Caterpillar's heavy vehicles are killswitched subprime computers on wheels


#1

[Read the post]


#2

I hear Kurt Vonnegut applauding from his grave, it’s so science fiction’y.


#3

Brilliant! And how will Cat reposes these massive machines? Because I’m so sure that Chinese contractors wouldn’t just abandon them, or use that well honed ingenuity to patch around the kill switches…

I suspect the Chinese will use these things like CueCats.


#4

I’m shocked someone talking about shitty embedded computers isn’t more familiar with [Windows XP] (http://www.networkworld.com/article/2199038/software/ballmer-to-hu--90--of-microsoft-customers-in-china-using-pirated-software.html).


#5

“For sale, one Caterpillar 7750 mining truck, slightly used, sold as-is. May require complete engine replacement plus a new tire. Local pickup only, truck location 300 miles west of Huangnan, China. Cash preferred, Paypal okay.”


#6

While I agree with most of the article and its point, the addition of auction results is just misleading. Sure, some equipment this company made is now selling at 99% off (or whatever they want to claim). This is 30 year old equipment they’re showing which is probably past its service life. I’ve sold a couple of cars for $500-1000 and at a discount of 95 to 97% of their original value too (and I didn’t use them for mining).


#7

Take out the computer. You get a heap of steel, with hydraulic pumps and valves and pressure sensors, and the motor sensors and fuel injection switches, and other things that report either simple digital protocol (I2C, SPI, CAN…), analog signal, or on/off signals.

Take this brainless body. Put in a new brain, a general purpose computer (possibly augmented with a couple microcontrollers for realtime tasks). Think a raspi with couple arduinos.

Voila, the Little Boy can be putt-putting across the quarry again.

I can see this as a popular solution for retrofit of both old and new machines, with a generic opensource core and model-specific mods.

It’s a fairly generic approach.


#8

Aside from the obvious “And if they just mod-chip it or haul it to the chop shop, isn’t your only recourse the legal system you apparently have little enough faith in that you embedded killswitches?” problem, I’m just not quite sure how this business model is supposed to work.

In the low end of the killswitch market, sleazy car loans and rent-to-own computers filled with spyware, the model works because technological crippling is cheaper than litigation and because the depreciation associated with a history of multiple impecunious users is less of a concern because the the break-even point tends to be well before the loan or rental period is over; and it is assumed that there will be another, similar, customer available if the used item is repossessed.

At the high end, IBM will sell you a mainframe with more CPUs installed than enabled in firmware; with the option to buy the additional capacity if needed. That works because the margins on the hardware alone are generous enough that they can afford to ‘loan’ you the unused processors; and the customer cares more about avoiding downtime and capacity issues; and IBM cares more about selling software and services. The measures are technologically enforced; but the real muscle comes from the fact that people who buy mainframes don’t tend to try running warez to crack the firmware; and turn a nasty shade of grey at the words ‘void your support contract’.

Here, though, I’m a trifle confused: Construction is an industry highly vulnerable to cyclical booms and busts(especially if, totally not hypothetically at all, some unknown-but-enormous amount of variously obfuscated debt has been sloshing around to finance dubious construction projects with no obvious ROI…), so, unlike the sleazy car dealer or the rent-to-own place; the supply of customers isn’t likely to be steady: when times are good, you’ll be able to move units as fast as you can make them; but if things go sour, even 100% perfect repossession still leaves you with a bunch of used heavy equipment and few interested customers. Killswitches may make people slightly less likely to just abscond; but they can’t prevent them from just walking away and letting you take the vehicle. This would make me very nervous; were I Caterpillar or an investor; because the plan is to tie up a great deal of capital in assets to lend to people we don’t trust; who are both risky borrowers and substantially failure-correlated with one another(exactly like the American subprime real-estate market…Couldn’t possibly go bad.)

And, unless Caterpillar is capable of commanding pretty heroic margins versus its competitors, it seems unlikely that they can arrange the lease price so that they come out ahead if the borrower completes only a small portion of the lease; or sell enough add-ons that they profit even if the hardware is sold at a discount.

I’d venture a guess that their fancy technology isn’t as impregnable as they think it is; but I’m confused on how this is supposed to work even if the implementation is infallible. Risky borrowers with strongly correlated default rates? Tying up capital in equipment that has no alternate customers if those risky borrowers all default together? We played that game; and no matter how many tranches you cut the shit sandwich into; it doesn’t taste any better.


#9

Thank g-d the Chinese have no computer hackers!


#10

So true, and they know nothing about making electronics from scratch, or rapid prototyping, either.

I’m going to withdraw all of my savings and go long on CAT.


#11

You know we are all going to be driving killswitched cars in a few decades. Better let the bugs get worked over there so we don’t have to fight them here.


#12

Um, I don’t think “lessors” means what Mr. “Durden” thinks it means.


#13

I know that movie.


#14

That was a good one! :smiley:


#15

Clearly the long play here is CAT hopes to figure out how to make Decepticons. Miss a payment and then your heavy equipment turns on you. First offense it crushes your mobile office. After that bones will be broken. :wink:


#16

stuck in the middle of a mine, quarry, or construction site with a paperweight weighing dozens of tons.

Just the place you want your property! Did it ever occur to them to… yknow… sell the equipment to China?


#17

Hmm…yes, why, exactly, would China, the country we have a massive trade deficit with, be short on cash?


#18

Re: equipment for China, I’d suggest the ebay approach. Never lease out anything you can’t afford to lose, in this case, the equipment that is approaching the end of its useful life cycle. If someone defaults, well, they can have the bulldozer with the nearly shot hydraulics. Selling is cash on the barrelhead, unless your reputation is sterling.


#19

Already here, at least in the subprime car loan market: http://www.wsj.com/articles/SB123794137545832713 (there are many non-WSJ links to similar articles, this was just the first major newspaper one to show up in my google search). And yes, those controlling the kill switches already ignore their own stated rules and turn off cars while they’re moving, or at stop lights, or whose owners are in good standing.


#20