Dyson announced yesterday that it’s planned foray into Electric Vehicles was no longer commercially viable. The original investment was expected to be £2-2.5bn.

EVs are no more for Dyson, it seems, but it’s still going to press ahead with its investment in batteries, particularly solid state varieties. If I recall correctly, about half of the original investment was for the car itself and half for batteries – so this is still an investmnet of over £1bn in new capabilities (those batteries could still supply cars for other manufacturers of course, or could be solely for Dyson’s current and any future products).

Why decide this now?

  • Subsidies for EVs have been reduced across the world (recently in the UK but, particularly in China, the largest current market). Do Dyson see fewer buyers, despite the near universal commitments governments have made to take petrol and diesel cars off the road over the next 2-3 decades? That seems unlikely.
  • Is a £2.5bn investment not enough? Tesla has consumed more than £14bn to date, and not made a profit. VW is expecting to spend $33bn over the netx few years. Joint ventures, mergers and deals between car manufacturers, “taxi” firms (such as Uber and Lyft) are proceeding at a pace. Perhaps Dyson couldn’t keep up with the expected spend rate?
  • Cars are hard. Are they too hard for a new entrant? It’s a volume game, for most companies at least. 87m cars were sold globally in 2018. Tesla is shipping only (I say “only” in a relative sense) 100,000/quarter (or thereabouts, with ambitions for more). Perhaps Dyson think it’s not commercially viable in the short term – that the hockey stick of demand is too far away for investment now?
  • Did they pick the wrong place? Singapore is not known for its car manufacturing. It’s an expensive, though stable, location to pick. Maybe it was the wrong place to setup a cost effective and efficient factory?

It could, and probably is, all of these. The ROI profile must look daunting, especially in an uncertain market where realistic large scale take up is a decade away (at the mass market, global level – the point of pickup in volumes is perhaps 3-5 years away).

Perhaps the most important point is Dyson went all in, quickly. And then all out, quickly. He saw an opportunity and funded it, but then saw that it wasn’t going to pan out as planned, and so pulled the funding. Just as I’ve written here before, projects fail. They fail all the time. The trick is to see the failure coming, be sure it’s really failing and can’t be picked up, and that it’s not failing becuase of an elementary error (that is, you have learned the lessons that others learned before you), and then address that. It’s a bold decision. And his investments live to make a return another day.

Original source – In The Eye Of The Storm

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