At first glance, Apple Inc., Google, and other tech giants’ entry into the automotive world doesn’t seem to be particularly lucrative.
Manufacturing a car requires factories, equipment, and the military to design and assemble large chunks of steel, plastic, and glass. Other than that, it guarantees slimmer profits. According to data compiled by Bloomberg, the world’s top 10 automakers will have an operating margin of only 5.2% in 2020, just a fraction of the 34% enjoyed by tech leaders.
But for Apple and other giants who are jumping into self-driving technology or making grand plans for private cars, the impetus is not only to enter new markets, but also to protect valuable grass. ..
“Why are tech companies driving autonomous driving? Chris Gerdes, co-director of the Stanford University Automotive Research Center, said:” There are business models that people are unaware of. . “
The market, which is projected to exceed $ 2 trillion by 2030, cannot be ignored. By then, more than 58 million vehicles worldwide are expected to drive private cars. And Big Tech has the means to disrupt this 100-year-old industry, from artificial intelligence and large amounts of data to chip manufacturing and engineering.
At stake is, in essence, even more valuable than profitability. That is, the last unbilled corner that catches the consumer’s attention during the awakening time.
Especially in the United States, the time people spend in cars is important. According to the latest data available from the AAA Automobile Association, Americans continued to drive 307.8 hours in 2016, or about 6 hours a week.
This is a significant part of someone’s life, not using the app on the iPhone, searching on Google, or unknowingly scrolling Instagram. Any company that can free that time in a meaningful way will have a good chance of catching it.
Don’t miss the world’s relentless shift to eco-friendly intelligent cars. There are many studies showing that combustion locomotives are on the path of dinosaurs, if the government has not yet declared a carbon-neutral plan, in some cases by the end of the last decade.
BloombergNEF’s annual electric vehicle outlook, released earlier this month, estimates that global oil demand from all road transport will peak in just six years, assuming no new policy measures are introduced. By 2025, EVs will reach 10% of global passenger car sales, rising to 28% in 2030 and 58% in 2040. Ultimately, self-driving cars will completely reshape the automotive and freight markets.
Against this background, it’s no wonder that tech companies are stepping up their activities and investments after years of scraping self-driving cars.
Self-driving cars are only as good as the human drivers they have learned. Therefore, the people who teach these systems need to be good drivers themselves.
Bloomberg reports that over the past few months, it has prioritized Apple Car’s plans after previously focusing on the manufacture of self-driving systems. It fuels fierce speculation about the automakers and suppliers that the company behind the iPhone may partner to realize that vision. Apple recently lost several top managers on the project, but there are still hundreds of engineers in the larger automotive group.
There is also Waymo. Waymo is in talks to raise $ 4 billion in funding to accelerate its efforts. Founded in 2009, the business, formerly Google’s self-driving car project, was the first company to drive completely autonomously on public roads. Alphabet Inc, Google’s parent company. Under, it became an independent company in 2017, launched self-driving ride-hailing services in Phoenix in 2018, and began testing self-driving trucks in New Mexico and Texas last year.
Microsoft Corp. has also partnered with Volkswagen AG on self-driving car software to support several autonomous initiatives, perhaps aimed at creating offices on the go.
Meanwhile, Amazon.com Inc. lags behind Rivian Automotive Inc., which manufactures electric trucks, and last year, unmanned driving startup Zoox Inc. Was acquired. It may appear to include self-driving cars as part of the Prime membership program.
Professor Raj Rajkumar, who heads the Institute of Robotics at Carnegie Mellon University, said: “From their business point of view, if you don’t, someone else can and will probably do so, and eventually your current area of influence will disappear.”
Apple has dominated phones, tablets and smartwatches for decades and has fought a decent battle for computers, but now Google and Amazon are leading the areas of artificial intelligence, voice and smart speakers. So I’m behind.
The company will benefit from the release of groundbreaking new products. While successful with watches released in 2015 and services such as Apple TV, Apple Arcade, and Apple Music, which are now major new sources of revenue, nothing approaches the success of the redefined iPhone. .. Throughout the industry, it has become Apple’s most profitable product since its release in 2007.
At Google, executives have long built investments in self-driving cars as a risk that venture capital and low-financial companies don’t or don’t take. Waymo discusses potential business models for taxi services and long-distance logistics.
The onslaught is that incumbents in the car are fighting. Industry giants such as Ford Motor Company, General Motors and Toyota Motor Co. are stepping up their own rivalry in autonomous driving.Japanese car makers Build the entire city Focusing on autonomous driving at the foot of Mt. Fuji, while Hyundai Motor of South Korea manufactures EVs in the United States and invests $ 7.4 billion to develop unmanned flight taxis.
In China, it’s the largest tech company throwing their hats into the ring. Huawei Technologies Co. From Baidu Inc. The giants have promised to invest about $ 19 billion in electric and self-driving car ventures this year alone. Smartphone giant Xiaomi Corp. And even Apple’s Taiwanese manufacturing partner Foxconn have joined the battle, formed a partnership and announced their own car manufacturing plans.
We understand the automakers who protect their territory, but Mr. Takehito Sumikawa, a partner of McKinsey & Company’s Tokyo office and advice on future mobility, said that technology providers will not enter the autonomous driving space. It’s a “natural extension”. “I’m sure they can do a better job in disrupting the industry.”
Existing businesses at Amazon, Apple, and Google already need to be proficient in AI, process large amounts of data, and design complex systems. Basically, we have upfront investments in the core technologies needed to design and manufacture self-driving cars, and many engineers are keen to solve more complex problems, not to mention the willingness to mess up.
But perhaps one of the clearest examples of tech companies with the ability to change their own springboard is Amazon. Web retailers will benefit greatly from the low cost of delivering packages home using their own car.
Amazon also has a habit of transforming its tools into businesses that can be sold to a wider range of customers, as in the case of cloud computing, which was originally created to support its online retail operations. Amazon Web Services, morphing into the computing and data storage platforms used by Netflix Inc., the US government, and others, is currently a $ 45.4 billion company.
The coronavirus pandemic temporarily weakened consumers’ desire for new cars, but demand surged. The shortage of semiconductors means that many traditional players cannot keep their production lines running fast enough. This year alone, the global automotive market is projected to grow 9.7% to $ 2.7 trillion, according to IBIS World.
“Even for companies like Apple and Google, this is a huge market,” Rajkumar said. “CFOs and CEOs are literally drooling, because starters are likely to have a big advantage. Each of these companies wants to be a predator, not a prey. I am. “
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