the

software that goes in it. And nobody writes software like

like Tesla does. So I know people say that you

can't reverse engineer software, but leave me it's possible. You'll

get in a shedload of problems if if you tell people, well, when you look at Tesla, the number of lines of code for Tesla.

Speaker 5: It's minuscule in comparison.

Speaker 2: To I ran into some dedies the other day or software guys the other day, and they were like, don't brag about how many lines of coder in your car.

You don't want to brag about you want to brag about how few lines of coder in your car?

Speaker 5: Exactly right.

Speaker 6: And that's where again, the marketing of electric vehicles is so far off at any and it's funny you don't want to talk of You want to say, we can do this with three lines of code. Oh, and we

can give you a circuit bard that's like all in one ship. Excuse me, too much talking anyhow, I can

tell you for sure that the way that people are marketing there's tough. They're completely wrong.

Speaker 5: Been a hell of a week, but anyway.

Speaker 6: Yeah, And in essence, the fewer the lines of code, the better are it's less to fail, it's less the trouble is shoot. Yeah, and if you've got if like

Elon makes his own chips, it's hard to beat that.

Speaker 2: Well, they buy chips too, Oh, they buy.

Speaker 6: A lot, but they just signed them. They just signed

them and then they'll send them out to Timewan or something like that, but only because nobody will do it over here. They couldn't find anybody to make the dojo chip.

Nobody over here, right.

Speaker 5: Why, well, you know what you need to do, it's outsourced.

Just send that outside and you can.

Speaker 2: Except for you don't want to see the legacies trying to learn how to design. I mean that train left

long ago. They really do need. What they need to

do is partner with the chip makers, bring them in early in a program, get their knowledge on things.

Speaker 5: But you know that's what the Chinese did.

Speaker 6: They brought us from an engineering standpoint, they brought us in.

They brought in actually they paid BMW and Mercedes and GM and everybody else. Hey, come on, Volkswagen especially, come

on to China. We'll give you all kinds of free stuff.

And when to show us how to build a car, you gave it all away.

Speaker 5: I mean, how dumb?

Speaker 6: I mean, and I look at things like this and I go, this is plain old stupid.

Speaker 2: Why did you do that?

Speaker 6: And then I well, you know it was financially prudent at the time, but you gave away all your profound knowledge, You trained your enemy.

Speaker 2: Why did you do that?

Speaker 6: Well, it was unprecedented. Really, you remember a company called

McDonald Douglas. They gave everything away to Airbus.

Speaker 5: They gave it away. Oh hey, we've got those French

guys to make these parts.

Speaker 6: Really, and I can go and look at thousands of different examples like that, we give it away and.

Speaker 5: Then uh, we shouldn't have done that.

Speaker 6: It's just amazing. And it happens over and over and

over again. How do we miss this?

Speaker 5: See?

Speaker 2: I don't quite see it quite that way to me.

I mean, China was such a you know for the twenty teams. Boy, if you weren't there as an automaker,

you were missing out big time. But the thing that

I think really hurt all the legacy automakers over there was when COVID hit all the execs, all the top people stopped going to China for about four years, and they missed the revolution that was going on in electric, in software defined, in zonal compute, all that. They missed

it all, and when they finally got their boom, they had missed an entire design generation. I think that's how

they fell behind. Now I'm not going to say that

the Chinese would not be as successful, but I think that the Western including Japanese and Korean companies, would have done a whole lot better if they if their top people had been constantly on the ground and seeing the changes that were happening, because when they finally did see it, it was too late.

Speaker 6: Well, like I said, I started over there at twenty fourteen, and I couldn't I could. Actually I had two purchase

orders in my backpack that are equivalent to about four million bucks. And on the airplane ride back to the US,

Trump said, Hey, you know what, these Chinese guys are going to kick our ass. I'm putting tariffs on everything.

And by the way, if you're working with Huawei or Zte, you're not working.

Speaker 5: With them anymore.

Speaker 6: I got back and those four million dollars were like interesting but gone. And because of the way that I

had to stop talking to the folks that CTE and Huawei, my Chinese visa went away.

Speaker 5: They they're.

Speaker 6: Chinese are General son Sue is the best general that was ever alive.

Speaker 5: He was Chinese.

Speaker 2: Sonsu from what was it six seven hundred years ago or something like that.

Speaker 5: Oh no, he would be about the same time as christ.

Speaker 2: Oh Okay, several thousand years ago.

Speaker 5: A couple of thousand years ago.

Speaker 6: Anyway, all of his notes and whatnot, his books, they get translated, and if you go to the military colleges and whatnot, they all read them. Because it's really clever

the way he does things. He takes what is commonly

known as this is the way we should do it.

And then he says, now, if these guys are all walking down this plat down this way here, attack them where they're not. In other words, they're going this way,

so you attack them when they're they don't know what's going on, so you go an attack here.

Speaker 5: And in general that's got this. He's way in the

front of the pack.

Speaker 6: He doesn't really realize that his army is being eroded a little at a time because we're attacking in other areas, cutting off his supplies and things like that. And that's

what the Chinese did. They don't follow NBA rules. They

follow military rules and or strategic rules.

Speaker 2: But here's the thing about the Chinese industry, I just don't see on the EV side, certainly where it's sustainable, because only two Chinese companies are making money on their evs byd and le Outo and le Otto just reported a big drop in its earnings, by the way, and everybody else is losing money, and we just are looking at there's some telephone company that's getting into making EV's right now, and I mean so more players are coming into the field where there's massive overcapacity to export as

much as they can as a pressure relief valve. I

just don't see this thing being sustainable.

Speaker 6: I do because quite frankly, the Chinese don't think like we think. If we use our rules to play against them,

it's like going to play football but you only know baseball, and all of a sudden you walk onto the field and your catcher's mitt doesn't do you much good trying to catch up.

Speaker 2: No, but if you run out of money, you run out of money. I mean need another EV company. Just

stop building cars because it couldn't sell them.

Speaker 5: Here's the thing.

Speaker 6: When I was over there the last time, which was like late November of twenty nineteen, and I gave my speech, I was interrupted by chairman. She he wanted to talk

before I did. I was supposed to be the keynote.

And as soon as they said, mister chairman, she wants to talk. Okay, good enough for me. And what did

he tell them? He said, there's six hundred and fifty

car companies. I want to see about one hundred and

fifty car companies by the time we get to twenty twenty five. What happened to all those companies? He said,

you got enough to keep you going. I know you've

got stocks, and you've taken the money from here, there and everywhere, and you ferret it away. Well, you're going

to have to use that money from now on. And

then Denny went. He came out and said that we're

all Han. Han means Chinese, and.

Speaker 5: We're all Han.

Speaker 6: So get with your brothers and your uncles and your cousins and figure it out. And then he left kind

of a sad audience after he stopped talking. They're at

one hundred and sixty car companies right now, and some of them don't make money. But that's not the way

an entrepreneur thinks. It's the way a financial guy thinks. Right,

a Harvard guy would think like that. No, I agree,

I agree, I don't think that way.

Speaker 2: Well, when you run out of money, it doesn't matter how you think.

Speaker 4: So Sandia, Okay, when you look at the Western auto industry now, from the point of view of the products that are rolling out, whether they're electric or ice vehicles or yeah, you know, hybrids, what have you? I mean,

do you see ways that the Western companies can make some shifts that allow them to become more competitive?

Speaker 5: Yeah?

Speaker 6: Absolutely, there's I mean, all you have to do if you want to see why it is that some car companies fail, it's because they don't keep up. So I

don't want to, you know, throw a car company under the bus. But didn't we just hear something about Toledo

going down to one shift on the money maker for that company?

Speaker 5: How did that happen?

Speaker 2: You're talking Wrangler and Gladiator going down to one.

Speaker 6: How did that happen? I drove a Wrangler since I

was thirteen. I love that car twenty thirteen, a Wrangler.

I traded it in for a new Wrangler EV whatever.

Speaker 2: And not EV plug in hybrid.

Speaker 5: It was a plug in.

Speaker 6: It was a plug in hybrid, and I was very unhappy, and I tried to bring it up the hill. We

have a my wife and I have a house in a country, and there's a hill. Our house is up here,

and then there's weeping beds for our sanitation system. I

drove it across the sanity over the top of the weaving beds, which I had done with my twenty thirteen.

I drove it across there and I tried to go up that hill, and I got about halfway two thirds up, and I could see that if I pressed on that accelerator, I was going to be tearing the grass up, and I would be a very unhappy, unpopular guy. In my house,

my wife is standing at the edge of the driveway near the and she's got her arms folded, and Okay, anybody that goes off roading, you're in that kind of a situation, you don't like it.

Speaker 5: You've got a couple of options. But the option that

I took. I'd rather flip the car over than than

dig a big hole.

Speaker 6: So took it out of gear, let it coast down, kept my fingers crossed, got around. I drove past like

around the weeping field and up the driveway, and as I'm bringing it around to put it in the in the garage, Sue yells out sell it and goes into the house. I only had that car for a month.

That was not an off road vehicle. Then I got

a rivan. Wow, you look at the video of me

taking it over four foot diameter logs and up cement a concrete hill with all the all the the wranglers, you know, kind of dancing and trying to keep their foot, you know, with a torque and blah blah, and I go off stop dead because I did it really quickly. Okay, fine,

So I got in the line again. I waited until

the guy got up halfway. I went up stopped the car.

You know what, that's death that that. I don't know

what the slope is on that hill, but it's enough that I would really be uncomfortable if it was stopped.

Speaker 5: And I sat there. I waited until the guy got over.

Speaker 6: The top, punched it, squealed, the tires jumped right over the top of the thing. Where is that kind of excitement?

Where's that excitement or a wrangler? Why when they saw

that videos, those videos at right across the street from it's basically a Chrysler, everybody thought it was great, Wow, that's really something we got to do that.

Speaker 5: What did they do?

Speaker 2: No?

Speaker 5: Right, how do you how do you keep your job? Nope?

Speaker 6: I gotta do say nope, and you're safe because if you say no, you didn't take a risk.

Speaker 5: Okay, now, what do you want to do? Well, how

are we going to catch up? Well, that was three

years ago.

Speaker 6: That's three years. You can't get back. What are you

going to do now? Oh, we're going to catch up.

The enemy is at the fifty yard line and you're at zero and you're doing one hundred yard dash. How

do you catch up? You have to have some serious

changes in the way that company management views the job or the role of the engineer and the manufacturing people.

They have to change a lot in order to in order to make any kind of an effective change.

Speaker 5: And I don't really see that happening right now.

Speaker 4: What's the view that they need to change? I mean,

how do they need to begin to perceive manifact, train, and engineering number one?

Speaker 5: The first?

Speaker 6: Okay, so in my company, if somebody comes along, well, Sanny, I don't think.

Speaker 5: We can do that. You're probably right, You're done. I

I have no heart.

Speaker 6: What's in fact? Elon is man. I My guys think

I'm kind of brutal. I am nothing compared to Elon.

If you don't produce, he says. If if if a

wood carver doesn't produce chips, he's he's not doing his job.

You have to be allowed to try and take things on and if you fail. I mean Henry Ford used

to say, uh, say, failing is the uh is the impetus to move on only smarter. Well, we aren't doing that. Well,

you know it's my job. You know, I got a mortgage.

Speaker 5: I can't.

Speaker 6: I really can't. You know, you can make that suggestion

if you want, But it's my ass out there, it's your ass out there, no problem. But but at the

end of the day, if I see that kind of stuff with smaller companies, I immediately go straight to whoever's in charge and say, that guy will never help you out.

He's too afraid to do anything. Actually he or she

too afraid to do anything.

Speaker 5: Get rid of them.

Speaker 6: They're just they're nothing but an impediment. And sometimes when

you get rid of that kind of a boat anchor, things move along a lot faster because in a lot of cases it's middle. We call it the frozen middle

at Monroe, the frozen middle. They want to get up higher,

but they don't want to have anybody crossing through them, and they don't want to make any mistakes because they know that just around the corner they're going to get that VP roll or something that kind of mentality. That's

the hr that I was talking about earlier. That'll kill

your company every time. If people aren't willing to try

things and make a mistake and put you into a better financial possession, it should be released. Let them going

bugger somebody else's company up.

Speaker 2: But you really need it at the top because it has to be at the top. People who are running

entire departments can't make the change that you're talking about.

They can, they can affect their department perhaps, but what you're talking about is you got to change the complete way.

You got to bring down the silos and can get these people to work together.

Speaker 6: And cultural changes happened when I was at fort. In fact,

somebody wrote one time, actually I actually said this, and then somebody wrote the part underneath it.

Speaker 5: It was I said, it's.

Speaker 6: Fabulous to know that even at a low level, someone at Ford can make a change and.

Speaker 5: Have the company, you know, benefit, or something like that.

Speaker 6: And at the bottom was spoken by Sandy Monroe, a former Ford Motor Company engineer, that went around like wildfire, that that kind of stuff. Because I didn't say no,

that that'll get you into trouble a lot. If you're

with that old fashioned kind of culture. And the old

fashioned kind of culture is cheap, cheap, cheap, cub cheap, and that don't win. You can't win.

Speaker 5: Now.

Speaker 6: You were saying they're not making profit right now, there's a ton of people. There's a lot of billionaires in China.

And when people aren't making money, what they're doing is they're tapping these other billionaires that may be in real estate or whatever, and they're asking them for money. And

because they all feel that somehow they're one great, big giant family, the money shows up. But trust me you,

when it comes right down to it, if they need cash, they'll get it. And if they aren't making money today,

it doesn't matter because they have thousands of years of history of making things happen.

Speaker 5: Yeah, so I hear different mindset.

Speaker 2: The state owned enterprises will get the money, the government owned ones will get the money. The independence, I'm not

so sure about what it's byd Eyd's independence.

Speaker 6: And and and yet they're they're on top of the game.

And the reason for them is because somebody invested a hell of a lot of money in a word buffet, Yes, exactly, invested a hell of a lot of money in them and told him what he wanted them to do. And

when they stumbled byd what did it used to stand for?

Speaker 2: It? Build your dream?

Speaker 5: Bullshit? It was borrow your design, That's what it used

to say. That was it.

Speaker 6: And what were they doing? They were they were taking

the best we had to offer, trying to figure out how to turn it into their vehicle. And when it

failed or whatever, they got a chance to do it again and again and one buffet. All he did was

shovel money in. That is also happening. It's just that

we don't have an American doing it.

Speaker 5: They have.

Speaker 6: They have their own billionaires in China that are shoveling money in these things, and they don't care about making money today.

Speaker 5: The objective is to win the war.

Speaker 6: To win the war, not to appease somebody in Wall Street for next quarter. And until you have a long view,

you can't beat these guys period. They have a like

I said, they've been around for thousands of years. They

have a whole different perspective on winning, and they have depth is immeasurable.

Speaker 2: I mean, no, look, I agree that they've got the long vision. They're winning the war right now. Like you said,

they're at the fifty yard line. I think there's going

to be hell to pay in the Chinese market. But

the ones that survive are going to be so strong, the Byds, for example, maybe the Liado's, maybe Gilie as well.

The survivors are going to be.

Speaker 6: Super strong to beat, impossible to beat. And that's something

that people can't grasp. Oh, we did it before and

we can do it again. They've got little songs like this, Okay, okay,

that's fine. Little songs don't get you to where you

need to get. And quite frankly, if you don't change

your culture doesn't matter, you'll get run right over.

Speaker 2: I don't think it's changing.

Speaker 4: So, Sandy, five years from now, what's the Western industry look like? Smaller companies, going away, companies, combining all of

the above.

Speaker 5: I don't think that.

Speaker 6: So we were talking earlier about you know who's in trouble Stilantis, Volkswagen got to be right at the top of the list. I got a thing from a guy

in Holland who I don't know how well. He's connected

really well at Volkswagen, and he sent me some information and he's always been right. I've been getting getting emails

from him for since twenty twenty, and he's always absolutely one.

Right when I was saying, you know what, the only people, the only company that's going to be able to clobber uh Tesla is going to be VW.

Speaker 5: And then they gave me the ID for Are you kidding me? This?

Speaker 6: This is the best that this can't work, This can't be right. Something's wrong? Is there something here that we

And because they had to electrify America and I couldn't make the ID for work on the charging station, I had to go to something else in order to make the charging station where how is this even possible? I

don't know what happened at Volkswagen, but they're they're in deep trouble.

Speaker 5: So Stilantis is in trouble.

Speaker 2: Because I'd put Nissan on the list too.

Speaker 6: Yeah, Nissan is also. I mean, there's a lot of

guys that are in trouble on BMW and Mercedes are are are in for some tough times. But you mentioned Gili.

I'm telling you, Gilian great Wall.

Speaker 5: They're formidable. Yes, they are huge.

Speaker 6: And I'm telling you right now I did business with f A W B BYD Beijing Automotive, Gili great Wall all kinds of different companies. All these guys, they're wicked smart.

Their engineers aren't dumb. Okay, maybe they maybe they attack

a problem a little differently or whatever, but they soak up knowledge like a sponge, and they are not afraid to take a risk. And that's where the culture changes.

I mean, one guy, show me the car that in fact it's I've got one.

Speaker 5: In my office.

Speaker 6: It's got a fish tank in it. There's a fish

tank where the car soul would be, so people could want fish while they're while they're driving their vehicle. They

thought it was so good that they made little cars like that. It was at the Detroit Auto Show. Everybody

laughed their tail off. Well guess what, They aren't putting

fish tanks in your cars anymore. But I will tell

you that they're doing just fine. And then we haven't

even talked about the other ones that are sitting out there.

Speaker 5: The Vietnamese. Then fast, I'm telling you what.

Speaker 6: We're tearing a park key As and Hyundai's they are pretty snappy. We've got a couple of Japanese cars on

the floor right now. We're looking at They've they've taken

a they've taken a giant U turn on the way that they were going to do things in the past to the way they're going to be doing them in the future. They're going to leave a lot of people

in the dust. They're doing really well. I don't see.

I don't see how Volkswagen, certainly Volkswagen and Stillantis, I don't know. Stillantis needs to fire the guy in charge.

I mean, I would recommend it right this very second.

He is the wrong guy to put in charge when you have that many people that up and leave or.

Speaker 5: Get fired at the top of the house. What's that

old give away?

Speaker 6: I talk to executives every once in a while and I bring up this story. So when I was a kid,

we used to kill rattlesnakes. If you want to kill

a rattle snake, you don't cut off its tail. That

maybe where the noise is coming from.

Speaker 5: But you cut the head off.

Speaker 6: That's where the problem lies. Everybody's trying to cut the

tail off.

Speaker 5: It's a mistake. You've got a problem.

Speaker 6: You get rid of the head and all of a sudden, the rattlesnake is just a skin that you can make a belt out of, and if you like it, you can eat that meat, not me, but hey, we used to sell that to the other farmers.

Speaker 5: But at the end of the day, that's kind of its kind.

Speaker 2: Of Look, I agree to me. It's a real puzzle.

Why the board of directors at Stilanti's decided to stick with Tavares.

Speaker 6: I'll bet you anything. It's because of a contract that

he had him signed.

Speaker 2: Oh of course, but anybody can get bought out of a contract. How much money do you want to lose?

Speaker 6: So you have to pay this buy forget, forget the money that you're going to lose. You're going to lose

a whole industry. North America is dying. I mean, we

went to three shifts to two shifts and one shift on a product that everybody used to want.

Speaker 5: What the hell's going on there?

Speaker 2: Yeah, look, you're preaching to the choir. I mean, you know,

Stillantis North America accounted for sixty percent of the profits.

It was the golden goose, and Tavaris killed the golden goose.

Speaker 6: He went to find the eggs inside of it. That's

what happened to the golden goose in the story. Somebody

cut it open so we could find out where the source of the golden eggs were coming from guess what, one at a Time's good fishing.

Speaker 5: If I had a.

Speaker 6: Goose that we was shooting out golden eggs, I'd be happy.

Speaker 5: Yeah, you'd buy it the best chicken steed.

Speaker 2: Right, So, look, we could go on for another hour.

This is really good stuff, but we're gonna have to wrap it up. And always great to have you on

the show, Man, It's always good.

Speaker 5: Yeah.

Speaker 6: Well, I'm glad that, you know. Then we got a

chance to get together again. We haven't done this in

a long time.

Speaker 2: Oh yeah, yeah, the beginning of the year you were here, but that was a long time. That was We're at

the end of the year practically, and here we are. Yeah,

but no, great having you back on the show. Gary,

you and I will do this and we have Chris Benjamin right the next week.

Speaker 4: No, that's a couple of weeks. December fifth, okay, December fifth,

and next week is Michael Rowinette Michael Robinant.

Speaker 2: Yeah, okay, good do that. Then. I want to thank

all of you for having tuned in, and if you haven't done so week yet, please subscribe to our channel or sign up for our newsletter on outline dot tv website.

But for now, we'll see all next week.

Speaker 1: Auto Line After Hours is brought to you by Bridgestone Tires, Solutions for Your Journey, and by Borg Warner. The automotive

industry continues to evolve, and so do the opportunities to define it. Borg Warner, one of the world's most admired companies,

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