THE FOLLOW UP: European Automotive's Slow Suicide

The Cancer Killing European Automotive (And No, It's Not China)

My last article about the European automotive industry's death spiral hit a nerve. Many of you asked: How did we get here? What's the real problem? How do we solve it?

Let me be very clear: We're not failing because of China. We're not failing because of EVs. We're not even failing because of costs. We're failing because we've built an entire industry on fundamentally broken thinking.

And it's about to destroy us.

The Architecture Delusion

Want to know why Tesla and Chinese manufacturers are cashing in and we are not? While we're still building cars like it's 1990 - component by component, supplier by supplier - they're building software platforms that just so happen to have wheels.

Look at how Tesla rolls out updates. One push, millions of cars get new features. Their entire fleet evolves overnight. Meanwhile, we're scheduling model year updates like we're still in the old times of mechanical typewriters.

比亚迪 aren't only building cheaper, more affordable cars - they're building evolving ecosystems. Their software platform allows them to roll out new services, features, and improvements across their entire fleet continuously. We're still arguing about whether over-the-air updates are "premium features."

We're proud of our "premium engineering." We boast about our "component excellence." But the thing is, we're master watchmakers in an Apple Watch world.

Procurement: The Silent Killer

The the cancer that's really killing us is.... procurement.

I recently watched a European OEM reject a groundbreaking software solution because it cost €8 more per unit than the outdated alternative. The potential value? Millions in new services and features. But procurement saw only the unit cost.

This isn't an isolated incident. It's systematic suicide.

In every European automotive company, there's a procurement department with one mission: squeeze suppliers for every cent. They celebrate saving €5 on a component while killing innovation worth millions.

Here's a real example: A major European OEM spent six months negotiating prices on a new sensor system. During those six months, their Chinese competitor integrated a completely new generation of technology and launched it in their vehicles.

I feel like we're using fax machines to send emails - and celebrating that we saved money on paper!

The Leadership Vacuum

This might be uncomfortable for some to hear, but most automotive executives in Europe don't understand software. They don't get platforms. They don't comprehend modern architecture.

Walk into any European automotive executive meeting. Count how many people understand the difference between component integration and system architecture. Count how many can explain their software platform strategy. I'll wait.

This isn't just a knowledge gap - it's a mindset that's world away.

Look at Rivian or NIO蔚来 ’s leadership team: they are packed with software architects, system thinkers, platform strategists. Look at Tesla: engineers and architects leading product decisions. Now look at European automotive leadership: finance experts optimising component costs and marketing guys planning model year updates.

The Business Model Time Bomb

But something really crucial is that the entire business models are built on sand, a truly unstable foundation.

Tesla's market value isn't magic - it's math. They treat software as an appreciating asset. Each line of code, each feature, each update adds value across their entire fleet. Their platform gets more valuable over time.

Tesla generates $100's per month per vehicle in software and service revenue. Their software platform has a reuse rate above 90%. Each new feature deployment costs them a fraction of what it costs us.

Meanwhile, European automakers are still:

?? Calculating ROI based on hardware units

?? Treating software as a cost centre

?? Planning in model years instead of continuous deployment

?? Building one-off solutions instead of platforms

We're not just using the wrong tools - we're solving the wrong problems!

What Victory Looks Like

Let me show you what success looks like:

? Architecture-First Thinking: Start with the platform. Everything else is implementation detail. BYD's entire vehicle lineup runs on a unified software platform. When they improve one vehicle, they improve all vehicles.

? Value-Based Procurement: Stop measuring savings. Start measuring value creation. Look at how Tesla evaluates suppliers: not by unit cost, but by innovation potential and platform contribution.

? Technical Leadership: Put people who understand both software and systems in charge. NIO’s success comes from having architects at the helm, not accountants.

? Platform Economics: Build once, deploy everywhere. XPENG Motors 小鹏汽车 's software platform costs them nearly nothing to deploy across new models. Each new vehicle adds value to the entire ecosystem.

Never Let a Good Crisis go to Waste - Winston Churchill?

The solution isn't complicated, but it's hard:

1.Kill the component-first mindset:

• Start with system architecture
• Design for software first, hardware second
• Think platforms, not products
• Build for evolution, not just production

2.Revolutionise procurement:

• Evaluate total value creation, not just cost
• Partner for innovation, don't just buy parts
• Think ecosystem, not supply chain
• Measure speed and adaptability, not just savings

?3.Transform leadership:

• Put technical leaders in charge
• Build architectural thinking at every level
• Create software-first organisations
• Reward platform thinking, not just product delivery

4.Rebuild the business model:

• Treat software as an appreciating asset
• Build platform value, not just product value
• Create continuous value streams
• Think ecosystem economics, not unit economics

The Truth

This transformation will be painful. Some companies won't make it. Some careers will end. Some egos will be damaged.

But you know what's more painful? Watching the entire European automotive industry become irrelevant while we argue about supplier costs and component specifications.

I've seen European OEMs spend years perfecting door handles while Tesla reinvented the entire concept of what a car can be. I've watched procurement teams celebrate 2% cost savings while Chinese competitors built entire digital ecosystems.

This isn't just about survival - it's about relevance. In ten years, will European automotive be known for premium engineering, or museum pieces?

The choice is simple: Transform or die. Not next year. Not next quarter. Now.

Because while we're busy optimising our procurement processes and celebrating our premium engineering, our competitors are building the future. And they're not waiting for us to catch up.

The question isn't whether we can change. The question is whether we have the courage to change before it's too late.

Let me know your thoughts? I do think it is really important that we keep talking and keep creating action.

I'm tagging those that commented/liked on the previous post so you don't miss this follow up:

Simon Davis ?????? Craig D. John Birch Yuri Tan, P.Eng Ugur Guner Andrew Thomson rob van den berg Satish kumar Komaragiri GurPreet singh Fernando Martín Alfonso Martínez Graham Parkhurst Tobias Fieger Steven Clugston Enrique Martinez Shiv Patel Jimmie Adolph, EMBA Khushal Khan Mick Fews Richard Robinson Dr. Martin Lockstrom Arun Chandranath Antonio Sánchez Navarro Mark Ellis James Carter Ryan Shedlock Dr. Martin Lockstrom Arif Amirov Miljenko Bakovic Tobias Fieger Andra Gerek Murali Krishnan W. Christoph Domke Steve Monaghan Francesco Diaz Daniel Davenport Carlos Sanchez Apoorv Kandharkar Rohit Singh Cesar Arego Chris Goss Amani El Sheikh Nico Sergent Adam Hafejee K Srikanth Miguel Munoz Satish Sundaresan Cherie Hodder joris mertens Enrico Di Daniel Filippini Azhar Gulamali Greg Basich Adebayo Turner IEng MIET Anamika Borah Premkumar R. Dr. Krystian Radlak Jagjit Singh Jhutti TANUJ KUMAR