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Over the past 11 years, the number of new economy manufacturers has increased approximately 40-fold, while old economy manufacturers have seen a 0.72-fold change.

According to an article on page 3 of the Nikkei Shimbun dated December 26, 2024, a comparison of market capitalization growth was presented between (1) the top 10 traditional automaker groups (Old Economy companies) and (2) Tesla and BYD (New Economy companies).

Traditional automaker groups: Toyota Group, Renault-Nissan-Mitsubishi Group, Suzuki, Honda, Ford, GM, Daimler, BMW, VW, Hyundai
New Economy companies: Tesla, BYD
June 2013 November 2024 Growth over ~11 years and 5 months
@ $826.4 billion $598.7 billion 0.72x
A $36.9 billion $1.462 trillion 39.6x
This stark difference in growth—the Old Economy companies in decline while the New Economy companies have grown nearly 40-fold—cannot be ignored if one wants to foresee the future.

As you know, stock prices are an indicator of a company’s perceived future value. I believe this overwhelming gap is irreversible. It’s akin to comparing a withering, hollowed-out ancient tree to a young tree thriving in its prime.

Executives of Old Economy conglomerates often dismiss Tesla with comments like, “We can learn a thing or two from startups,” belittling the company despite Tesla’s market capitalization being 4.6 times greater than their own. The difference in growth potential is undeniable, yet they look down on Tesla!

Moreover, the era is shifting from hardware to software, and from software to AI, progressing rapidly into AGI (2025–2027) and ASI (2030–2035). Even Japan’s AI researchers, among the slowest globally, suggest that AGI might be realized as early as the end of 2025, albeit with a low probability.

The most significant gap between New Economy and Old Economy automakers lies in software and AI-based autonomous driving. Japanese automakers, in particular, lag Tesla by a critical 5–6 years. This is a fact recognized by the stock market. Tesla’s market capitalization alone exceeds the combined market capitalization of almost all other automakers, around 30 companies, worldwide.

Additionally, the performance and cost gap in battery technology is immense. Chinese batteries dominate approximately 70% of the global market with unmatched performance and cost-efficiency. This gap is unlikely to narrow, a reality even acknowledged by the Japan-biased analysts of the Old Economy.

It’s painfully clear that no Japanese automaker can compete with New Economy makers like Tesla or BYD. If cost-effective companies like Xiaomi or Geely complete their production systems by 2025, Japanese cars will face overwhelming competition and may be driven out of the market.

Even as a Japanese citizen, I find the design language of current Japanese automakers incomprehensible and their management approach excessively exploitative, which fosters a sense of disgust. Their prioritization of profit over safety through cutting corners in design is infuriating, especially as a fellow professional in the design field.

With Trump-era tariffs, Japan’s sole competitive advantage—low price—is at risk. Without it, Japanese cars may become entirely unsellable.

The reality of global warming—acknowledged by everyone except Trump—means the era of BEVs (Battery Electric Vehicles) and MaaS (Mobility as a Service) is unavoidable. Carbon taxes will also become inevitable. The following 10 items must be achieved by 2026 to remain competitive in the future automotive industry:

High-performance battery technology and cost reduction: Chinese batteries are overwhelmingly cost-effective.
AI and autonomous driving Level 4–5 capabilities: Tesla is expected to achieve this as early as late 2025, or by 2027 at the latest.
Rationalized manufacturing systems: Increased automation, higher in-house production rates (90% or more), and reducing components and labor by more than 1/6.
Increased vehicle utilization rates for services like robotaxis: From the current 5% to at least 30%.
AI-powered infrastructure and MaaS management systems, including ride-hailing.
Improved total energy efficiency: ICE (Internal Combustion Engine) cars can no longer improve efficiency.
Development of OTA (Over-the-Air) systems for continuous updates to prevent aging and ensure the latest performance.
Construction of satellite monitoring and communication systems to oversee all road conditions.
Seamless high-performance charging station networks.
Systems enabling low maintenance costs and revenue generation through vehicles, such as robotaxis.
Failure to achieve all 10 points will make it impossible to survive in the automotive industry. New Economy makers are investing massively, at the risk of bankruptcy, to achieve all of these points with astonishing speed. Sadly, no Japanese automaker is competitive in any of these 10 areas.

The year 2025 will likely mark the beginning of widespread uncertainty for the 5.58 million people involved in Japan’s automotive industry.