The Swiss Watch Strategy: Why Legacy Automakers Must Pivot To It Now…Or Be Crushed By Chinese EVs
Porsche just announced catastrophic financial results.
The CEO of Ford announced that China can “put us all out of business”.
Stellantis, a juggernaut conglomerate of car brands, faces its own financial and strategic difficulties.
The factors leading to the current state of affairs are complex, but a reasonable hypothesis is that electric vehicles (EVs) - Chinese EVs - sit squarely at the nexus of all of them.
Electric vehicles stir controversy with regard to both their supply and demand, the former never failing to bring up the threat China’s automakers present to the established order, and the latter no doubt getting people riled up over complicated legislations, supposedly meant solely to force automakers to create cars it is only assumed consumers want.
So EVs are a hot-button topic, and as these tend to go, there is no black or white way to look at the situation. If one is willing to approach the current state of affairs critically, another industry already provides a framework with which to navigate the current turbulence.
As part of that nuance, I first need to address upfront the topic of sustainability, which has distorted the automotive debate, and which now serves as a red herring to reduce a complex ecosystem into simplistic moral binaries that obscure economic reality.
Let me be clear: I do not believe that you can consume your way out of a sustainability crisis. Climate change is real, and the only method to actually fight climate change via transportation is by consuming less transportation, electric or otherwise.
I may have moved to France from Houston and cut my household’s car use by literally 99%, but the idea that billions of other people will mimic, or even accept, such a behavioral shift is not realistic.
Indeed, that was one of the primary drivers of early enthusiasm around EVs: automakers and governments love the theory of EVs because you can market them as a way for people to carry on as usual with their lives while also contributing to “solving” climate change.
That’s just not true.
EVs are not a magic bullet, they solve some environmental problems while introducing others. However, EVs do in fact present advantages over internal combustion engine (ICE) solutions, with associated disadvantages.
All of this is to say that it’s not productive to say that EVs or ICE are categorically good or bad, they are different offerings that are adapted to different markets and both can, and should, co-exist.
The real issue at stake here is: who makes and sells what, and to whom?
This is not an EV vs. ICE debate, it’s a strategy debate
Unfortunately, we’re past that rubicon and it does appear that opinions have calcified in both camps. Crucially, automakers in some countries have already cast their lots in regulations which can be viewed as restrictive. That’s not a value judgment on my part, but rather a conclusion I draw from the flexibility with which the Swiss faced their own existential crisis.
If we imagine a world where no EV legislation targets existed, or if end-goals rather than product mixes were prescribed, the case study of the Swiss watch market is actually highly useful in mapping out a framework for how legacy automakers can respond. This response would form in such a way as to not only manage the carbon footprint of their products, but also survive, faced with what will be ferocious Chinese competition, perhaps not today or next year, but absolutely in the near-future.
Watches used to be utilitarian tools
Though the earliest clocks and watches began as ornaments for the wealthy or instruments for clergy and the military, by the industrial age their purpose had shifted entirely.
For most of the 20th century, a wristwatch was a utilitarian device. It existed to tell the time, nothing more. People purchased the watch that delivered the best accuracy and reliability, and mid-century advertising reflected this perfectly: brands competed on precision, shock resistance, waterproofness, and durability.
A watch was machinery, not mythology.
Maintenance, likewise, had nothing romantic about it. Every few years you took your watch to a local watchmaker because you had to. It was a functional tune-up for a functional object.
And while Switzerland was already a recognized center of mechanical watchmaking, it was far from the only one. The United States had a thriving watch industry in companies such as Waltham, Hamilton, Elgin, and France had its own significant manufacturers as well.
These countries remain economic powers today, yet most people would struggle to name a single contemporary American or French watch brand.
The reason is simple: everything changed with the arrival of quartz.
Video: 60 Minutes overview of the Quartz Crisis and the Swiss watch industry
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The “Quartz Crisis”: Japanese quartz technology hits the market
When Japanese manufacturers introduced quartz movements in the early 1970s, the established order was overturned almost overnight.
Quartz watches were far more accurate, far easier to manufacture, and while costly at first (as nearly all new technologies are), they became dramatically cheaper as production scaled.
Mechanical watches suddenly became obsolete as precision instruments, the very metric by which they had defined themselves for centuries.
What followed was a collapse not only of Swiss output, but of the American and French watch industries almost in their entirety.
Yet it was Switzerland that emerged with the most enduring strategic lesson, one that would eventually make it the country synonymous with fine watchmaking.
The lesson of the Quartz Crisis: You can’t compete on features that commoditize
The Quartz Crisis delivered a harsh but illuminating insight:
If your differentiation depends on features that can conceivably be technologically surpassed or mass-produced at lower cost, your position is inherently fragile.
Quartz democratized accuracy, and precision itself became a commodity.
Try as they might, the Swiss could not maintain a leadership position on the functional metric that had once defined their industry.
This forced a fundamental strategic rethink, one that would change the trajectory of the luxury world for decades.
The Swiss response: Reinventing mechanical watches as emotional luxury
In the early years of the crisis, the Swiss made the same mistake legacy automakers are making today: they tried to beat the disruptors at their own game.
Swiss companies began releasing quartz watches branded as superior to ordinary quartz; there really were, for instance, Omega quartz movements whose accuracy was meant to best what was offered by the Japanese.
But one figure in particular, Jean-Claude Biver, recognized the futility of competing head-on with Japan’s cost and scale; you cannot out-commodity the commodity makers, so Switzerland pivoted.
Quartz watches weren’t only about precision, you could also recreate other functions (such as the date display) that were before then achieved mechanically, so rather than framing mechanical watches as instruments, the Swiss reframed them as emotional objects: expressions of craftsmanship, heritage, tactility, engineering artistry, and cultural meaning.
Advertising changed from touting accuracy to evoking identity. Patek Philippe’s legendary slogan, “You never actually own a Patek Philippe, you merely look after it for the next generation”, later became a masterclass in reframing a device from a tool into a legacy.
Biver’s revival of Blancpain was even more confrontational: “Since 1735 there has never been a quartz Blancpain watch, and there never will be.”
Switzerland also leaned on national branding. “Swiss Made”, around since the late 19th century, was adapted to watches in the early 1970’s and became more than a mark of origin; it became a symbol of authenticity and excellence, even though, in practice, the label’s legal definition today allows substantial foreign component sourcing.
Regardless, perception, not purity, created value.
The result is, to me, one of the greatest strategic transformations in modern industrial history. Switzerland produces a tiny fraction of the world's watches today, but captures a staggering share of global watch value.
Most people do not even wear mechanical watches, but those who do tend to choose Swiss, and everyone just knows that a Swiss watch is a good watch.
Switzerland escaped technological obsolescence by embracing emotional differentiation, but, crucially, there was and is no mandate in the market: both quartz and mechanical watches are available, each with their own pros and cons, and consumers are free to decide the choice that works best for them.
Video: Part 1 of an interview between Jean-Claude Biver and Revolution.
The automotive parallel: Brands are abandoning their emotional capital
The parallels between the mechanical watch industry and the automotive sector should be unmistakable by now.
Cars, like watches, began as technological marvels accessible only to the wealthy, before Henry Ford industrialized production and made automobiles indispensable tools for modern life. For most people today, a car still serves a primarily functional purpose: mobility, independence, the ability to work and live on one’s own terms. And until very recently, that mobility was provided through the most advanced and scalable technology available: internal combustion.
But the automotive industry faces a point of tension the watch industry did not. When quartz arrived, watches fully transitioned from tools to symbols only when their survival depended on it.
Cars, however, have always been both tools and objects of passion.
Almost as soon as cars took to the roads, people started racing them, and since the post–World War II boom in consumerism, cars have only more intensely become vessels for aspiration, dreams built on magazine spreads, design posters, childhood fantasies, motorsport legends, and decades of soundtrack-rich emotional imprinting.
Quartz watches were welcomed enthusiastically because they offered something unquestionably superior, accuracy, to a tool about which many people probably thought little, if at all. EVs do not enjoy that same open-armed reception, because their arrival forces consumers to confront the possible loss of an identity they have lived with for generations.
Regulation complicates this further.
Transportation is core to environmental and personal health, so legislation is unavoidable, and to me, welcome. But writing regulation requires a delicate balance between end goals and permissible pathways. By mandating a specific technological solution (EVs), rather than prescribing outcomes, many governments have inadvertently forced legacy automakers to abandon the historical status and emotional assets that helped the Swiss navigate their own existential crisis.
Today, many automakers are doing exactly what Switzerland did before it recovered, discarding their emotional core in favor of a technological race they cannot win.
Porsche is the clearest example.
Once held up as a brand defined by engineering purity and motorsport lineage, it went all-in on electrification, only to discover the catastrophic limits of competing on technology rather than identity. In hindsight, the mistake becomes obvious.
A Porsche flat-six, a Ferrari dodici cilindri, a Subaru boxer engine, a Mazda rotary; they are no longer mere engineering choices.
They are cultural signatures, they form the sensory and emotional DNA of their brands.
They are the sounds, sensations, vibrations, and stories through which generations have formed attachments.
To discard them wholesale, after decades of refining them, racing them, mythologizing them, without a clear plan for what identity replaces them is to sever a brand from its source of value.
Electrification itself is not the threat, here, not directly.
Identity loss is.
EVs are not “an enemy” but rather a misunderstood ally
From the very beginning, if governments truly wanted to accelerate EV adoption, they would have avoided the polarizing language of sustainability and focused instead on the areas where EVs are objectively better: they are quieter, they require less maintenance, they eliminate trips to gas stations, and yes, they allow drivers to feel good about reducing certain kinds of emissions.
These are compelling, real advantages, and they deserved clearer communication from day one.
But while these traits are excellent for evangelizing EV adoption in general, they pose a profound challenge for legacy automakers in Europe, Japan, and the United States because if those are all advantages of EVs, then it stands to reason that China offers them more, and better, than anyone.
If the consumer narrative becomes centered on convenience (less noise, less upkeep, less hassle), then the field shifts toward whichever manufacturer can provide the same functional attributes at the lowest cost.
And in that race, China holds overwhelming structural advantages.
Indeed, the real challenge is not generally that China makes cheap EV appliances while legacy automakers make expensive ones.
The real challenge is that China now makes genuinely good cars, well-designed, feature-rich, comfortable, technologically polished, increasingly safe, that simply happen to be electric.
The EV aspect is incidental, or will eventually become so.
What matters is that China can deliver a remarkably competitive automobile at a price point Western, Japanese and South Korean manufacturers cannot touch.
This reframes the competitive landscape completely.
Consumers in this paradigm are not choosing EVs over ICE because of ideology; they are choosing value.
And just as buyers eventually embraced Japanese cars in the 1970s and South Korean cars in the 2000s, they will warm to Chinese cars for the same reason: they offer 80–120% of the experience at 60–70% of the price and just happen to be EVs.
The propulsion system does not drive this preference, the value equation does.
China did not enter the global market through EVs because EVs are morally superior or symbolically advanced. They chose EVs because EVs remove the barriers that historically protected Western automakers: complex engine development, decades of accumulated knowledge, legacy supplier networks, emissions compliance, and combustion IP.
EV platforms democratize carmaking in the same way quartz democratized precision watchmaking. It’s not the technology that threatens legacy players, but rather the industrial model it enables.
This is why tariffs are rising, why policymakers are panicking, and why every Western government is trying to slow the pace of Chinese imports.
It’s not because they fear Chinese EVs won’t sell. It’s because they know, with absolute certainty, that they will.
And once consumers accept that a Chinese car, EV engine and all, is simply a good car, whole swaths of the established car market are in danger.
This is the quartz parallel in its purest form.
The path forward: Legacy automakers must move upmarket and sell emotion, not features
Value-based arguments matter, but none of them build emotional loyalty. Saying an EV is more hassle-free or a better value than an ICE car is like saying a quartz watch is more accurate than a mechanical one.
It is true, but it steers consumers toward a mercenary mindset where the most objectively superior option always wins, and increasingly that will be a tough case for established car brands to make.
However, they have something China does not.
China does not have deep automotive heritage. It has a history, but not heritage, not in the sense that Porsche, Ferrari, Toyota, BMW, Honda, Ford, Subaru, or Mercedes possess it.
What China does have is scale, integration, aggressive industrial policy, and the ability to produce convenient, affordable, increasingly well-designed EVs at breakneck speed.
It is following the exact path Japan did with quartz: set the rules of the new game, then dominate on price, volume, and manufacturing efficiency.
Meanwhile, today in the car world Europe, the United States, and ironically, Japan, find themselves playing a game they did not design.
A game they cannot win on China’s terms, whose infrastructure is designed around new powertrain solutions.
The resulting, lower prices with regard to equivalent established brands are a problem, because Europe, America, and Japan do not (and will never), win on price, but they can absolutely win on margin, as luxury brands do as compared to high-street retailers.
And they can do so alongside the EVs which are so often seen as a threat to the established order.
If the watch industry teaches us anything, it’s that when a legacy player cannot win on scale or cost, the rational response is to leverage that legacy to move upmarket.
Switzerland survived by abandoning the fight for mass-market relevance, or even any pretensions of quantifiable value, and instead embracing the emotional, cultural, and symbolic value of its products.
The same strategic path is now open, indeed, increasingly necessary, for established automakers.
Their advantages are emotional and cultural: heritage, motorsport pedigree, craftsmanship, design language, national identity, and story.
This is the contest legacy brands can win, and yet the industry continues to chase a narrative that pushes them into the exact trap quartz set for the Swiss.
Let’s take the regulatory landscape at face value for a moment.
Assume that European automakers sincerely want to reduce emissions: from the sourcing of materials, to production, to usage, to end-of-life recovery.
The current regulatory approach attempts to achieve this by prescribing a particular drivetrain mix, but what if it just mandated a target? This raises a strategic question: what if, in the long-term, legacy automakers simply ceded the mass market entirely to China?
What if, instead of diluting themselves across a broad, value-sensitive product portfolio, they concentrated on what they do best, and have done since their inception: selling emotion at a premium?
Imagine a scenario where legacy automotive brands anchor their portfolios on exquisitely engineered combustion engines, limited-run specials, beautifully noisy powertrains, bespoke interiors, personalization programs, and profitable options packages, while Chinese manufacturers own the popular EV mobility space.
Under this model, Chinese automakers specialize in delivering the best, most efficient, most accessible transportation available, while others, like the Swiss, shrink to grow, concentrating on luxury, culture, and emotional value.
The result, in theory: a smaller but more profitable footprint, and ironically, a reduced environmental burden from lower production, lower emissions because fewer people are driving internal combustion engine cars, and lower disposal emissions because people maintain and keep those cars.
In many ways, we are already seeing this evolution begin.
The average price of a car in the US is now $50,000, so until a cheaper alternative appears, everyone who wants a new car is a de-facto luxury buyer. At the truly high-end of the market, Ferrari also makes substantial profit selling options packages on top of its already high-prices earned from decades of brand management.
At an industry level, just as mechanical watchmaking sparked a renaissance of artisanal independents (FP Journe, Philippe Dufour, De Bethune), the automotive world is undergoing the same fragmentation. Pagani, Koenigsegg, Rimac, Singer, Gordon Murray Automotive, and a host of restoration houses have emerged because enthusiasts crave mechanical artistry.
They want objects with personality and permanence, not just transportation appliances, and the more mainstream brands drift toward anonymous electric mobility, the more powerful the counter-movement toward mechanical purity becomes.
The off-road segment illustrates this dynamic clearly. Stellantis has already leveraged Jeep’s heritage to push it upmarket, increasing prices faster than perceived quality improvements.
That is a dangerous position.
Off-road capability is one of the few emotional moats Western brands still own, and it should be fortified, not eroded. Because if a Chinese manufacturer eventually produces an electric off-roader that is better built, more reliable, and significantly cheaper (a scenario that is not far-fetched) many consumers will choose value over heritage.
At that point, Jeep’s only defensible lever will be its identity, and identity is meaningful only if the underlying product remains worthy of it.
For established automakers, following this path is not without cost. Transitioning away from mass-market ICE or mass-market EV portfolios would represent a profound restructuring of century-old business models.
But the alternative, attempting to remake themselves into battery-appliance manufacturers at worst, and run-of-the-mill car companies selling EVs at best, in a market where China sets the terms, is arguably far more expensive, and with far lower odds of success.
Legacy carmakers need their own version of “Swiss Made”
The “Swiss Made” label is of high value for several reasons. On one hand, decades of associating Swiss manufacturing with quality allow the country to export goods with a high perceived value.
On the other hand, one of the least understood aspects of Swiss horology is that “Swiss Made” rests on the percentage of value allocated to a watch’s production, and we can generally qualify that allocation process as “loose”.
In practice, this allows considerable flexibility in sourcing; a watch can contain many globally sourced components and still qualify.
The value lies not solely in rigid adherence to a term but also in the perception of cultural authenticity, and this works in a virtuous loop up and down the cost spectrum. The “Swiss Made” label helps to justify the purchase of watches costing tens of thousands, even hundreds of thousands, of dollars, and the halo effect of those watches convinces the recent college grad to splurge a thousand dollars (still very much a premium choice when one can view the time on their phone) on a watch that also says “Swiss Made” even while it is far less so than the options costing as much as a house.
Regardless of the powertrain, the size of China alone as a new competitor means that European, Japanese, South Korean and American automakers will have to scrap for every differentiation factor they have available to them. They can therefore apply the same logic as the Swiss: celebrate domestic craftsmanship, story, and engineering identity while leveraging global supply chains to sell premium cars for the mid-career professional all the way up the CEO.
Going upmarket poses a risk to jobs, with an upside
In any conversation about efficiency, and certainly one in which the hypothesis to completely abandon a long-tail of vehicles produced by existing car companies will inevitably bring up concerns about job losses.
These concerns are real but must be confronted honestly.
Chinese factories run on robotics at a scale which is almost unimaginable.
Is this what existing car manufacturers want to get to, assuming their workforces and governments even let them try? If so, then the job losses are already foretold.
Can they even fight this war on two fronts, in which they must tool up for this new paradigm while also keeping their existing operations solvent?
While this is a vast question to contemplate, Europe’s cost structure is not set up to compete on a price, in a paradigm where consumers will migrate toward value, and value in the mass market favors China’s cost structure.
Furthermore, for these employees who are left servicing a smaller yet potentially more lucrative automotive market, the future could be much brighter. If you visit a Swiss watch workshop today, you’ll see well-trained, highly-educated watchmakers operating state-of-the-art machinery and if this is by analogy the future that established automakers can offer their workforces, then it is one worth aiming for.
The sustainability paradox: Convenience vs. longevity
Though I’ve tried to avoid dwelling on sustainability, there’s an interesting historical irony potentially at play for automakers.
EVs are marketed as sustainable alternatives, but in truth, if EVs do become widespread and have appliance-like lifecycles, like that of your phone, what are we to make of all the e-waste that future generations will have to contend with?
Meanwhile, consider that Swiss watches survive, and are cherished, because they are worth repairing.
Servicing a mechanical watch costs a small fortune, but people pay those sums because preserving something of emotional value feels meaningful. Quartz watches, by contrast, are inherently cheap and are very likely to be discarded should they no longer work or be wanted.
Lost in the automotive discussion over sustainability is that repair culture is sustainability, perhaps the most honest form of it.
Today, a trip to the garage is for many a necessary burden of car ownership, often costing large sums of money and causing considerable stress.
In a hypothetical paradigm in which legacy automakers have moved upmarket, servicing can be even more of a margin driver than it is today, because the more luxurious the machinery, the higher the servicing costs.
Automakers could even come up with a marketing campaign to convince ICE purists that servicing is actually part of the joy of ownership, as well as craft individualized experiences out of each trip to the service facility, all to reinforce the fact that they can offer what Chinese EV brands do not: something close to immortality via their machines.
Hybrids as a strategic moat
Not much has been said yet about hybrids, but they are a crucial medium-term strategic advantage.
I’m not personally convinced that hybrids are the future of the car industry; as battery technology and charging networks evolve and early adopters convince more and more people to buy full EVs, who will be left wanting the added expense and complexity of an ICE vehicle they don’t really feel much about?
Nevertheless, hybrids are a crucial strategic differentiator, and, importantly, something China is not yet widely known for, even while the country absolutely does buy and sell them in large numbers.
The perception alone that China makes EVs, not hybrids, is valuable. Legacy automakers still possess vastly deeper hybrid know-how, rooted in motorsport, long-term R&D, and an engineering culture that goes back to the dawn of the automobile.
That advantage will not last forever, but it exists today, and it is one of the few domains in which Western and established Asian automakers can still go toe-to-toe with China on substance rather than nostalgia.
In that respect, hybrids perform a very important function: they buy time.
They stabilize the middle of the market while the bottom shifts to Chinese EVs and the top moves toward emotional, high-margin ICE.
And critically, hybrids keep ICE technology alive: the engineering talent, the supply chain, the tuning know-how, so it doesn’t disappear the way much of Switzerland’s mechanical manufacturing infrastructure did when traditional watchmaking machines were literally scrapped during the Quartz Crisis.
I do not believe hybrids are the endgame 100 years from now.
They are the Swatch Watch phase: the practical, contemporary solution that keeps legacy automotive brands top-of-mind while new competitors such as BYD come into the market, long enough for legacy automakers to execute their real pivot.
My hypothesis is not that hybrids are where established brands win against China.
Rather, they’re what keep Western brands alive long enough to win elsewhere.
If automakers want EVs, they need premium EVs, made irresistible by the emotions created by motorsport
Vaucher Analytics is a consulting practice focused on motorsport, and participation in these activities on an ongoing basis will become an even more essential marketing expense, not only to keep up a premium image but also to face the reality that Chinese teams will inevitably head for the track to build their own legends, just as Japanese brands did in the latter part of the 20th century.
South Korea’s Hyundai is far down this path, so if a European, Japanese or American brand really wants to stay in the mass-market EV segment, showing up to the race track will be even more important, provided the right halo messaging is built to go along with those campaigns.
EVs, just like crossovers before them, will become interchangeable, so they must inherit meaning from their respective manufacturers’ racing cars. This is exactly what Porsche and BMW did with the original Cayenne and the X5, respectively.
ICE motorsport has the potential to legitimize premium EVs and hybrids in a way that Chinese brands can’t. If you don’t believe me, go watch a WEC race, where most of the cars are hybrids, and tell me they don’t look amazing. And the cars that aren’t hybrid? Well, there’s one, it’s the Aston Martin Valkyrie, propelled by a screaming, naturally aspirated V12 engine, and tell me you didn’t peruse their website after seeing it chew up a straight.
Today it’s worth highlighting Alpine, whose planned all-electric portfolio rests on its racing heritage, and Genesis Magma, which seems to be setting up a racing program as much to sell electric cars to consumers as it is to win races.
Video: Overview of Genesis’s new performance line.
If a brand such as BMW, Porsche, or Honda among so many others can create on-track monsters and then somehow convince customers that some of that magic shows up in their EV that they take no further than their workplace and their grocery store, then they may be able to make a sale.
Just how much of a premium this can command, and the size of the audience for which this would be appealing would require further study; in fact some very high-end Swiss brands do sell quartz models today but the clientele is very focused.
Why recent automaker moves appear strategically incoherent
Swiss luxury brands do not compete in timing competitions with quartz watches.
They don’t need to, because their value lies elsewhere.
Likewise, Porsche, Ferrari, BMW, and Mercedes should not dilute their identity by competing in technological arenas that do not reinforce their emotional capital.
In this framework, Porsche aggressively pushing EVs while leaving the WEC to focus further on Formula E is puzzling, but it wouldn’t be surprising if other enthusiast car brands, faced with similar short-term pressures, make the same kinds of decisions.
These are extremely difficult paths to take and they are not inherently wrong, but they reveal an industry reacting defensively rather than strategically.
The future of Europe’s car industry depends on a lesson Switzerland already learned
In the absence of data, it’s always dangerous to speak in absolutes rather than hypotheses. However, given the scale of the challenges facing Europe’s, Japan’s and America’s respective auto industries, these are are close to absolute statements as one can get:
If these regions attempt to outproduce China in EVs, they will fail.
If they attempt to undercut China in price, they will fail.
But if they embrace what makes their car cultures unique - emotion, heritage, longevity, motorsport lineage, craftsmanship - there is a path forward.
The Swiss proved that path. Quartz was the neat new thing, but in the end the “old” way came to be viewed as the more valuable, everlasting one.
Automobiles are undergoing the same transition.
The brands that recognize this will survive.
The rest will become e-waste.
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