Difficult to change legacy system

My friend said that it is when the traditional manufacturers like GM, Ford, Toyota, BMW starts to manufacture electric cars, Tesla will face strong competition. He thinks that Tesla will not be profitable.

I disagree.

I told him that it is difficult for the traditional manufacturers to change the legacy systems. Their management and workers are already indoctrinated on the combustion engine car. They will not be able to change their mindset to accept the electric car.

There is another big obstacle – the dealer network. The traditional manufacturers depend on the dealer network to sell their cars.

These dealers have vested interest. They want to sell the combustion engine cars because they make huge profits on servicing and parts. They will not be keen to see their profit margins disappear with the electric cars.

When Tesla introduced the fast selling Model 3, they decided to get away from the dealer network. They decided to sell their cars directly by taking online orders from end customers. They do not need to depend on the dealers.

The traditional manufacturers face two big obstacles – the mindset of their people and the vested interest of the dealers. They will not be able to compete with Tesla.

 

Tan Kin Lian

 

 

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15 Responses to “Difficult to change legacy system”

  • opposition dude:

    Well we could say the same about Nokia and Blackberry too can’t we?

    Who here has never owned a Nokia back in 2002 or come across someone using a Blackberry in 2009 or so? And look what happened to both.

    And how about Kodak as well? Traditional company and all that too yah?

    End of the day any company will have to adapt to customers’ tastes. When the time comes when a majority of customers want electric cars is when all manufacturers will be forced to make them or go out of business, dealer network or not.

    You can have exclusive dealer networks the whole world over but they won’t be of use to you when customers do not want to buy your product.

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  • Bapak:

    TKL, you are right again. Many hybrid cars here are parrallel imported.

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  • Wow !:

    Mr Tan, have u given politics and becoming a car salesman soon ?

    We will miss you at Speaker Corner.

    Keep your focus on CECA if you are planning to stay in politics.

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  • Blah Blah Blah:

    “because they make huge profits on servicing and parts.They will not be keen to see their profit margins disappear with the electric cars.”

    1) Don’t electric cars need servicing and parts, too? This is not a sound or logic reason for combustion dealer not to take up Tesla’s dealership.
    2) If and when demand for electric cars pick up, this will eats into the demand for combustion cars and drives down combustion car dealers’ profit margin anyway.

    ‘When Tesla introduced the fast selling Model 3, they decided to get away from the dealer network. They decided to sell their cars directly by taking online orders’

    3) This is even more dangerous for the combustion car dealerships. What Tesla is doing is taking the middleman profit of the dealer and hands it over to the consumers.

    Frankly, the days of middleman creaming off (obscene) profit without adding value to the consumers are over – look at the big, fat banks.

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  • Blah Blah Blah:

    “because they make huge profits on servicing and parts.They will not be keen to see their profit margins disappear with the electric cars.”

    1) Don’t electric cars need servicing and parts, too? This is not a sound or logical reason for combustion dealer not to take up Tesla’s dealership.
    2) If and when demand for electric cars pick up, this will eats into the demand for combustion cars and drives down combustion car dealers’ profit margin anyway.

    ‘When Tesla introduced the fast selling Model 3, they decided to get away from the dealer network. They decided to sell their cars directly by taking online orders’

    3) This is even more dangerous for the combustion car dealerships. What Tesla is doing is taking the middleman profit of the dealer and hands it over to the consumers.

    Frankly, the days of middleman creaming off (obscene) profit without adding value to the consumers are over – look at the big, fat banks.

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  • Harder Truths:

    I take the bus and MRT – do not have riches to gloat over like you, TKL. Only those who are cunning in $G can amass wealth or else are born into it. So forgive me if I don’t give a rat’s ar*e about your car fetish.

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  • To very mediocre Money minds:

    “The scientists of today think deeply instead of clearly. One must be sane to think clearly, but one can think deeply and be quite insane. The day science begins to study non-physical phenomena, it will make more progress in one decade than in all the previous centuries of its existence.”

    - Nikola Tesla

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  • clown shim > najib rosmah:

    wah lan eh.

    tan kin lian.

    where did you learn your England?

    even worse than pap bugs bunny kee chiu chan chung sing.

    what a shame to your parents, teachers.

    an embarrassment to your family members.

    if with a brain, at least start to polish up and maybe stand a chance to retain deposit money in the next election.

    other wise, a complete waste of time.

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  • Financially Speaking:

    Cars or Automobiles will be relics of the past. The Automobile manufacturers are all facing their age of extinction going forward.

    With Climate Change resulting in growing public awareness about carbon effects of fossil fuels which affects climate extremities. Young people are no longer buying cars & opting for public transportation or ride sharing to get around. People are also getting worried about the air quality.

    Unlike the older generation who still valued their cars, the younger generation are ambivalent about owning cars but instead taking a firm interest in protecting the climate. Car sales may one day suffer a waterfall drop in sales & car manufacturers go bankrupt.

    With the Sharing Technology (ie. ride, car share & room, house share) in place, assets such as Hire Cars & Investment Properties are being put into use as shared assets whose utilisation rate by users of the sharing technology platform increases to a point of maximization.

    With greater maximization, users of the service finds no more need to own an expensive asset eg. cars, holiday property, etc. With greater adoption by the masses with asset sharing, one can imagine the consequence for those markets in the future.

    Frankly, I don’t see a viable future for Tesla nor for the electric cars. The future needs only Mass Rapid Transit systems & a small fleet of ride share vehicles for “the last mile”.

    With online retailing & efficient delivery mechanisms in place, why do you need cars? In addition, electric cars are a pain to dispose or recycle. Their lithium battery packs need to be handled property or it will explode!

    The problem with S’pore is the massive revenue collection schemes in place. COE, ERP, ARF, Petrol duties, parking, etc. And when the system are far too dependent on collecting revenues to discourage car ownership, we have a problem!

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  • Ditch Them:

    You can choose the make of the car to buy,
    just like you can vote for the party you like.

    No one is asking you to keep the old car.

    You are right to say it’s hard for a party to reform itself.

    Know when to change to make a right choice.

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  • Be realistic, KLTan:

    Ask any Singapore for their perception of PAP’s attitude towards political opposition n do some research on the public exposure of of LKY n party attitude n policy of sparing no effort of eradication by LKY himself all thru his political life. The answer will invariably related to SIN popular cliche “till your pants drop” as evidence by the all win except JBJ’s. Case presided by SDJ M Khoo, “get out fast” as evidenced by Liang, Tan WP, Nair, AG F Seow, Amos n more perhaps, most probably with Ministers taking over Judges’, AGC’s n police role in their self glorifying righteousness pooh thru the Parliament (all-6) jialiaobis on fake (definition as PAP chooses as evidence by Indianee’s success career ace of conflict of interest, Chun S Chan’s accountability etc…). The fallout of LHY/LWL allegations of Compliant Bureaucracy n Dynasty Evil Ploy (which opined by Seniors n PGs to be replacing nepotic succession which can be decided by nepotic founder to dynastic succession decided by sitting nepotist or his Gorilla of his harem r telling signs of Trumpism prevailing in SIN some even Trumpism before the world hear his existence. A rather significant fallout is the confirmation of PAP promises r just farts. LKY-GCT-LHL jointly proclaimed publicly that any damaging allegation should be challenged in a Court of Laws to determine its truthfulness failing whichSingaporeans can accept the allegation as it stands n the consequence should follow n LKY prided himself what he would do in his own perception of his worthiness as a man of honor n words sine election promises! lHY/LWL allegations were wayanged in Parliament. This doubly confirmed PAP do what it likes including demeaning the sacred institution where National affairs r debated to a settlement of family feud worse to mock her dignity by self cessation of the session with self acquitter instead of majority vote. Should citizens expressed their views n consequences, could a Singaporean with reasonably logic n sensibility be accused of fake news as they r his perception n truth value is irrelevant but would PAP Minister-prosecutor-judge has that depth of understanding of what perception, extrapolation n speculation really imply n demand from the source that prompt such thought processes!

    A simgle party finds the need to nurture Compliant Bureaucracy to provide addition protection n shielding of what it chooses to do as it wishes undoubtedly to its advantage n benefits, definitely not adverse to its interests n benefit. A two houses govt process will duly be rejected outright if it has bits of honor in sincerity otherwise it would be an added shield n protection to butt up its faker authenticity. Evidence is why the review of ministerial salary by ?expert? appt not by PM but by ‘nfi of it’ GY comitt

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  • REGIME CHANGE is the solution:

    TKL should go back to school and study business. Being first is not always an advantage. Tesla can start and develop the market for electric vehicles. It will make mistakes. The “legacy car” companies can learn from Tesla’s mistake and use their network of car dealers to sell their own electric cars. They also have “deeper pockets”. The dealer network is an advantage because the car manufacturer does not have to fund their operations. BTW the quality of Tesla car sucks. Repairs and servicing are also very expensive.

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  • too many ceca ah nehs in Spore:

    this tan kin lian, WHICH many call blinking fool, surely has no brains.

    where got such a thing as cannot change.

    the only time things won’t change is when fools such as tan kin lian behave so.

    all things, as long as human, can change.

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  • too many ceca ah nehs in Spore:

    Wow !:
    Mr Tan, have u given politics and becoming a car salesman soon ?

    We will miss you at Speaker Corner.

    Keep your focus on CECA if you are planning to stay in politics.

    very well said, bro. Agree.

    but this tan kin lian, blinking fool, does not have the grey matter to focus. only the pea brain to distract or waste time on non essentials. truly a waste of time.

    pity his primary school and secondary school teachers. unsure if he took A levels so unable to say pity his A level teachers.

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  • no brains, study also no use:

    REGIME CHANGE is the solution:
    TKL should go back to school and study business.

    can pap clown study to become a better person? cannot. ask Mr Lee Hsien and Dr Lee Wei Ling and Mr Li Shengwu and they will tell you pap clown studied in Cambridge but all for show only.

    so asking tan kin lian to study is as good as getting the sow to climb trees. it won’t happen. because born like this and no medicine can help.

    at least pap clown via his papa is pap chief. tan kin lian is not even anything. a waste of time and oxygen in the air.

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