Joe Simpson: 0:02

Hello, I'm Joe Simpson.

Drew Smith: 0:04

And I'm Drew Smith.

Joe Simpson: 0:05

And welcome to Looking Out the Podcast, auditory sidekick to the newsletter, in which we connect the dots across mobility, design, and culture.

Drew Smith: 0:15

Coming up in this show, well, it's been about two years since we last ran into one another at the IAA in Munich, Joe. So we thought that it would be a good idea to have a bit of a review of the show and to understand what it means for the industry at large. So we're going to talk about the classic German rivalry of Mercedes versus BMW BMW versus design, because they seem to have been waging a bit of a war against themselves on that front. Renault versus the affordable car Volkswagen group versus itself and then of course the big backdrop to all of this, which is Germany versus China. How does that sound, Joe?

Joe Simpson: 1:02

I mean, I think it should be good fun. Munich was last week. I was there. You were watching from afar. Let's go.

Drew Smith: 1:09

Awesome. So I seem to remember the last time we were face to face in Munich, there were a number of very large beers consumed at the Hofbrauhaus where we were trying to wrap our heads around this new type of motor show that the IAA had, had, had taken on. No longer was it one massive exhibition site in Frankfurt that required a Rolls Royce to get from one end to the other, or very, very, very sore feet, but it had this split personality between the, Industry exhibition halls out at the Messe and then in, in some cases, these quite beautiful exhibition spaces that the brands were setting up within the center of Munich itself, which if, listeners haven't been, it's an incredibly pretty city. How has the Munich motor show moved on in the past couple of years?

Joe Simpson: 2:11

Right, so, the setup was as you describe and last time I think we very much had the view that being out at the Messe was a bit sad, felt a bit old fashioned, and we were like, well this isn't very new, and then on the second day we went into the city and were like, oh, yeah, this works, this is good, this is, Brands meeting the people. This is cars and mobility in outside space and daylight and the city and seeing things on the street in context. And in some cases you had a totally different perspective and this year, two years on the same, but I would say more so, which is to say what I understand is that the IAA have done a deal with all the brands and exhibitors and said, if you want a space in the city and you want to build something clever or even small or entwined in the city, you have to have an exhibition stand at the Messe Nonetheless, what was interesting was that clearly the brands felt probably quite similar to us, and the stands at the Messe were certainly not what they once were. I think Christopher Butt, or Autodidact, has a quite good piece on this about how journalists on the press day used to beef cheek and lashings of red wine were perhaps a bit disappointed by the fact that you could only find a coffee and the odd pretzel and generally show stands, which were in some cases not much bigger than the room i'm sitting in

Drew Smith: 3:45

Didn't Opel have a show stand that was the size of a postage stamp?

Joe Simpson: 3:50

I mean, yeah, I mean maybe bus stop is generous. It was literally They could barely get the concept car on it which was just quite weird and quite amusing and yet you had these huge sprawling stands by people like Continental and Mobius and it became like a supplier trade fair. So I think by the middle of the afternoon on the press day, most people had left the Messe and gone to enjoy the sunshine because one of the things that boring side detail, but actually quite important is that last time, Munich served us with a glorious two days of weather, and this time it did the same thing more so, and I still don't know quite how this format would work if it decided to just throw it down with rain. But it was 27 degrees, there was not a cloud in the sky, and so on day two, when all the city centre pop ups or brand houses or however you call them. And they were quite varied in terms of their size and number and set up, it was just so nice. And as you said, you can wander around the center of Munich, you can shop, you can see real people. You can have. food in a nice restaurant, you could grab a beer or coffee and then you could go and look at a new Renault or you could walk into this, some temple to techno hip hop that Mercedes had set up and wonder what the fuck was the point of CUPRA and things like that. So, it was really quite, enjoyable from that perspective.

Drew Smith: 5:15

The Mercedes one from, from the images, it felt like a similar level of commitment to the Mercedes of yore when I remember that their, their Frankfurt show stand cost something like 22 million euros. Right. And, and, and although the, the, the stand at the center of Munich probably didn't cost anywhere near that much because, cost of living crisis, it was a remarkably bold. And I think it's, it's, it's interesting to relate that to, to, to BMW's presence in its hometown.

Joe Simpson: 5:51

Right. So a couple of things that you said. One is, it made me think exactly of those days, the Halcyon days of the, the Frankfurt Auto Show, where Mercedes had an entire hall that they just took over. And it was like, I don't know, it was just weird sometimes, wasn't it? Or Audi spent, as you said, millions building a world in this forecourt that cars could drive into and see them disappear. And dry ice would fire out of and stuff.

Drew Smith: 6:20

Well, and BMW had that racetrack. Remember the year the i8 concept was launched. They had a racetrack running through their hall.

Joe Simpson: 6:28

That's right. Yes. So we're maybe not quite at those levels, but it definitely felt with Mercedes that they, I mean, they, they built this They built this stand that was through a passageway off Is it Oberplatz? I can't remember. My Munich geography is not very good. But it felt a little bit like a cathedral square. And it was back to these days of almost like cathedral to the car. And you went in via this like interesting labyrinthine gateway and then up some stairs. And then you were brought up and then you entered onto this balcony mezzanine where you overlooked this what can only be described as light show that was introducing the CLA, which made it very difficult to see the CLA.

Drew Smith: 7:13

Was that on my purpose perhaps?

Joe Simpson: 7:15

I mean, well, let's, let's be, let's be, it's just, we're jumping around quite a lot in terms of the what we said we'd say in this show, but my take on the CLA is actually, strip all the tinsel off it and not so bad, quite inoffensive, quite reasonably proportioned, quite professionally surfaced, but Jesus Christ, tinsel, I mean, talk about a brand going nuts with its logo as graphic motif. You have, yeah. Now the three points are, like, bigger than ever in the grill. And then... A set of grill texture made of mini three pointed stars, and then main lamp graphics that are three pointed stars, and then three pointed stars all over the aerodisc wheels, and three pointed stars all over the full length glass roof, creating a shadow effect inside of three pointed stars, and three pointed stars on the seats and the door cards, and it's just like... I mean, talk about it's like, the very obvious, like, Louis Vuitton bags. It's the opposite of subtlety. And here is maybe where we make the transition to the comparison with, with BMW. And I think to say that Munich is BMW's hometown, there's a quality with BMW where the stand, both last time and this time, felt like a real effort to actually almost try to fit into a cityscape to not build temples to the car to not build grotesque hills out of wood and metal and something that was quite subtle, in some ways, quite playful, quite fun. A lot of use of yellow, which I think is a very on trend color this year. Quite modern, quite fresh, quite future facing. And actually not a huge amount of car: they'd put Mini and Motorrad and BMW together. So much less of a show-off statement is where we find ourselves in quite an interesting space with Mercedes and BMW. Mercedes are still really doing all things to all people. I said to you at the show, or after the show, it's like they're threading the needle between speaking to their audience of taxi driver, octogenarian landowner, and, I don't know, gangster, movie, influencer person.

Drew Smith: 9:43

It also feels like the CLA was still very much speaking to a Chinese audience from Germany and, and we can come onto the significance of that. But it was such a wildly different statement of intent and, and mood and mode from, from BMW.

Joe Simpson: 10:05

Right, but Mercedes really has this duality at the moment. So then outside, you had the new E Class in all-terrain spec, in estate form, in a demure shade of green, which actually suited it very well, with a brown interior, and some actually quite nice... color material that felt very German market orientated and despite the still some level of tinsel, actually quite a well done, well executed, quite classical car. And then further away in the car park, this reminder that Mercedes, when it puts its mind to it, still is this might of engineering and prowess in the form of the EQXX, which is just the most, sorry, exquisitely executed thing, which is so small, particularly in terms of its track, and so beautifully refined and so exquisite in its materials and they're just letting people get in and drive it. And for people not, not aware, this is Mercedes' demonstrator of how to achieve essentially hyper efficiency in the battery electric era. So it's a CD of, I think, 0.17. They've done real world range tests where they're going a thousand kilometers on a charge and I can't remember the figures but the battery isn't that big. Even the Mercedes Benz sticker in that case It's actually a sticker. It's not a Mercedes Benz logo It's a sticker on the and it's like that level of attention to detail on how do we save weight? How do we take weight out of it? All the materials are from things like mycelium, it's mushroom based real real effort and thought and like advancement and advancing the car and it's like this is the thing that fascinates me about Mercedes is this It's this brand of juxtapositions now.

Drew Smith: 12:05

It felt the EQXX feels like the the throwback to the halcyon days of the the c111 when when Mercedes would regularly put out this statement of intent that, as you say, demonstrated their, their technological superiority to the world. But I want to come back to the E Class and, and sit that against your experience of the BMW 5 Series, because of course, these two cars historically have been the mainstay of the image, if you like, of, of, of these two brands. Well, what, what, what's going on with the 5 Series?

Joe Simpson: 12:48

I think it's a fantastic example of the challenges the industry faces in electrification now. So, again, just for readers that aren't fully aware of the minutiae of the detail here, BMW and Mercedes now have very different strategies on this. Mercedes has decided to do a full on split. So you have the EQE, which is a E sector sedan, which is on a platform, it shares in a lot of bodywork, it shares with the larger EQS and they're the electric sedans in the E and F sector. And then they keep the regular, fundamentally internal combustion engine based, different platform, E class and S class equivalent. So you've got a internal combustion engine car, which yeah, you can get in hybrid and plug in hybrid form. And then you've got the fully electric one in the EQ models. BMW are taking a completely different strategy and they are basically taking one platform and making it I think they call it like"electric ready" or"born electric","electric first" or something, but it's fundamentally a platform developed to take electric, plug in hybrid, and ICE. So the new 5 Series is available in petrol, diesel, hybrid, plug-in hybrid and fully electric versions in i5 form. And it's fundamentally... same platform and same sheet metal. So they differentiate through mostly color material exercise. And the result of this is that the, the, when we look at Mercedes, the EQE and the EQS are quite to many people, aesthetically challenging. They're an interesting set of proportions. And Mercedes have, again, I think probably there's probably many upset designers, but they've focused on this"one bow" idea, as they call it, and really going to town on the CD. So it's like 0.20, 0.21 drag factor. And then that allows the E Class and the S Class to be an evolution of what they've always been, and, some people... maybe not a fan of the current aesthetic, it has this slightly soft, slightly puffy surface quality. Yeah, yeah. But, I think, probably argue the toss a little bit about taste. They're not, they're not bad proportion, bad looking cars. The 5 Series, on the other hand, is the oddest 5 Series I think we've ever seen. The 5 Series though has had a very specific proportion. Cab rearwards, short front overhang, long dash to axle, quite a long rear overhang. Very traditional rear drive proportion. This new one, the proportion's awful. It's like, it's really, really bad. The poor car's really like, been dealt a bit of a, a hospital pass with the platform and then over the top BMW have done the, what they've been doing for the past few years, which is just surfacing, and I mean even worse detail execution, which just looks like someone didn't care, stuff that right in most of the brands I've worked with, you would not let out of the door would not pass, like, wouldn't, wouldn't get out of the door, wouldn't even be like, quality control acceptable, things not matching up. We'll maybe put in the show notes, or maybe they've got a picture of the front of the grill on a 5 series, on an i5, and just graphics and things that aren't even, that, are supposed to be continuous and just don't meet. But perhaps the bigger thing, then, is that when you get an E class, you can disagree, I suppose, with the taste. There's still a lot of bling. There's a lot of traditional stuff. So we're talking screens and chrome edges and wood and, and a lot of leather and perforated leather and heated pants and, everything's dressed and stuff. And you get in the back and you're like, yeah, it's like nice and quilted leather and blah, blah, blah. Get in the back of a 5 Series. There's no door pocket. On the, sorry, there's no there's no seat back pocket. There, on the normal versions, there's basically no climate control. There's two air vents, but you can't separately control the climate as a rear passenger, which has become a thing in the C sector, let alone the E sector. The the door pockets are just plastic. There's no flocking or lining in them to stop things rattling around. The door is not dressed in leather, it's dressed in mostly hard plastic. The window switches would do, I mean, genuinely would look out of place in a Dacia. And what you realize is that because BMW have got this platform which has to carry the cost of all the stuff to electrify it, they clearly had to strip cost out of that car and they've done it in the cabin in the rear of the cabin where i'm guessing they're hoping people won't notice or won't care.

Drew Smith: 17:37

I wrote a piece not that long ago about the impact of decontenting on the rear seat experience. And I think there's an extent to which you can, you can, you can de content intelligently, and optimize where people are going to look or optimize for where people are going to look and where people are going to touch- shout out to Intended Future and the work that they do in this space but, but when the difference becomes so stark, when you've clearly ripped cost out of every available surface and interaction point, people are going to notice this. And I guess, I guess the other thing that's really interesting about BMW's strategy is that you lose any of the opportunity to optimize for new types of package. As long as you're having to, to, to, to accommodate an internal combustion engine in the front of the vehicle, be that a straight six or a V8 like that's a whole bunch of space that you're just not going to be able to use to do smarter things with. Now, of course, Mercedes with the EQE and the EQS also flubbed that opportunity, quite famously, and managed to put the windscreen washer filler under a flap on the side of the car because they don't want you to open the hood because they don't want you to see the fact that they've optimized the space so poorly, but at least the opportunity is there.

Joe Simpson: 19:11

Exactly. I mean, I think there's a lot of questions going on. This is where the startups really come into their own. But yeah, there is a packaging price to pay. You don't, as you say, get any of the benefits with an i5. And then... The big question and maybe this brings us on to one of our next points is you walk around the i5 we were looking at and yeah sure it's got 21 inch wheels and it's an m sport version and it has got like, All kinds of other kit on it 98 000 euros. 98 000 euros for a 5 series. They're a lot There's a lot of people saying EVs because the affordability just isn't there Yeah, I know everyone finances and leases, but I mean, it's, it's crazy the prices of some of these things, and I think, yeah, when you, when you range that against the, what we just described as the decontenting, I just think there's going to be customers who go, hang on, I've always bought one of these, but I feel like maybe I'm being taken for a ride. Going to look elsewhere.

Drew Smith: 20:14

Before we get on to that pricing point, though, and I think we can broadly agree that the 5 series has reached the age, like, where men, you have sex with your shirt on, you don't take your shirt off I, I, I want to, I, I mean, it happens, people, it happens I, All design at BMW is not a dog's dinner because there was the Neue Klasse, which is an evolution of the concept that they showed at CES earlier in the year and I think it is a wonderful demonstration that there are signs of life still within BMW design, particularly from an interior perspective. But also just in terms of what they're pushing out with the exterior as well. How, how did it sit in the flesh?

Joe Simpson: 21:10

I realize that I went on a complete rant for about five minutes about the Five series, so apologies BMW designers, but now I'm going to be nice to you because I know that some of you listen to this show, and I know that some of you worked on both cars, so I know you're not bad designers. I thought this was really good, and I'm going to qualify this by saying that this was really interesting, because I know that... A lot of people who I respect, my peers, my friends, people like you, people like Sam Livingstone, people like Christopher Butt, people like Patrick Lequement really were impressed and refreshed and"oh, thank God" about this car. Equally, there were many automotive designers I know, very senior people, including many people in my own organization, who still thought this was a dog's dinner and completely dismissed it. And I tried to, I think, explain that, the reason why this happened. I think, in reality, this car is very, very interesting in terms of if you zoom out and you half squeeze your eyes and you look at what it says and you think of it as 85 percent of the next 3 Series and you think back to BMW's history and you think that the inspiration for this was really apparently the E30, and that what BMW to me have done is managed to make a car which feels and looks like a genuine BMW. The way that the cabin sits on the body, the relationship of the glass to the body, when you look at older BMWs from the 80s.

Drew Smith: 22:46

I was gonna say! There's so much glass!

Joe Simpson: 22:49

Yeah, there's so much glass. Like, and, and, and this is the thing, this against the fact that then this makes it feel authentically electric. The proportions aren't maybe typical BMW, it reads of being electric, it reads of being from the future and I think that's really impressive and I thought it was really, really interesting to see. I also think they finally, they've got something in this digital combined kidneys and lamp face which actually works combined with like the shark nose coming back and it actually works quite nicely and it's so refreshing compared to the beaver teeth that's on the i4, which is terrific. And, yeah, just really a breath of fresh air and a sign that, there's still life at BMW and they still have it and they can still, they're still looking to the future. And then, as you said, you get in the interior and the real effort to really slim the pillars, to bring the glass down into the body side, maybe things that you can't do in production. But but the glasshouse, the consideration of the experience you will have inside, the use of materials, the use of the deep thinking around circularity, the way that screen is actually really reduced, but the way they push the IP down to then bring that band right across the car as a display, but it means they don't have to have this huge cut out section, a massive hood sat into the dash. And I think they'll do something with this. I think this is fun, but I think it's continental technology in, in production, and then you just end up with a very small center screen. It's all really clever. It's really reduced, but it speaks of, do you remember a while ago when BMW tried to evolve the tagline from The Ultimate Driving Machine to Joy and then decided that, oh, went on this thing about how Joy

Drew Smith: 24:38

Wasn't it Freude am Fahren?

Joe Simpson: 24:40

Joy from Driving. Yeah. This car, to me, this felt like a car that it would be joyful to be in. It would be nice to be in with your friends, right? So there I am being all romantic about it. The reason that people don't like it is because the execution is still not great and particularly from the rear three quarters and the way that the C pillar comes down and where it is in relation to the rear wheel and the deck is odd and then the the lower the recycled clad, particularly around the rear, it's really clumsy and heavy handed. It doesn't need to be. And things like the tail lamps are like, they just feel weirdly out of proportion. So for a lot of car designers who I think focus on surface language, execution, like, the really tough stuff that we have to sweat it's still not wonderful. But, to be fair to BMW, what I hear is that both the iVision D and the Neue Klasse, or Neue, New Neue Klasse, as we're calling it. It's like, oh, come on... they were never intended to be shown publicly. They were studies, and we're, we're very much led to believe this is... 80 percent of the next 3 Series, but they weren't intended to be shown publicly. So I think for that reason, I'm gonna let them off that, and I really think it's a sign of hope, and I want to say, well done, it's, I'm sorry that sounded very passionate, but...

Drew Smith: 26:05

Let's celebrate it! It's the first time in a long time where we've been able to genuinely celebrate a piece of BMW design. And I think the fact that it is contentious in both positive and negative directions is a good thing. It's like a throwback to the halcyon days of the Bangle cars because you could quibble about the execution of those.

Joe Simpson: 26:29

It got back to some of the... Some of the Bangle philosophy. It challenges. It asks questions of you, but in a good way, and not everyone's going to like it, and I'm really fine with that. So, yeah, really happy to see that.

Drew Smith: 26:46

Coming back to the question of cost, we've got a 98 grand 5 series. There's also a new 45 grand Euro Renault Scenic. What the hell is going on there?

Joe Simpson: 27:02

Well, I mean, we could be fair to the Scenic and say that if you gave me the choice of traveling in the back of a Scenic and traveling the back of a new Five Series, I'd choose a Scenic every day of the week. And, and, and the perceived quality is better. So, maybe cheap at half the price, but yeah, we're in this, this is, this is the thing, isn't it? We're now in this We sound like a pair of old men, really expensive in, modern day. that's my faux Yorkshire voice, sorry. But, I mean, 45,000 euros as a starting price for a Scenic? Wow. This is a mainstream brand which has had its issues in the past. And, I think the Scenic's actually a really decent bit of design. It's certainly a lot better than some of the other stuff on the Renault stand. Renault has become this schizophrenic brand where The Megane and the Scenic both are really quite good, but extremely different to each other in design language from an exterior point of view.

Drew Smith: 27:52

Can I, can I, can I just give you, like, just a point of, point of information there? I mean, not gonna lie, from, from an outsider's perspective, it looks like Gilles Vidal has done a bit of a lift and shift from Peugeot to Renault.

Joe Simpson: 28:09

There's a lot of people talking about this and when we look at the four, I'm gonna get my Peugeot numbers wrong, we look at the 408, or is it the 4008? And we look at the Renault I never bothered to check how it was actually written. Is it the Rafale? Or the Raphael, I'm not sure.

Drew Smith: 28:27

Yeah, I'm not sure.

Joe Simpson: 28:30

And the Scenic, it rather looks like Renault and Peugeot have been looking at each other's homework, and yes, for those of you who know, there's been quite an exchange of designers between those two brands, not just Gilles Vidal, but a bunch of other people. The weird thing is, as you and I both know, Drew, in this industry, I don't get quite what's happened because I don't think Gilles has been at Renault long enough to have influenced that Scenic unless they redid the whole thing at the last minute because it must have been signed off around the time that he joined. But yes whereas Peugeot consistently evolved with their very almost like fractal language. Now, Renault, you've got them again, which is still in this quiet use rubbish terminology, but emotional fundamentally quite French human language, and then you've got the Scenic which is very, very angular, picking up on all this like fractal surface and, really different geometry, really different graphics and detail language with a lot of repeat patterns and, gloss meeting a, a satin meeting a texture pattern, the sorts of things that Peugeot have been doing. And so that's a bit confusing for Renault as a brand. There's no consistent language there. Nonetheless, different though they are, I was probably one of the people who was quite impressed by the Scenic, even though it's definitely not my Scenic.

Drew Smith: 30:00

Yes, there's, there's, there is this point around, okay, like what, what is, what is Scenic and what is Scenicness and, and, this was the car that basically invented a category, right? Like the, the equity in the Scenic name is I would argue, I mean, amongst people who are interested in this thing, it was, it was an absolutely landmark vehicle and it feels a bit of a shame to have lost that to another crossover. I think, I think the other thing that, coming back to this question of cost, I know Renault has, has publicly talked about a strategy of higher average selling price per, per unit and, and, and extracting more margin. But 45, 000 euros, my word, that is a stretch for something that has historically been considered, a very mass market family product. And can Renault, can Renault stretch that far?

Joe Simpson: 31:08

And, and don't forget that's for the base car with the small battery smaller battery. So yeah, I think, and I think what comes into play here is that that's about, this is about the price you can get a Tesla Model Y, which as most people probably know is now like basically the world's best selling car. And this is a summary of where we're at in the industry. If I look at it with a set of design eyes on I think the Scenic looks more interesting. I think from a broad design as aesthetics level, it's slightly cleverer. It's nicer to sit in. It has better quality materials. And it has some really nice usability things, like the armrest folds down and then you lift a part up and then the cup holders swing out and the cup holders double as a rest that you can slot your iPad into and they come out in such a way and if you have two kids you can put an iPad in each one or if they both wanted to watch the same thing you can turn them fully together and then it creates a slot that you could hold one in. That's the stuff that Renault has. some nice traditional Renault stuff. Exactly. Exactly. And that's not, that's not where Tesla are at and where, on the other hand, yeah, exactly. But this is the thing that's like, so you're buying that and this like, Oh, quite nice materials. And it's like generally nice ambience and blah, blah, blah. Versus a charging network, software that, will fast charging. A battery which is fundamentally going to take you probably further than the Renault will. The ability to just plug it in and charge it. It'll work. And yeah. And I think increasingly is going to come down to this old world, new world thing. Are you in a cars of software and Musk's camp? Or are you, are you in the old world of like, well, I want sense of quality through materials and actually I don't like Mr. Musk very much. So I'm going to stick with, with But right now, Volkswagen or whoever.

Drew Smith: 33:11

Well, and I think, I think I can imagine that from a car buyer's point of view, if you're making such a massive bet on a new piece of technology, which for the vast majority of car buyers an EV will be an investment in a new piece of technology, are you going to go with a brand that has been working on this stuff for 10, 15 years longer, right? In, in terms of time in market and, and has demonstrated that they really know how to do this stuff well. And as you say, they've, they've like the service integration is exceptional. The technology from a, from a. Hardware, software and hardware, software integration point of view is still better than what we're seeing from the European manufacturers. Or are you going to go with an old world brand who is desperately trying to catch up and I think this is a good segue into the, the, the backdrop conversation, what, what is going on geopolitically while the Munich show was going on. You had Oliver Zipse in the Financial Times basically bleating that, that the Chinese have had an unfair advantage and that the EU needs to do something about curtailing that unfair advantage. And then a few days later you have Ursula von der Leyen saying that the EU is announcing an, an anti subsidy probe into the Chinese automotive industry. And then today you had inevitably China saying, be very careful what you wish for. Because when you think about it, China is still a massive market for European manufacturers. China is still a massive producer of technology. And all the while, all the while let's not forget that Tesla has collected huge, huge amounts of subsidy from the United States government.

Joe Simpson: 35:17

Well, and managed to do deals with the Chinese government for Giga Shanghai that no Western was able to do before it. Right. I mean, I don't, I don't really think I need to add anything to what you said other than to expand on it and to say that in Munich the the backdrop was Well, the competition is here. The competition is in plain sight. Anybody who is still laughing at what the Chinese are doing or accusing them of copycat frankly needs to Get out and go home And And Brands like BYD and Nio: they're starting to have impact and it, it's not that the execution of the product is necessarily that much better than a European brand. I think it's that the product is here, it's here and available now. It's broadly, I mean in Europe it's price parity, in China it's definitely cheaper, but the technology and what you get is Generally, it's a bit like Tesla. It's like well BYD have been vertically integrating all this stuff and working on batteries for years now and this is allowing them to strip cost out and make cars that and this is EU a priced at a level that the average European family lower middle income consumer might be able to afford That Europe needs people by to hit its objectives for removing the internal combustion engine and hitting climate change goals And that basically Europe can't afford to do right now with its European factories and as you say and the All the European manufacturers are reliant on a Chinese supply chain. They're all reliant on sales in China and a lot of them are producing cars in China. So what are you going to do if you tariff Chinese imports? Well, they're going to tariff you back and cause you all kinds of issues. No easy win here. It's very complicated.

Drew Smith: 37:31

And, and, and I think, the, of course, the, the concern for a lot of the European manufacturers, I have no doubt is there's just the employment base, there's hundreds of thousands, if not millions of people involved in

Joe Simpson: 37:49

I think it's like 14, 14 million people in Europe, like Directly connected to auto and then probably, I don't know how many indirectly.

Drew Smith: 38:00

And, and, I, I, there's, there's part of me which looks at somebody like Zipse and thinks thou doth protest too much. It's not as if you could not have seen this juggernaut coming down the line. But I think there's also been whether it's ineptitude or yeah, I mean, let's just, let's just put it down to ineptitude on behalf of, of the EU, introducing the phase out of the internal combustion engine, but where's the concomitant policy that deals with what that means in terms of structural reform for the industry and what happens to all of those people employed by an industry in roles that are going the way of, of the internal combustion engine itself.

Joe Simpson: 38:46

Yeah, and I mean, we should be very honest and say, we've got quite a lot of skin in the game here. we are, we're talking to some extent about ourselves. But I think we're not, we're not, we're not blind to the challenges. And I think the, for me, the analogy was Oliver Blume from Volkswagen. I think he, he, a few weeks before Munich, he was on record again. I think it was the FT saying the roof is on fire. In terms of the problems that the Chinese have, well, in Munich, it was a case of like The entire house is being burned down literally by BYD who was stood across the street from the Volkswagen stand and not only were you going yeah this makes for a difficult juxtaposition and you looked at cars like the new Passat and you were like if I was just Not with the history I have and I just landed on earth yesterday and I went and looked at the Passat and not same thing, but then I went up to like the BYD Seal I'd be like, why would I choose the Passat? Because Volkswagen and we had this conversation on text, after Munich. Volkswagen, let's not forget, for our listeners, is successful because of this perception of quality. And this perception of quality was enriched by the idea which they as a group invented of perceived quality. My perception, to the average customer, they will not see much perceived quality difference between a BYD that's 20,000, 25,000, and a Volkswagen that's 45,000 or 50,000. And that's got to be a big worry for Volkswagen.

Drew Smith: 40:16

And, and I, I just want to, to suggest to people that they go and have a look at the rear doors of a BYD ATTO and then go and have a look at the rear doors of a 98,000 Euro BMW 5 Series. You ain't got guitar strings. One is the result of, like, wild decontenting. And the other one is the result of throwing the whole... kitchen sink at the back door and it I'm being a little bit glib but In terms of giving a perception of value for money, that, that BYD, in terms of how it's treating its rear door is, is just on another level. And I have to admit, when I saw the new Passat, I thought it was like a five or ten year old MG product. Yeah. It is, it is that bland and that unsophisticated and that Pathetically proportioned, and it's really sad, the Passat used to be such a wonderful product. Yeah.

Joe Simpson: 41:16

Absolutely, absolutely. And I think what you say is absolutely true. It's like for many European brands, they are literally, you can see through the cars almost, they, they exude the panic. The literal"don't really know what to do" quality of the decisions that must have been being made in boardrooms. I mean, while they're Chinese, I've not only discovered how to make cars, how to make them well, and then how to cost them down and get them out of factories. Terrific rate. They've actually started to have fun and go, right, yeah, we can do it like this. And that'd be quite fun, wouldn't it? Oh, that'd be quite nice. And as you say, as it comes to, you're like, ah, that's actually quite sweet. Or it's quite, it gives me, makes me smile. It's like, yes, you're delivering value rather than a Passat which just makes me feel sad, frankly.

Drew Smith: 42:15

And, and, and look, I think if we, if we, if we take a step back to wrap, wrap this up. It has felt in terms of some of our conversations and, and there was, there was a conversation that I was having with somebody else where they'd been to the Munich show this year and they said, it feels like design is dead. And I wanted to cry and I have to admit at first read from a distance It felt a little bit like that to me too, and yet I think what we've touched on here is there are reasons to be joyful. Certainly about, certainly about the domain of automotive design, right? We are seeing some interesting things happening. There are some things that are bringing smiles to our faces. We haven't even touched on the interior of the, the, the new Minis, right? There's some genuinely lovely new thinking going on there. But it is against this backdrop of like major, major, major change, right, that, that we're, we're heading from the European generation in, into the Chinese generation and to try and fight that seems like a bit of a a lost cause at this point. I'm not saying that it, that it is, but the Europeans in some respect feel so far behind. Yeah, that it's almost like if you resort if you have to resort to tariffs and shutting people out of your market It's like you've lost

Joe Simpson: 43:50

You've failed exactly and I think just to wrap that off. I think you're right I don't think we should give up and be disheartened. There were there were signs of life. There were signs of of hope. Real flashes of inspiration. And as you say, the Minis were the Mini interiors and that screen were real standout for me. But also I think what's happening here is a struggle to fundamentally cope with the fact that the world is going in a different direction. I think we were converged to three, three years ago. You could sell China and the Chinese market what was premium in Europe, and now it's different. And I, I think the brands that can adapt and be flexible and make the smart bets will, will... Survive because I don't think

Drew Smith: 44:42

China is demanding different. Is that because the Chinese consumer is totally different? That's my because their domestic manufacturers are doing just a much better job. If we're honest,

Joe Simpson: 44:54

it's a different, it's a different mindset as well. It's a different relationship to car, it's a different relationship to technology, what the car can do for you. It's a different acceptance of potentially things that might be a bit flaky and not always work in a way which you wouldn't expect or accept in Europe and then a cost base and market, which is just like in a bloodbath. And I think there is a thing where some of the Chinese brands are going to kill each other. They can't, a lot of them are still losing money hand over fist. They can't all survive, but this also then ranges against another thing, which is, I think we're seeing other changes, which is, I do wonder whether we've got, or we will get a set of Chinese consumers who start to reject the more is more. We can already probably see signs of it, who we can see with legislation and things that coming in, what happens in Europe? What will you be able to sell in Europe? How does end new end of life vehicle regulation affect things? How does that younger consumer's perception of sustainability It's still all very, sorry, we're part of the problem here again, but it's still very male, stale, and pale. There's not much youth around. There's very few women. There's very little diversity. And I think, it's not that young people don't want cars. It's just that they've got a different perception and expectation and... a lot of brands just look like they're greenwashing at the moment. So I think we've got things diverging and I think the brands that can be authentic, clear and focus and can find a niche of customers and people around ideas, I think they'll be okay. I think the brands that need to chase volume and that have very poor profit margins and are trying to win everybody and be everywhere and have confusing portfolios and I think they'll struggle. So yeah, it's going to be very interesting. And we'll see massive change in the next 10 years and we'll definitely see some brands disappear. And I mean brands that we know and love and like, see on the roads a lot in Europe today. That's my, that's my guess.

Drew Smith: 47:04

You just made me think of like the whole car as avatar thing, and we're just not seeing a set of avatars that are reflective of where a younger consumers mindset is, and I think you've absolutely nailed it. I think in, in as much as the traditional European manufacturers, much as much has happened in the United States, when they lost out to the Japanese in terms of selling cars to, to, to younger consumers. The European manufacturers really have lost touch, I think with what it means to be appealing to young people now and the young people who are coming, right. Yeah. And, and how do you encapsulate a much more environmentally aware sustainable mindset in, in a product and, and in large part, we're just, we're not there yet.

Joe Simpson: 48:10

No. And that's, that's a key question for Europe. But one last thing on this, I want to say, I, I, I wonder, I wonder whether we go back to some level of, for many of those European brands, a move to look the other way at the moment. They look east. They look at China as the opportunity looks to China as a profit engine. That's what it has been. But with the way the political landscape is, we are not going to see Chinese cars in America or adopted in America anytime soon. And I feel that there's a bit of a level of ignoring the USA. And I wonder whether America will still ultimately be the, the place where certain brands, and this is maybe where brands like Subaru will still do well, because they have such a strong base in the US, they don't need China they're irrelevant in Europe, but they don't care, they're, they're selling hundreds of thousands a year in America to a very specific group of people who they understand really, really well. And that's the stuff I'm talking about. I think Hyundai and Kia get it as well. So I wonder if we'll see people looking more towards like, Oh, maybe, maybe we need to refocus on the US a bit more. Just, just a thought.

Drew Smith: 49:25

That probably behoves a conversation about Scout at some point. Right. It's a future show. Look, that has been Just a really wonderful, deep dive from, from into the Munich show, from somebody was there. What, what, what else has been tickling your senses of late? Any, anything that, that, that, that we should think about dropping into the newsletter or or talking about on a, on an upcoming show?

Joe Simpson: 49:53

Yeah, a couple of things from me. I have been following with quite a lot of interest the whole AV in San Francisco and California should we call it debacle with crews and... Anyone who wants to tap into that, I really recommend a listen of the AutonoCast, which is Ed Niedermyer Alex Roy, and Kristen Korolek's podcast, which deals with, like, AV mobility, and they're all out there. Well, he certainly had a lot of fingers in pies on AV, and I think they've got some really interesting takes but yeah, that's, that's one to follow. It's rumbling around in even the mainstream press things like basically the the AV operators were essentially granted license to operate much more freely in California. And as that happened, then crews went and basically, a week later up, drove into wet cement, did a bunch of funny and not so funny things. There's one that was taken out by a firetruck and person was in hospital and stuff like that.

Drew Smith: 50:50

Almost ran over two mums and their kids.

Joe Simpson: 50:53

Yeah. Yeah. So want to have a look at, and maybe we all write about. The other thing I've been looking at is the An article by John Votka about the adoption of the North American Charging Standard, or NACS by first Ford and then GM and then other brands. And he writes in a series of articles, the first one is called How Automakers Disappointment in Electro America Drove Them into Tesla's Arms. And I think this There's this assumption that, well, it's just that, the Tesla Supercharger Network was the best and brands were just like, oh, well, we may as well join it. But actually I think it's this whole fascinating situation. This is the ongoing rumbling on of Dieselgate. And for those of you who don't know, the impact of Dieselgate was that Volkswagen were fined a lot of money. But a lot of that money went into setting up the Electrify America charging network. It was essentially set up by Volkswagen. And, according to this article by John there's now so much annoyance from other automakers at how badly Electrify America has been set up and run, and how unreliable it is that there's a huge amount of anger at Volkswagen Group, generally and it's driven them into the arms of Tesla. So yeah, really fascinating read and something I'll write more about in a future newsletter. But Drew, what have you been doing and looking at?

Drew Smith: 52:28

Well, apart from discovering that there's a company in France who is retrofitting OG Renault Twingos with batteries and electric motors, which is just so unbelievably delightful that, that I wanna stick it in the next newsletter. I have been, with the help of Looking Out fan Michael Banovsky setting up an Instagram page. Because we've had some feedback from you lovely readers and listeners that you want to see us in more places. So we thought in the spirit of Elon Musk, let's fuck around and find out. So you can on Instagram go to automobility group you will find the looking out page. And yeah, we'd love to see you there. Because let's be honest, the bird sites going down the drain and we never really liked it there that much anyway, did we? No, we did. That's where we met That's where we met Joe. We met on the bird site,

Joe Simpson: 53:28

The Bird site, the fellow of the bird site pushing us into the arms of Mark Zuckerberg. And Meta. Yeah,

Drew Smith: 53:35

I never ever thought I would say that Mark Zuckerberg seems like the less bad option, but here we are in 2023 That's it for this seventh episode of Looking Out the Podcast. It's been a pleasure to have you with us. Slightly new format, a lot more ad libbing in this one. If you liked the show, if you liked this new format, if you liked what you heard, please leave us a review. And if someone who might like the show... Please, for God's sake, forward it to them. We'd love to spread the love. For more information about the topics in our show visit our website at lookingout. io where you can sign up for Looking Out, the newsletter as well. Looking Out, the podcast was written and presented if we can call it that, by Drew Smith

Joe Simpson: 54:24

and Joe Simpson

Drew Smith: 54:27

this is Drew Smith and thank you for listening.