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In a no-holds-barred session with the team at Munro & Associates, Sandy Munro offers a candid, sharp, and sometimes humorous assessment of the future of the automotive industry. Drawing from six decades of experience, he unpacks the tectonic shifts underway and paints a stark picture about surviving the paradigm shift: legacy OEMs (Original Equipment Manufacturers) are playing checkers while the disruptors, led by Tesla and China’s EV giants, are playing chess.
The Paradigm Shift No One Wants to See
Sandy opens with a modified quote from Alice in Wonderland—”The time has come… to talk of many things…”—signaling a frank discussion. He identifies what he calls an EV paradigm shift, a fundamental change in the rules of engagement within the automotive sector. Historically, success under the old rules becomes a liability when those rules change.
He uses powerful analogies, from rattlesnakes blindsided by roadrunners to OEMs ignoring electric disruption, to illustrate how legacy players suffer from paradigm paralysis. They’re so invested in their past successes—big V8s, ICE platform investments, and hierarchical decision-making—that they cannot see the ground shifting under them.
OEMs as Chess Pieces in a Strategic Game
Sandy brilliantly recasts the automotive ecosystem as a chessboard:
- Pawns = Shareholders and analysts, often misled by marketing glitz and misinformation.
- Rooks = OEM assets and debts, constrained by limited movement—up, down, left, right—symbolizing inflexibility.
- Bishops = Tier 1 suppliers, moving diagonally between OEMs, yet half of them are predicted to disappear by 2030.
- Knights = New technologies and nimble startups—unpredictable and dangerous to status quo players.
- King = The OEM itself—slow, central, vulnerable.
- Queen = Finance—agile, powerful, and ultimately the OEM’s lifeline.
As Sandy puts it, “If the Queen sneezes, the King gets pneumonia.”
The Cost of Clinging to the Past
General Motors and Ford, he says, are textbook cases of “paradigm blindness.” GM, despite announcing 20 new EVs, brought none to the EV-themed LA Auto Show. Worse, the show floor was deserted.
Meanwhile, GM is saddled with overwhelming debt—$260 billion across the auto sector according to April 2021 figures. The Altman Z-score, which measures corporate financial distress, places nearly all major OEMs (GM, Ford, VW, Hyundai, Honda, Daimler, etc.) in the danger zone. Tesla, however, stands firmly in the safe zone.
Munro’s warning is clear: The illusion of being “too big to fail” won’t save OEMs this time. The EV paradigm shift is coming, and there’s no guarantees of survival for anyone. After all, he’s seen it before—when U.S. machine tool companies fell to Japanese competitors in the 1980s.
Tesla, China, and the New Game Masters
Tesla, the clear leader in EV design and lean manufacturing, is not just building cars—it’s reinventing how cars are built. With a vertically integrated approach and minimal debt, Tesla’s stock performance is up 73% compared to GM’s 33% plunge.
Then there’s China, which Munro identifies as both a threat and a model. With government mandates pushing 100% EV production by 2040 and robust domestic brands like BYD, FAW, and Changan, China is on a trajectory to dominate. In 2021, China sold nearly 13 million vehicles in six months—a pace and scale unmatched globally.
Munro compares Norway to a “fruit fly” in scientific experimentation—its 87% EV adoption offers a glimpse into a possible future. China, however, is the industrial powerhouse, rapidly scaling production while western OEMs flounder.
The Coming EV Market Battle
Looking ahead to 2030, Munro predicts:
- China: 26% of the North American market
- Tesla: 21%
- Ford & Toyota: ~8%
- GM: 5%, beset by strategic misfires
He also expects a wave of newcomers as a result of the paradigm shift, smaller EV startups ready to exploit gaps left by legacy automakers. Sandy draws from history—specifically GM’s fall from 50% market share in 1963 to just 13% today—to show how dominance can dissolve in a decade if paradigms are ignored.
What If China Nationalizes Foreign OEMs?
Perhaps the most provocative prediction for the auto industry shift: China could nationalize foreign OEM operations, like GM or VW, as punishment for failing to align with its EV mandate. Since these companies generate their highest profits in China, losing those factories would cripple them. Tesla, by contrast, owns its operations outright in Shanghai—giving it insulation from this geopolitical risk.
If Chinese cars are banned from North America as a retaliatory measure, the landscape could look like this:
- Tesla: 35%
- Ford & Toyota: 10% each
- Hyundai & Honda: 7–8%
- New EV brands: The rest
Actionable Takeaways for Survival in the EV Paradigm Shift
- Don’t ignore the paradigm shift. Past success doesn’t protect you from future irrelevance.
- Watch the Altman Z-score. If a company’s in the distress zone, its future is shaky—regardless of brand strength.
- Think like a chess master, not a checker player. Strategy, flexibility, and timing matter more than legacy assets.
- Follow the fruit fly. Norway’s and China’s EV stats are not outliers—they’re forecasts.
- If you’re an engineer in batteries, motors, or EV design, Munro & Associates is hiring. They want problem-solvers, not paper-chasers.
Final Thoughts: Back to Zero
Sandy closes with a sobering analogy: like the Native Americans at the first Thanksgiving, today’s dominant OEMs may soon find themselves marginalized by foreign disruptors.
When paradigms change, everyone goes back to zero.
Will your company adapt—or become a footnote in EV history?
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