With ever smarter cars already on the road and semi- and fully autonomous vehicles in large-scale trials, the automotive industry gears up for battle against a host of challengers. Big tech companies and smaller dedicated startups in the fields of AI, mapping and autonomous driving seem to make rapid progress, but there may still be a role to play for the incumbent hundred-year-old industry. What will the automotive landscape look like in a few decades?
As we noted it before, the ideas of self-driving cars have come and gone since the first automobiles entered our lives. Today, it seems as if the technology, both hard- and software, have finally reached a threshold of performance and price levels to turn those ideas into reality. This does not mean that fully autonomous vehicles will see commercialization soon, this will take another five years at least, but virtually all car manufacturers and large tech firms are now developing and testing their prototypes to fine-tune systems and train their algorithms. It will be interesting to see how the struggle between these old and new industries will evolve. Will the old giants continue to dominate or will tech companies take over the industry? Will traditional manufacturers be reduced to mere suppliers of white-label cars? Daimler CEO Dieter Zetsche, for one, has already expressed that his company will never become a supplier of white-label cars for the tech industry.The plethora of collaborations between both sides suggests that these competitors need one another and their competences seem rather complementary indeed. Car manufacturers are great at mass production and the assembly of (many outsourced) parts. They also have a deep understanding of their consumers (and regulators) and will be extremely focused on building reliable and safe vehicles. Tech companies clearly understand software but, as demonstrated by Tesla’s ongoing struggles with the upscaling production of batteries and vehicles, lack expertise in the mass production of the hardware. Ride hailing companies like Lyft and Uber also understand software, and perhaps more importantly, they have introduced tons of customers to the mobility-as-a-service model and understand their needs.Together, these businesses could cover the full stack from the car’s body, powertrain, sensory hardware, data infrastructure, and software. They could even operate fleets of shared vehicles themselves. That is, operating those fleets across the globe will be a highly capital-intensive business as actual revenues would follow years after vehicle production. Besides technological competences, capital will thus be crucial to the realization of the AV dream.So far, these strange bedfellows have managed to work together, but several ‘breakups’ suggest that diverging ideas (and industry cultures) may stand in the way of long-term cooperation. Once AVs become a commercial product, a battle is likely to ensue as all sides want to put their badge on the final product, harvest consumer data, and offer a range of new in-car services.