A car is just a carriage with an engine bolted on — and not one carriage company survived
A car is not a carriage plus an engine: change the powertrain and the whole technology stack and market change with it, and not one of the carriage makers of the day lived past a century. The test for an EV company today is whether it controls the battery upstream.
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Benz built cars because a failed startup forced him to
Both Mr. Benz and Daimler entered through manufacturing industry, and both went from engines to whole vehicles. What is more interesting about Mr. Benz is that he was a serial entrepreneur — he started out in mechanical manufacturing, his first venture failed and left him deep in debt, and that is precisely what pushed him to study the internal combustion engine. Zhang Junyi's judgment is that ‘the powertrain is always where the money is’, the same logic as today. He only really built Benz automobiles after the age of 40, because you have to accumulate enough engineering, resources and capability before you can create a new model and brand. That rule repeats over the following century and more: most founders of new brands were engineers, and most did not come out of the auto industry, but they had always spent a long time accumulating in some other industry — the example the show gives is a carmaker that just passed its 75th anniversary, whose founder was an aeronautical engineer; Mr. Porsche was the finest designer; Mr. Maybach founded two brands in his lifetime.
— Zhang JunyiThe first driver was a woman, and they called her a witch
The car was finished in October 1885, but local regulations would not let it run, and it only got its patent and its first public run in 1886. To promote it, someone had to drive it and show it, so Bertha Benz took her two children and simply drove to her mother's house, breaking down several times along the way and refuelling once. There were no petrol stations then — petrol was compounded in pharmacies, because petrol was treated as a medicine at the time, and that pharmacy became the world's first petrol station. People around her called her a ‘witch’, because a car with no horse was far too loud. From this Zhang Junyi says, ‘I think women drivers should hold their heads high.’ Bertha did more than drive: when her husband's venture was struggling she first covered it with her own dowry, and then she became the first test driver.
— Zhang JunyiThe Red Flag Act: whoever walks ahead sets your speed
Britain enacted the ‘Red Flag Act’, and in essence it was not aimed at cars at all — it was originally about steam locomotives. It was not settled which powertrain would run on early roads — petrol engines, diesel engines, steam engines and electric vehicles all appeared — while the dominant traffic was still carriages and pedestrians, and steam locomotives were loud and easily spooked animals, so the law came about to protect the interests of carriage drivers. In practice it meant a person had to walk in front of the vehicle, and ‘his speed determines your car's speed’, so the car simply could not go fast and had little practical value. Zhang Junyi's judgment is that this indirectly affected the whole of Britain's car development over that period, and America inherited part of it, until it was repealed around 1896. In the same period Britain and America were relatively conservative while continental Europe was more open, because that is where the Industrial Revolution started.
— Zhang JunyiThe powertrain changed and the carriage companies all vanished
‘Isn't a car just a carriage with an engine added?’ — but the result is that not one carriage company survived across a century. Zhang Junyi says this is an early example he keeps coming back to: when the powertrain changes, the whole market and the whole technology change, and many companies die because of it. The earliest bodies really were converted carriage bodies: Benz's first car had just one row of seats with the original carriage behind it; Daimler put the engine into the carriage he had prepared for his wife's 43rd birthday. Bodywork had been the carriage makers' job, and only later did it gradually merge into the vehicle manufacturers. He pushes this logic straight to today: if a carmaker has no control over upstream, batteries for instance, it will struggle to make money, and every one of the leading EV companies without exception has control over and innovates in the upstream three electrics.
— Zhang JunyiChina's first car owner was Empress Dowager Cixi
The show says China's first car owner was also a woman — Empress Dowager Cixi, who received a Benz in 1900. Unfortunately this owner never drove it herself and the car never moved, for a reason rooted in her worldview: how could she allow someone to sit in front of her and drive the vehicle. She even gave her driver a suggestion, that he should drive while kneeling, and Zhang Junyi adds, ‘then just think about how you'd control it.’ He treats it as an anecdote, but says it shows that China's awareness of brands like Benz goes back a long way. He notes in passing that in those same years brands like P&G and Coca-Cola were being founded one after another, while over here they were still living through the Qing dynasty — adding himself, ‘if I remember correctly.’
— Zhang JunyiThe internal combustion engine won on efficiency, not on being advanced
Why was the internal combustion engine the right choice a century and more ago? Zhang Junyi's answer is the relationship between fuel efficiency and cost. The four-stroke Otto cycle is a foundational theory, and on that basis the engine's thermochemical efficiency is relatively the highest, and its failure rate is low. It was not that other energy sources did not exist: external combustion engines and steam engines were running, and there were storage batteries too, but their range was extremely short, they broke down easily and comfort was poor, so that round of technological iteration eliminated them. He sums up energy choice as two things — availability, and cost and efficiency. The car replaced the carriage not because it was faster either; early cars may not even have outrun a carriage, but because it needed no upkeep, was easy to keep clean, and fuel was cheap enough.
— Zhang JunyiDaimler is currently splitting itself into three companies
Mergers and splits among carmakers keep cycling. In the early years Daimler and Benz merged, Audi's four rings represent four companies merging, BMW came over from aero engines. In recent years the direction has reversed: what Daimler is doing is a spin-off, one company becoming three — Mercedes passenger car group, truck group, financial services group — which will be listed further, because different businesses have different interests and a spin-off makes better use of the capital markets. Zhang Junyi says the value of merging lies in procurement synergies and product synergies, while the logic of splitting is that certain models are unprofitable on their own, or need more capital, so you let them list and raise money independently. He mentions in passing that Porsche was extraordinarily profitable decades ago and even considered a reverse takeover of Volkswagen, but that too was a family matter.
— Zhang JunyiChinese founders won't put their names on the car
Why has China's new generation of car entrepreneurs not designed a car for their wives? Zhang Junyi says actually they have: Li Bin was the first to propose the ‘queen's seat’, and spent a lot of money on that sliding rail; the vanity mirrors in NIO cars use soft lighting, and things like NOMI get described as a ‘spiritual companion’. But he also says this batch of founders are not automotive engineers, ‘one might even say they may not have enough of the idea of realising romance’; the romantic moment he names is the photo of Li Bin and Natalie holding each other on the day of the IPO. Deeper still is a cultural difference: foreign companies are used to putting their surname on the product, while Chinese entrepreneurs are less personal, and consumers would rather see a product than just the founder's endorsement. He says BYD only became a brand once BYD was explained as Bring your dream, and Chinese people care about having the name match the reality.
— Zhang JunyiIn their own words · checked verbatim
It was precisely a failed venture that forced Mr. Benz to study the internal combustion engine and go into internal combustion engines, because in any era the powertrain is always where the money is.
奔驰先生正是因为一次失败的创业 才逼迫 他去研究内燃机 去做内燃机 因为无论在什么时代 动力总成总是最值钱的吧
Zhang Junyi5:05
The world's first driver was a woman driver, Mr. Benz's wife. Yes, this is a view I have always held — I think women drivers should hold their heads high.
世界上第一个车手是一位女车手 就是奔驰先生的夫人 对这是我一直主张的观念 我觉得女司机们应该是扬眉吐气的
Zhang Junyi7:10
Petrol didn't come from petrol stations, because without cars how would there be petrol stations, so petrol was actually compounded in pharmacies, because at the time they treated petrol as a medicine.
汽油不是有加油站的 因为没有汽车哪有加油站 所以汽油实际上是在药房里配的 因为他们当时把汽油当成一种药物
Zhang Junyi8:13
He walks ahead to guide you, but his speed determines your car's speed, so there was not much practical value in it. To some extent it also indirectly affected the whole of Britain's car development over that period.
其实他帮你引路 但是他的速度决定了你的车的速度 所以这个就没有什么太大的实用价值了 从某种程度来说 也间接的影响了 整个英国的当时那段时间的汽车发展
Zhang Junyi10:15
When the powertrain changes, the whole market and the whole technology change, and many companies die because of it.
当动力总成改变的时候 其实整个市场 整个技术就会改变 很多企业也会因此而消亡
Zhang Junyi15:16
How could she allow someone to sit in front of her and drive the vehicle. And she gave her driver a suggestion: you need to drive me while kneeling.
怎么能够允许别人坐在她前面 驾驶这个车辆 而且她给司机提了一个建议 你需要跪着把我开车
Zhang Junyi25:21
Energy choice is first availability, and the second thing that drives a change in energy choice is cost and efficiency, which is very important.
能源选择一个是可得性 第二个事情是 推动能源选择的一个变革 就是成本和效率 是非常重要的
Zhang Junyi30:25
In fact consumers would still rather see a product, and not just the founder's endorsement, especially since not every founder is suited to being the endorsement.
事实上 消费者他还是愿意更多的看到一个产品 而不光是创始人的这个背书 尤其是不是所有创始人都适合做背书的
Zhang Junyi48:32
Figures
| Year the world's first internal combustion engine car received its patent | 1886 | 2:22 |
| When Britain's Red Flag Act for motor vehicles was repealed | around 1896 | 11:15 |
| When Daimler and Benz merged | 1926 | 20:18 |
| Year Empress Dowager Cixi received the Benz | 1900 | 25:21 |
| When Renault and Peugeot appeared | around 1889 | 27:24 |
| Aston Martin's brand history | 115 years | 29:24 |
| The three companies Daimler recently spun off | Mercedes passenger car group, truck group, financial services group | 43:30 |
Glossary
- Red Flag Act
- An early British law requiring a person to walk in front of a motor vehicle; originally aimed at steam locomotives, repealed around 1896.
- Otto cycle
- The theoretical cycle of the four-stroke internal combustion engine, established long before Benz built his car.
- Whiz Kids
- Ten men who moved from the US military into Ford after WWII, coming out of operations research; several later reached the top of the company.
How to listen
Investors and operators in the auto industry, founders building hardware and energy, and anyone trying to work out who makes the money when an industry changes generation.
The closing riff on future mobility and robotisation wanders; you can fast-forward.