Palmer, Part 2: Aston Martin CEO on EVs, Autonomy, and the Future of Luxury

A shift as dramatic as moving from the horse to the car

Aston Martin CEO Andy Palmer has been an executive in the automotive industry for decades, with a long stint at Nissan before he took the top job with the British luxury automaker. Below are some of his unique perspectives on how dramatically he thinks the automotive market will change in the coming years, including why he believes Aston Martin is uniquely positioned to survive the tectonic shifts to come in part 2 of New York bureau chief Jamie Kitman’s interview.

JK: This is a really unique moment in automotive history, it seems to me. Maybe I’m just getting old, but I have apocalyptic thoughts all the time about the business, and what’s going to happen. And I’m sure that you must be in deeper into all that stuff, than me. You know, electrification, autonomy, all those things. It seems like you’ve been pretty proactive in addressing the electrification part, and obviously the Daimler hookup will help with autonomy, but how do you see that unfolding? And what does that do to your market, and your customers?

AP: It’s really interesting. You know, the only thing I can tell you is anything I think is almost certainly wrong. (Chuckles.) Because we are going through a period, which I consider to be as dramatic as when we moved from the horse to the car. The policy in this luxury area is if you follow the logical thinking through of what people call car care—ride sharing, and connecting cars, and autonomous cars, and zero emission, where do you end up?

You end up with a vision of a pod that will sit in your garage, or may not even sit in your garage. Call an app, and drive you from A to B. Sad, sad world. But, for most of us, most of the time, it solves the problem of going to get us from A to B, very efficiently, and very safely. If you think about that then, you think, well, you’re talking about a commodity. This is not differentiated by anything other than its efficiency to get from A to B. And you may not even own it. You don’t care about the brand of taxi you get into, do you?

JK: No.

AP: But there are things that you will care about. And my belief is that the luxury market will be somewhat immune to that. It’s not the only car in the garage. They can have three pods for all of their kids, and two pods for himself, and the wife. But also, you’re still going to want a proper car in your garage, for the weekend, or special occasions. So, it’s my profound belief the segment which is least affected by this change is going to be the luxury segment.

One proof point I see of that is, if you think about the American market, for the last 50 years it’s defined itself by being the automatic market. You know, you guys only buy automatics. And the rest of the world was years behind you, with manual transmissions. Now, we’ve all moved to automatics. Guess what? I offer a manual transmission in the United States, and automatically this ran 15 percent and 25 percent penetration. So, you know, people that love sports cars, love sports cars and they love the full engagement. And if I’ve got a sports car I can drive properly, I want a manual transmission.

So, you have this counterintuitive swing to basically, something that is personal, and different. And I think, as we go forward, luxury is going to be defined by experiences. And the part of experience that that type money almost can’t buy, you can buy. Because, I will specify my own beautiful sports car, which is personalized to me, which not so many people can afford, I’m going to have that in my garage, in addition to my pod.

So, it’s my profound belief that we’re a much safer business model than the mass and premium [markets.] Because, the mass and premiums are going to go fight it out on the basis of pricing. And only a few [mass market] brands will survive over the course of time.

JK: Speaking from your mass-market experience, could you tell us what the rest of the business looks like, overall? It seems like there could be a lot less cars in the future. As well as a lot less jobs, and you know, all kinds of really volcanic shifts in the car business. How do you see those coming? When do we start seeing—perhaps we’re already seeing—the canaries pass out in the coal mines?

AP: Quicker than we think. I think back to when I was launching the Nissan LEAF, at first, the industry thought we’d lost our marbles. We’re going electric. Now, it seems incredibly insightful, doesn’t it? Thanks a lot to VW-gate, but I think it will go very quickly. I think most car companies will have an electric motor in their cars by the middle of the 2020s. Almost certainly, they’ll be a significant part of the car lineup, which is electric. Once you get to that scale, Moore’s Law kicks in. And all of a sudden, you get this sort of scale effect that comes in. And you move very quickly.

So, autonomy, if the lawyers don’t get in the way. Or if the lawyers can get their act together, and figure out how you get over that one in 10 million question of who’s responsible in the very rare crash? If we can get over that, the intellect, and technology for autonomy’s already there. So, I think it will move very quickly.

JK: Any time scales?

AP: Well, if you were to ask me to put a time scale on penetration of electrification, I’d say, EVs and plug-in hybrids, probably half of the sales volume of the world by 2040. As I said, one thing’s for sure in this discussion is I’m going to be wrong. That’s an extremely extravagant prediction today. I suspect when we get to 2020, 2030, that it might look a bit conservative. But, it’s that kind of scale, because we’re into that nonlinear adoption of technology, Moore’s Law.