Within a few years will we really be travelling inside self-driven vehicles and will petrol be just a memory from the past? More and more experts seem to be convinced of this. And in the meantime the war between traditional car manufacturers and Big Tech names has already started, based on technological innovation, radical changes in their business mentality and the search for new specific skills. Let’s check what has been going on
Traditional cars, designed to be driven without being connected to any possible devices, seem to have officially become an endangered species. There are many warning signs, indeed: Tesla claimed to have earned over 721 million dollars in 2020, finally making profits; Hyundai has been negotiating with Apple the production of a self-driven car; General Motors has announced that by 2035 their petrol fuelled cars are going to be phased out. We can then wonder about the future of the automotive sector: will traditional car manufacturers find a way to reinvent themselves or will they be replaced by technology-based companies such as Tesla and Apple? (The Auto Revolution Is Here).
A new industrial revolution
Judging on the basis of the moves and statements of the big players of the automotive sector, it seems sooner or later traditional cars will be phased out although we cannot tell exactly when. On the one hand, electric cars are being bought by few people, also due to obvious financial reasons. On the other hand, climate change and the policies adopted by countries all over the world to fight it, make us think we have reached the point of no return. A new, radical, irreversible industrial revolution has almost reached its climax (G.M. Will Sell Only Zero-Emission Vehicles by 2035).
The future of the automotive sector
Tesla has been the pioneer and the protagonist of this radical change. Elon Musk’s company has revolutionized the very idea of what a car should be like, turning it from a “ mechanical object” to a software. For instance, brakes and transmissions can be updated and adjusted while the car is moving. It is a brand new idea giving origin to a totally different product compared to the past. Changes which have affected the automotive sector so far, despite being relevant, have never completely challenged the very concept of cars design. Despite this, traditional cars manufacturers still boast huge competitive advantages: their production/assembly capacity, rigorous quality standards and a mass production pace. Should they be able to adapt to this new way of conceiving cars, they will seriously threaten the success of companies like Tesla (Tesla might finally have some competition. From Ford).
Ongoing negotiations between Apple and Hyundai
In the meantime the big tech companies such as Apple are moving in the same direction but along slightly different rails. Apple does not want to become one of Tesla’s competitors by building companies to manufacture cars. They have been negotiating with Hyundai to share their know-how in a win-win partnership. Should this work, in 2024 we will have several extraordinarily advanced self-driven cars. According to Reuters, Apple initiative started back in 2014. Tim Cook’s corporate strategy is based on the development of a new type of last generation battery which is expected to be much cheaper than the current ones and with a much longer life. We are talking about a big challenge if we think that Tesla took 17 years to generate some profits. This may be the reason why Apple has chosen to set up a new partnership for the production o f the vehicles. (Exclusive: Apple targets car production by 2024 and eyes ‘next level’ battery technology – sources).
The traditional automotive sector is not likely to collapse. Traditional companies which will be able to adopt the mentality and know-how of big tech businesses will be successful. And viceversa.
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