NEW INC. MAGAZINE COLUMN FROM HOWARD TULLMAN

 

Beware the Coming Carnage in the Electric Vehicle Industry

Car buyers are no longer beating down dealers’ doors to get in line for the latest electric offerings, regardless of how smart the cars may be.

EXPERT OPINION BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS @HOWARDTULLMAN1

Nov 18, 2025

 

If you ever doubted that the electric automobile industry was rapidly becoming a pedestrian and commoditized business of wrapping steel around smarts, where the software was everything of value and the shell was simply the latest look-alike clone, the signs couldn’t be any clearer than they are today. We are reaching the point where the carnage is about to hit every car manufacturer who is trying to make a go of it in electric vehicles (EVs).  The public is increasingly taking a pass. All the German manufacturers are backing away from their electric-only focus. Mercedes just reported almost a 20 percent year-over-year sales slump.

Buyers are simply no longer beating down dealers’ doors to get in line for the latest electric offerings, regardless of how smart the cars may be. Tesla’s recent profits fell almost 40 percent and, while they sold more cars in the third quarter year-over-year, they earned less money per car due to price cuts and low interest loans.  However, as I suggested many years ago, it’s likely when all the dust settles that Tesla will be the last U.S. player standing that’s making a real business out of EVs and also trying to hold off the Chinese onslaught, even without being able to sell the highly-profitable clean-air credits to all the other carmakers or the other prior government incentives. Mercedes, for example, is getting killed in China by BYD and Xiaomi, with sales off 27 percent in the third quarter.

The tariff problems are substantial for all the foreign automakers, but even if you put the current tariff issues aside for the moment and ignore the expiration of the EV credit that incented domestic sales for quite a while earlier this year, the fact that—according to the Kelley Blue Book—the average price of new cars has risen above $50,000 (driven largely by EVs and luxury models) has nothing to do with the realities that the vast majority of car dealers are seeing every day in their stores. This “real world” scenario is reminiscent of the fact that the continued surge in the stock market is a grossly misleading metric for what life is like for the average American at the grocery store, gas station, or local greasy spoon restaurant. Inflation continues to rise, prices at the pump keep jumping, and every shopper sees the truth regarding the sad shape of the economy despite Trump’s daily lies.

The real early warning signal for the car guys isn’t simply the slowdown in new EV sales, which have not been successfully altered by aggressive price cuts that are simply cutting into the dealers’ profits. It’s what you see in terms of the product sitting on the floors of the showrooms these days. They simply can’t sell anyone on the idea of buying a used EV. Upfront in the store, they may have positioned all the fanciest high-end versions of the 2025 and 2026 models, but if you step into the second or third tiers of demos and used cars, the asking prices for the 2023s and 2024s EVs are simply shocking. These are typically low mileage trade-ins that the dealers had to grudgingly take in to make a new sale—typically not an EV—and the prices look to be around half of what they were originally listed and sold for. Depreciation in luxury cars has always been a dramatic hit in the first year (right after the buyer drives the car off the lot), but these prices are absolute fire sales, and they still can’t move them.

The truth is that if you ask an honest dealer what’s going on, they will admit that the EVs are tough and costly to service; their unhappy owners are still plagued by the scarcity and wait times of charging stations—even though range anxiety is largely a fiction for folks driving six-figure vehicles to begin with—and the dealership owners hate taking these cars back in trades because they can’t do anything with them other than sending them to auction. The very last thing a Cadillac dealer wants to see sitting on his lot is a used Tesla. Dealers make a material portion of their overall income from the sales of pre-owned vehicles and there’s simply no buyer appetite right now for taking in or taking over someone else’s EV problems at any price.

But if anyone is going to come out of these dramatic dips in demand, it’s likely to be Tesla because Elon’s interest and business have always been about the software and the massive amounts of driver data that his systems were capturing. I’m sure he’s interested in selling plenty of cars (although he’s already more likely interested in selling them to fleet operators of trucks and robot taxis), but the long run view—typically tech-centric—is always the same, and that’s a winner-take-all game.

There’s never going to be a future for the majority of the manufacturers in the U.S. to try to build, maintain or enhance their own unique control and software systems. It’s just a matter of time before they begin to license Tesla’s tools and systems just as they’ve all been buying credits from Tesla for some time and since they’ve already begun to provide adapters for their vehicles to use Tesla charging stations. The ultimate value and the critical margins are in the software and the captured data which informs and strengthens the Tesla algorithms—not in the platform/shell that they’re housed in. At the same time, in a very new and rare twist, it appears that Tesla may be getting ready to license Apple’s CarPlay for its vehicles. 

Interestingly enough, in a completely different industry, we’re finally seeing a similar phenomenon where meeting the need and demand for increased access and expanding the reach of the “software” is far more important to all the parties than exclusivity, competitive considerations, or the platform on which the product is delivered and enjoyed. Microsoft is adopting this expansion strategy in the computer gaming industry, where it has bought two leading game studios in order to grow its multi-platform content offerings. But its most dramatic move has been the recent Halo announcement. Microsoft’s Xbox has been the exclusive home of the Halo video game for the last 25 years and Halo’s success has been responsible in part for the successive launches of four generations of updated Xbox consoles.

But Microsoft just announced that the 25th anniversary version of Halo will also be available for Sony’s PlayStation. Sony and Nintendo are Microsoft’s most important direct competitors in the game space. It’s clear that the new MSFT plan is to provide its games, software and other properties everywhere and make them available on all of the various platforms. Selling software, data and games is a lot more lucrative than building cars or consoles. These days, it’s not clear that it makes sense to manufacture anything.

In fact, following the many earlier examples in the mobile phone industry, where Facebook and others struggled and rapidly failed to introduce their own proprietary phone hardware, or the fitness field, where dozens of players entered and quickly exited the dedicated hardware device competition, I wouldn’t be surprised to see Microsoft step away entirely from its console hardware offerings and focus all of its attention on its desktop computers and its online offerings.

Since Microsoft Windows is installed on about 75 percent of all desktops worldwide, it’s a pretty short step to turn them all into mini-Xboxes as well. An early indication is the development of a new genre of video games that sits on your desktop just above the task bar (taking up only a fraction of your screen) so that you can keep one eye on the action and jump back and forth from work to wasting time in no time at all.

This takes multi-tasking to an entirely new level and is a significant step up from the old one-button fake spreadsheets we used to use to hide our screens from roving supervisors. But it’s also a reminder as well that—for too many of us—multi-tasking is simply another word for trying to do a lot of things all at once and doing each of them poorly. The critical key to success is to focus on being productive, not just being busy.

 

NEW INC. MAGAZINE COLUMN FROM HOWARD TULLMAN

 

Marketing

How Automakers and Car Dealers Can Survive the Chinese EV Onslaught 

We’ve seen this movie before. And it’s a lesson for all entrepreneurs about how to position your product for a changing market. 

EXPERT OPINION BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS @HOWARDTULLMAN1

JAN 7, 2025

Several decades ago, I was directly involved in one of the greatest efforts ever to position and brand entire new lines of luxury vehicles, whose Japanese manufacturers were planning to enter into the U.S. market. I was the CEO of a company that made millions of calls each year to measure the relative satisfaction of car customers with their sales and service experiences.

In the mid-1980s, the overwhelming perception by U.S. vehicle owners was that cars made in Japan were cheap-looking and unstylish, despite their reliability. We advised management at both Nissan and Toyota (and eventually Honda) that to succeed in the luxury space, they needed to establish new brands and new dealership facilities, and to enforce exceptionally high standards of dealer sales and service behavior. An elite group of existing dealers were awarded the opportunity to sell these new brands based on exceptional customer satisfaction levels as measured by our surveys and technology.

It was a given, of course, that the actual quality of the new cars needed to be high, but that was less of a concern than the need to overcome the negative consumer impressions of vehicles made in Asia. Luxury German, Italian, and English cars screamed elegance – but Japan conveyed a different image. 

Remaking that image is the origin story of Infiniti (Nissan), Lexus (Toyota), and Acura (Honda). These brands – at least in the cases of Lexus and Acura – have triumphed in America and come to be regarded as high-end, high-quality luxury lines with most car buyers not making the slightest connection to the parent companies, or to any remnants of their former prejudices and perceptions.  

Can Hyundai’s Genesis Pull Off the Same Branding Trick?

The latest entrant into the luxury branding sweepstakes is Hyundai, and the exceptional job it has done since launching the Genesis luxury brand in 2008 – again without the slightest look backward at its origin as a low-end Korean manufacturer. While most consumers still don’t even recognize the brand or badge, Genesis sales have continued to accelerate. New models have been added to the lineup and massive, flashy TV advertising has driven increased awareness. The cars themselves look largely indistinguishable from the major European luxury players (which the latest Genesis ads insist isn’t the case) while the built-in gimmicks, gadgets, and electronics are actually leading edge.  

Interestingly enough, and a lesson for entrepreneurs and startups, is that much of the new tech in these cars is relatively untested and somewhat unstable, but the advertising and promotion value of being leaders in the space has seemingly overcome the desire to make sure that all the stuff actually worked as promised. The major players are far more concerned, constrained, and even regulated in these areas and – as a result – are far behind. This is very much reminiscent of the Tesla self-driving fiascos, which are instances of the same old “forgiveness rather than permission” philosophy, but sadly, much like Theranos, represent serious ongoing risk to life and limb.  

BYD Is Yet Another Asian Competitor Ready to Crack the U.S. Market

The next vehicle invasion is already underway. This time it’s coming from China with brands and players, like BYD, that most car owners have not yet even heard of. They will soon. While the Musk-hyped media continues to drool over Tesla and bolsters its market cap, Tesla made about 1.8 million vehicles globally in fiscal 2023 while BYD produced more than three million EVs and ranked as the world leader. “Made in China” used to have negative connotations – similar to the earlier Japan issues – before the world learned that everything that Trump sells to the MAGAt suckers is manufactured in China and that’s made things apparently hunky-dory with the cult. 

We’re now watching Tesla sales decline for the first time in a decade, with the often-ridiculed Cybertruck leading the downward spiral. This is partly political, tied to CEO Elon Musk’s hard right turn and his boorish and infantile behavior.  Driving one of those monstrosities may soon be perceived as the vehicular equivalent of a MAGA hat on wheels.  

In fact, especially where certain energy technologies like batteries are concerned, there’s an understanding and even acceptance that China is now leading the pack. So, no one’s worried about hiding the backstory and both Elon and Trump can’t get seem to get enough of Xi Jinping. Tesla has its own very substantial facilities in China and is highly dependent on materials supplied from there as well as the revenue from the many Tesla vehicles sold there.

Trump has been talking big about tariffs on Chinese imports and also eliminating the EV tax credits, but most of that conversation was before he and Elon made their unholy and wholly confusing partnership. I’m not betting that anything adverse to Tesla (or Tik-Tok for that matter) is likely to happen any time soon, since nothing talks louder or more persuasively with the Orange Monster than the money that people put in his pocket. It’s also possible that Chinese firms have already begun planning to create assembly (and possibly manufacturing) facilities in the U.S., which would be expressly designed to get around any Trump tariffs.  

In fact, to give Musk his due, if it weren’t for Tesla’s cumulative edge in data capture, which will be critically important to the next autonomous generations of EVs, the Chinese would probably roll over the entire U.S. vehicle industry. There’s a precedent. Various Asian players have already done so in the steel industry, even as President Biden blocked their latest acquisition actions – Nippon Steel’s attempt to buy U.S. Steel.  

Car Dealers Will Need to Stay Aggressive

The Japanese vehicle invasion of the 1960s and ’70s caught U.S. manufacturers largely flat-footed. On the other hand, the biggest and smartest dealers that had available capital jumped on the new bandwagon, built new dealerships, and largely shut out any new entrants into their respective marketplaces. The captive dealers that were still playing the Detroit game and thus largely dependent on the old-line manufacturers lost several competitive steps and still haven’t really recovered. Today the mega-dealer chains like the Penske Automotive Group (with more than 200 locations in 28 states) have continued to expand and are probably already positioning themselves to add Chinese lines to their domestic offerings.

While some of the best and biggest of these dealer chains may finesse parts of the risk, most dealers won’t be able to resist the invasion by themselves. The prior Japanese history should be more than a fair warning that, if the domestic manufacturers don’t aggressively step up their EV game, they may lose this battle as well. That means millions of Americans will be driving BYD vehicles by 2030, if not sooner.  

STOP MAKING BIG TECH THE ENEMY

 

Stop Making Big Tech the Enemy

We're in a critical fight to stay ahead of China and India in A.I., yet our government and its regulators keep targeting the companies that are critical to winning. It's time we all played on the same team. 

Expert Opinion By Howard Tullman, General managing partner, G2T3V and Chicago High Tech Investors @howardtullman1

Sep 24, 2024

Election years are notorious for cheap stunts, useless hearings and the annually recurrent attacks on the tech and pharmaceutical industries. There's no lower-hanging fruit for these pointless pontificators than Big Bad Tech, and Big Pharma isn't far behind.

Nothing good ever comes of these abusive sessions except that they permit groups of know-nothing legislators to attempt to humiliate the leaders of some of the most important companies in America. They also consume loads of key management hours which - in these hyper-competitive times - is costly, counterproductive, and actively damaging to America's global market position.

Why anyone thinks these clown shows are productive has never been explained. Although in fairness, the price caps on insulin prices and prescription drugs that the Biden administration has executed are major and long-overdue accomplishments. They were so material and beneficial that the Orange Monster now claims that he was responsible for these new policies. He wasn't. The MAGAts had nothing whatsoever to do with it, but that's just another lie in Trump's vast portfolio of untruths.00:0001:49

The "gotcha" questions in these made-for-media harangues by idiots like MTG (R- GA), Lauren Boebert (R- CO) and James Comer (R-KY) are mostly for the benefit of right-wing cable networks. But they rarely result in anything more than displays of the ignorance of GOP hardliners. In 2018 Orin Hatch asked Meta CEO Mark Zuckerberg how his company could sustain a business model where its users didn't pay for the service. Zuck answered, "Senator, we run ads." Congressman Louie Gohmert (R- TX) once opined that climate change legislation requiring climate-controlled environments for computers could affect the Earth's orbit.  It's often hard to tell the monkey from the organ grinder in these boring bouts of one-upmanship.

And remember when Fox host Bret Baier tried to gotcha Secretary of Transportation Pete Buttigieg by asking him why Tesla wasn't invited to a White House session on tailpipe emissions? Imagine his surprise to learn that EVs don't have tailpipes. There's a quote attributed to Abe Lincoln that goes, "It's better to remain silent and be thought a fool than to speak and remove all doubt." Apparently, there are plenty of politicos and pundits where Abe's warning never got through to its intended audience.

One of the most vocal and insufferable of these congressional clowns is coup conspirator "Gym" Jordan (R-Ohio) who at last count - over a six-year period - clocked more than 565 appearances on Fox and has written exactly zero pieces of legislation during that period. This idiot appears to be preparing additional hearings on nonsensical subjects and is once again planning to seek the speakership in the House if Mike Johnson, the current holder, falls by the wayside because he partnered with the Democrats to avoid the pre-election government shutdown that Trump has been demanding.

Intelligent people might simply ignore these theatrics and the millions of dollars shredded by these stupid shows, but sadly the constant noise and attacks have had two more serious and destructive effects. They have turned substantial portions of the public against the tech industry and they have encouraged and empowered long and very costly litigation by various governmental and regulatory agencies with their own agendas, who never seem to learn their lessons either.

In a digitally connected and fundamentally borderless world of increasing global competition, our own government continues to be short-sighted enough to sue, hamstring and interfere with the operations of our best and brightest businesses in a number of critical tech areas. Decades wasted in pursuit of Microsoft led nowhere, just as breaking up AT&T did absolutely nothing to help the consumer. Threats to break up Amazon and spin out AWS are a bad joke, especially since AWS presently operates more of the U.S. government's back-end computing power than the government itself. The next obvious and very precarious battlefront - with the meetings and hearings already starting - is going to be artificial intelligence, where our edge is already being seriously challenged by China and India.

Only five or six major U.S. tech companies are sufficiently resourced to do battle on our country's behalf in these massive, expensive and complex technology spaces. I've previously explained how challenging it is for smaller operators, entrepreneurs and new business builders to go up against the power and ubiquity of these major players. And that contest seems to be largely over already. Nothing that the U.S. government does in the way of trying to restrict or interfere with their growth is likely to help us in the long run.    

It doesn't take an A.I. prompt engineer to figure out that it's not really a fair fight when the government is on one side of the battle, even if the biggest and most successful tech companies in the U.S. are on the other. And, sadly for our country, it's a more obvious problem and threat when the government in question isn't even ours. The officials and regulators of the People's Republic of China are sponsoring, funding and leading the charge against the U.S. tech industry on behalf of their own China-based businesses as they try to compete with us in the critical industries of the future - especially in the area of artificial intelligence.    

Instead of the government tearing these tech leaders down with stupid hearings and pointless litigation and further slowing our country's growth and initiatives in A.I., we need our political leaders to implement programs and strategies that permit and encourage collaboratives, consortiums, and other shared efforts to put all our resources behind a concentrated effort and a single goal - a U.S. win. Or we can count on being overtaken and outrun by China in the A.I. global marketplace.  

NEW INC. MAGAZINE COLUMN FROM HOWARD TULLMAN

 

If Carmakers Want to Sell EVs, They Need to Sell the Dealers First.

The lesson here is that, in many businesses, you need to get the sales team on board first; the buyers will follow. 

 

BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS@HOWARDTULLMAN1

 

In 1980 I started CCC Information Services, which is still the world leader in providing the automotive insurance industry with vehicle valuation data. Like many entrepreneurs, I struggled initially with a problem I couldn't anticipate. CCC's greatest early challenge was securing the cooperation and participation of tens of thousands of car dealers so that we could capture and incorporate their new and used vehicle information, and their actual inventories, into our valuation systems.

The premise was that real-time market data about the average asking price for a particular used car was the best and fairest way to establish the amount to be paid by an insurer in the event that a comparable vehicle was stolen or destroyed. Securing the dealers assistance turned out to be a very complicated task for reasons that are especially relevant today as automotive manufacturers, dealer ownership groups, and the last of the individual, old-time, family-owned dealerships confront the issues posed by the oncoming deluge of electric vehicles along with the emergence of new generations of owners, professional managers and operators.

Today most car dealers aren't really much interested in selling EVs;  in a recent survey, more than a third of them said they wouldn't offer an EV to their customers even if they could. Adding EVs, funding new staff training along with the incremental equipment costs necessary to maintain and service the new cars, building out new showrooms and display space, and facing uncertain near-term demand all mean that EVs aren't especially attractive undertakings. This is one of the major reasons that Tesla-- after lengthy battles with dealer groups, state regulators and local politicians who had been in the dealers' pockets for years-- built its own direct-to-consumer sales organization and its own outlets.

Talking to a car dealer (who is laser-focused on today's sales results) about a five-to-ten-year time horizon for substantial EV sales volume to develop is like trying to sell an anvil to a drowning man. It's not easy to sell these guys anything because they're world-class skeptics. They have the attention span of a typical teenager, the patience of a fruit fly, and they don't trust anyone-- especially to the extent that it concerns new technology. The U.S. goal of having 2/3 of the new cars sold here be EVs by 2032 seems like a pipe dream when you talk to most dealers. They don't have a clue as to how we're going to get from here to there.

To be honest, most established dealers today are fairly fat and happy with the way things have gone for them and their families for decades. They may have family and generational challenges, as do many other industries, but they've also had exclusive territories, scarce inventories, political protection, and very little price competition.  They don't like change, they don't like spending new money, and they're not really sold on the vehicles themselves.

We faced this kind of resistance and inertia when we first tried to introduce CCC.  The best way to value a car that had been stolen or destroyed (a total loss) was to find several existing comparable vehicles that were as close in age, features, and mileage to the lost car as possible. The insurer's adjuster could then point the insured or claimant to the available cars, give them a check based on the comparable values, and tell them where the cars could be found.

Our two-part pitch was pretty straightforward: (a) we'd do all the work; and (b) because we'd be handling hundreds of claimants every day who had just lost their cars, we could provide a steady stream of prospective customers who were interested in cars that were in their inventories and actually sitting on their lots -- and had insurance checks to pay for them. More importantly, even if the prospective buyer didn't want another version of the car they had been driving, they definitely needed a car, and they could be sold an alternative or even a new model. We thought that dealers would be drooling over a steady flow of prospects looking at their used car inventories. But what seemed like a no brainer took years to accomplish and to scale.

There were three main barriers to acceptance by the dealers, apart from their simple laziness and complacency. First, they regarded their used car operation as a necessary evil, not a part of the business that they really cared about. Second, they were reluctant to invest time, money, or effort into these cars (even something as simple as capturing each car's specific features, add-ons, and mileage) because they regarded them as fungible assets that would be on their lots for a short time and then, if not sold, sent to auction or scrapped. And third, used car sales represented a small percentage of their annual profits.

Even apart from the fact that there won't be too many used EVs any time soon (even though Elon is trying his best to make owning a Tesla an embarrassment), as noted above the dealers see plenty of similar problems with jumping into the new EV line of business. The manufacturers are trying very hard to push the EVs out the door-- a loaded dealer is a loyal dealer--because at scale they're much cheaper and easier to make than traditional cars and command higher prices. But the dealers are going to need to be bribed, cajoled, and eventually dragged across the finish line. The bright spot for the carmakers is that they have seen this situation before and have a pretty good game plan already prepared.

The first solution is the Carfax model. Dealers absolutely hated Carfax when it first emerged because the absolute last thing they wanted to do was to tell their customers about the nasty past histories of the used cars they were trying to sell them. So, Carfax jumped right over the dealers and went directly to consumers with a pitch that said only an idiot wouldn't check out a used car before they bought it. Today, almost every dealer in America offers customers a Carfax report (or one like it) as a free benefit and assurance. Tesla has already shown the way for the other OEMs to reach out to and convince the buyers of the benefits of the EVs in order to drive sufficient traffic and demand to win the dealers over.

The second solution is to move the whole discussion upstream in the consumers' minds and turn the EVs into a premium item and a status symbol (as Tesla has done so well) rather than simply a transportation tool. This is a page from the Japanese manufacturers who created entirely new and distinct imagery and marketing for their luxury cars to separate them from the public's perceptions about their legacy brand's quality and value. Lexus (Toyota) and Infiniti (Nissan) led this strategy with entirely separate stores and branding, and demonstrated the potential for substantially greater profits, renewed customer loyalty and improved dealer reputations. Today we see Genesis vehicles, which no one would ever suspect are a Hyundai product, independently marketed for the same reasons. Interestingly enough, at the other end of the economic spectrum, Hyundai also has just announced that Amazon will begin selling its cars online with delivery made by local dealers.

Finally, the manufacturers need to understand that, for a substantial period of time, they're going to have to share in the costs of the EV transition with the dealers. To jumpstart the adoption and use of the CCC system, we had to build our own internal sales staff -- not to sell the CCC system -- but to actually help dealers sell the cars to the insured buyers. Once they saw the program working, they eventually took it over for themselves.

The OEMs are going to have to finance equipment, subsidize EV training in both sales and service, and lobby nationally for extensive state and federal investments in charging stations if they want to win over the roughly 12,000 dealerships out there today who are sitting on the fence.

The bottom line is an old and simple rule: nothing good happens to a business without salespeople who are willing to sell your product.

 

NEW INC. MAGAZINE COLUMN BY HOWARD TULLMAN

 

Election Spending Has Become a Waste of Money. Only Advertising is Worse.

Chicago's recent mayoral election demonstrates how broken the system is. Meanwhile, there's no market too small to dissuade Big Pharma from massively advertising its wares.

BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS@TULLMAN

Indifferent and ignorant voters get the results and the leaders they deserve, goes an old political theory. And judging by the recent mayoral election results in Chicago, the city’s citizens certainly got the shaft. The untried and untested mayor-elect was ultimately chosen by less than 20% of the eligible voters. The majority of voters, around 65%, stayed home. They didn’t come, they didn’t care, and they couldn’t be bothered. It was a “meh” mandate for mediocrity, meaningless maxims, and misinformation. An inexperienced guy, Brandon Johnson, a teachers’ union lobbyist who hadn’t bothered to pay his own bills, fines and debts, and wanted to defund the police, is now in charge of a $28 billion budget.  Sad but not shocking. 

Even after four years of the utterly unqualified and incompetent Lori Lightfoot -- a mayor who’s left the desolate city in shock and despair with newly resumed warm weather wilding -- the voters failed again to select a competent and knowledgeable leader. Of course, Chicago’s not alone in that department. After 4 painful years and all the lessons of Trump’s lack of interest in or any qualifications to lead, it’s still clear that hyper-partisan politics are blinding large parts of the public to the true requirements of successful governance. Too many people look no further than someone’s alleged party affiliation at the polls to make their choices. We know now for sure is that consistently painting Paul Vallas, the losing candidate who was a lifelong registered Democratic, as a closet Republican in a supposedly non-partisan election was the kiss of death given today’s totally tribal political warfare. Nothing else really mattered, although the timely Trump indictment days before the vote was the icing on the partisan cake that made sure that Johnson would limp across the finish line. In Johnson’s case, having a field army of teacher’s union workers to wrangle 30,000 young voters to the polls on Election Day also didn’t hurt. One encouraging prospect is that— at least in Chicago— we won’t have to hear the MAGA morons chanting “Go Brandon” any time soon.  

But what’s really shocking is the staggering amounts of money raised, spent, and largely wasted by the two runoff candidates on ugly and angry media, old-world marketing materials, pollsters and doorknockers, and political consultants of every size, shape and flavor. You would think that no one had explained to these guys and their “consultants” that traditional ad media strategies and the old analog channels were dead meat and that the only effective games in town were social media, word of mouth, and precise digital marketing.  Millions were wasted with little or nothing to show for the effort or the expenditures. And, of course, thanks to the Supreme Court’s tortured view that money is speech, we only rarely know the sources of the largest chunks of the dollars flowing into these campaigns or the objectives of anonymous donors.

Waste is one of mankind’s worst inventions. Nature doesn’t abide waste. Everything has a use and a purpose, and the world has worked reasonably well (at least so far) because nothing in nature is ever done in vain. It’s only when stupid people insert themselves and their feckless, selfish acts and concerns into the mainstream  that our climate, culture, and country are all increasingly imperiled. Nothing seems likely to interrupt this accelerating slide into oblivion because no one who’s getting paid wants to interrupt the flood of funding. And no one in charge or in office is willing to be the first to de-escalate the crazy spending. We can only expect more of same and worse from our political “leaders” even when actually winning an election (much like the dog who catches the car) these days seems like second or third prize and an invitation to years of pain, self-flagellation, and embarrassment. No wonder that anyone with a brain or a real job doesn’t want any of these positions.

In a city struggling with rampant crime, shuttered schools, harrowing levels of homelessness, hospitals constantly closing, and growing food insecurity for thousands of families, two politicians pissed away more than $30 million in a matter of months to ultimately elect a deceitful and chronically underemployed union organizer who was good at pretending to be up to the governance task without ever uttering a word of substance. The people would have been better served and the pols would have accomplished far more if they had just paid each of their few supporters a cash stipend to show up and vote in the old Chicago way. And, if you look at the current state of shooting and looting in Chicago, even before the new guy takes office, it’s clear that there’s unlikely to be much improvement in the unsettling situation any time soon.  

We saw the same kind of lucre lunacy and ludicrous spending – around $42 million - right across the state border in another “non-partisan”  race for the Wisconsin Supreme Court, which set national records for outlays in that type of contest. At least in that instance, the Democratic backers and funders from across the country got the kind of respectful turnout they were targeting and the MAGA sore loser, conservative Daniel Kelly, got precisely the major 10-point drubbing he deserved from liberal Janet Protasiewicz. Interestingly enough, the outcome analysis to date suggests that the historic win and the margin was largely driven by youth turnout which had little to do with ad spend and everything to do to already well-seated Roe vs Wade anxiety. 

While current politics may be one of the most visible and obnoxious levels of excessive ad spending, the problem is far more serious and widespread. Every dollar that any business spends is precious; no one can afford to waste scarce resources on old-fashioned “spray and pray” campaigns or other brute force initiatives based more on faint hopes than hard facts. In the frenzy to get back to business, or to get their businesses back, or to get their story out in the midst of the overwhelming noise and clutter, millions of dollars that should be spent on R&D or productivity enhancements are being squandered on repetitive and useless marketing and ad campaigns which no one wants to see. 

It seems like the unending glut of pharma ads – even running the identical ad several times in the same commercial break – is a conscious effort by these advertisers to drive viewers away from traditional broadcast TV. Right now, no industry is spending more on linear TV advertising than Big Pharma. In 2022, the top 10 pharma ad spenders combined for a total of $1.68 billion in TV ad spend. Who, apart from the miniscule numbers of actual sufferers of these exotic “diseases” and conditions, do they think is interested in messages where the list of risks, abuse, and frightening side effects is substantially longer and a more material part of the ad’s content than any benefit claims? Who’s responsible for the seemingly weekly creation of new two and three-letter diseases like TED that no one’s ever heard of, but which may be secretly plaguing them at this very moment? Who is concerned these days about confusing their penis with bent carrots and other supermarket vegetables?

The arcane references, technical language, descriptive behaviors, prohibitions against use with conflicting named drugs, and other cautions are completely unintelligible to 99% of the viewing population. I’m not sure, for example, that anyone even knows what TD or GmG are, and the doctors complain all the time now that patients come in asking for the “purple pill” even before they’ve been examined or diagnosed. You’d think that the FDA had already been defunded at this point – the regulators have completely abandoned any attempts to regulate these ads which nothing more than lists of symptoms to suck sufferers in and catalogues of side effects to cover the vendors’ bases and potential liability.

The other big and relatively new bucket (and check box) is the politically correct and DEI-infused ads that literally litter the latest pitches from almost every agency and brand imaginable. The most striking element of these new offerings and paeans to whatever’s woke this week is that although they’re running on broadcast channels, they couldn’t be more particularly and narrowly targeted to highly specific, ridiculously small, and typically already suffering populations. Do we really need to be bombarded nightly with suggestions that we “PrEP” this (whatever that means) or “Detect” that? You wouldn’t go wrong concluding that the purpose of creating and running these ads has little or nothing to do with actual sales and everything to do with satisfying corporate and political demands and desires to demonstrate virtue signaling.

The latest Bud Lite trans spokesperson debacle (and the bizarre non-apology, non-explanation letter from the Anheuser Busch CEO) is just another example of busting Bud and burning down the house in the alleged name of expanded representation. Of course, now that the Republican old guard has reminded the young and stupid turks in the party that AB is one of their largest donors, they’ve been told to back away from this particular stunt. Amazon’s ad featuring a teenage girl with a prominent mustache that is the absolute centerpiece of the ad is just another tweak waiting to happen.    Does anyone believe that these ad campaigns on traditional broadcast TV make the slightest economic sense when the demographics of the actual viewing population continue to skew older and older every quarter?   

One of the few smart things that Elon ever did was to spend almost nothing on Tesla advertising while GM, Chrysler, Ford, and Toyota typically spent almost $2 billion a year. At the same time, Tesla’s $3 billion spend on R&D was greater than the combined spends of Chrysler, GM and Ford. Guess who’s still leading the R&D race?

We’re back – for far too many companies – to the Wanamaker times. In the 1920s, department store entrepreneur John Wanamaker was the first guy who honestly acknowledged that at least half of what he spent on advertising was wasted. But that he didn’t know which half.

 

 

 

NEW INC. MAGAZINE COLUMN FROM HOWARD TULLMAN

 Why I Didn't Fall into the Thrall of an EV 

Yes, EVs are better for the environment. But the technology is young and still balky -- just ask Tesla owners -- and the infrastructure isn't anywhere near ready.  

 

BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS@TULLMAN 

 

We're approaching the end of the first phase of EV adoption - first movers, early adopters, tech bros with more bucks than brains, suburban keeper-uppers, and a few folks who think they're doing something cool for the climate all seem to have shopped their fill. And, notwithstanding the fact that the first-generation Teslas painfully shake, rattle, and roll after a few months of driving, there's been no apparent rush among these early buyers to trade in their "beta" versions for later, better-built models that are built to last. Plenty of these folks will tell you, if they're being honest, that the early Teslas weren't released by Elon -- they just escaped into the wild. 

And no one, with a straight face, will claim that the fit, finishes, and details of the early Teslas were anything to be proud of. The tech was great and unique; the trim, finishes, and detailing were second rate at best. Not that the owners will necessarily admit it, because most of them would rather die than die of embarrassment, but they bought a pig in a poke, waited forever to get it, and now they're living with it, but not necessarily happy about it. A recent suit by unhappy customers in California complaining about repair issues is just one of the latest examples. To keep up with their peers, they bought these beasts and now they're locked in. In the world of emerging technology, it's often just as bad to be too early as it is to be too late. 

Don't feel bad for these people because there are no victims here, they all absolutely deserve each other and the beating they're taking. And the fact that Elon is rapidly turning himself into a pariah means that the cars are becoming the newest version of mobile scarlet letters with a "T" instead of an "A". The only thing that has fallen faster than the value of a used Tesla 3 is the value of Twitter.  

Disruptive innovation typically proceeds in a fairly linear fashion - early efforts are inexpensive, rough around the edges, and bound up with cheap materials because investing in the finer aspects of the product doesn't make a lot of sense until it's clear that someone wants to buy whatever it is that's being sold. It's a bottom-up business strategy that relies on the fact that established competitors usually ridicule or ignore new startup entrants until it's too late. The Chinese took over key parts of the U.S. steel business by starting at the very bottom with cheap, ugly, and inexpensive rebar and they built their market penetration and expansion into higher quality and more expensive specialty steel from that initial product platform. 

An important sign that we've reached the end of the early going is the fact that every major automobile manufacturer now has a suite of electric vehicles for sale. And these new offerings are a serious step up in comfort, finishes, and amenities from the still stripped-down Tesla models. Detroit is no longer asleep at the switch and the biggest global players understand that -- while the basic technology will soon be commoditized - they have recaptured an opportunity to sell "steel" at scale rather than just "smarts" to the next generation of owners.  This group will, once again, be looking for all the quality and the high-end bells-and-whistles they're used to getting for luxury-car pricing. Tesla maxed out the price part of the equation, but dropped the ball on the perks that matter the most in the long term. 

It's clear that either Elon still thinks that this game is all about technology, which it clearly no longer is, or his factories can't pivot to creating high-end and high-cost Tesla versions that are qualitatively competitive with the best EVs from Porsche, BMW, Benz and GM. He's dropping the prices on every model pretty dramatically and that trend is likely to continue, especially outside of the U.S. A far less attractive explanation for Tesla's problems (not counting the Twitter and SpaceX distractions) is that Elon thinks that the next true differentiator will be fully autonomous driving while almost the entire rest of the world -- and all of its regulatory authorities -- believe that it will be at least a decade or two from today. If at all. Things may be smooth in the open highways and bright sunny climates, but there's not a major city east of the Mississippi where anyone would trust a self-driving car to last for 15 minutes.   

In addition, there's a much more troublesome set of obstacles on the horizon because (a) the problems to date are only being experienced by the very small population of EV owners, and (b) most EV owners decided that it really wasn't in their interest to broadcast just what a pain in the ass it has been to own and operate an EV, because misery loves company. The trick to happily owning a Tesla is to not mind that it hurts. As the number of EV owners continues to grow, the problems will only multiply over time. 

But don't expect the present owners to tell you their troubles. Pain is fleeting, but pride is forever and none of these folks want to admit that maybe they were a little premature and certainly that they sold a bill of goods as well. It's easier to fool people than to convince them that they have been fooled. 

Here are just a few of the things that everyone should know before deciding whether to take the EV plunge.   

(1)   Just like cockroaches, there's never just one person waiting in line at your favorite EV charging station - take a number, bring a book, and count on a couple of wasted hours. 

(2)   Charging your EV is an everyday event somewhere - whether you like it or not. You've already got a day job and maybe a dog, but here's another chore to make sure you keep busy. 

(3)   There's nothing like a cold Chicago winter to suck the life out of your EV battery and cut the time you've got in reserve to a mere fraction of what you've been promised. 

(4)   Never buy a car that you can't push. When the electrical system on an EV fails, the whole dashboard, all the assistive technology, and just about everything else disappears. You'd do better at that point to be driving a golf cart. 

(5)   Elon learned how to build a car but, in his trademark arrogance, never thought about repairs or maintenance. Minor dents cost a fortune to fix because you have to take apart whole sections of the vehicle to access certain critical components, which is something that Detroit mechanics can do blindfolded in seconds on their vehicles because their design engineers thought ahead. 

(6)   Millions of people live in multi-family residential units and, if they're lucky, there's now a charging station or two for their entire garage. Worse yet, many condo associations and co-ops won't let individuals install their own chargers even at their own expense. It's not much better at your office garage or nearby parking lot. 

(7)   There are broken public charging stations, which the locator apps fail to disclose; there are chargers whose plugs aren't universal or compatible with your vehicle; and there are growing indications that in major population centers the electrical grid itself is already insufficient to handle the projected daily loads of charging millions of EVs. 

Bottom line: while there may be use cases and even users for whom EVs make sense, the smart money is on taking it slow and letting someone else be the guinea pig as the OEMs learn that the car is only one important part of the ecosystem required to deliver a safe, secure and satisfactory EV experience at scale. After six months of trying to talk myself into an EV, I settled for an embarrassingly overpowered, gas-guzzling Mercedes AMG GT63s with all the frills possible. That certainly doesn't make me an adventurer, but I'm pretty certain that I'm always gonna get where I'm going in style.