(Bloomberg) – At first glance, forays into the automotive world by Apple Inc., Google and other tech giants don’t appear to be particularly lucrative.
Car making requires factories, equipment, and an army of people to design and assemble large pieces of steel, plastic, and glass. All of this almost guarantees lower profits. The world’s top 10 automakers had an operating margin of just 5.2% in 2020, a fraction of the 34% enjoyed by tech industry leaders, according to data compiled by Bloomberg.
But for Apple and other giants now focusing on autonomous driving technology or having big plans for cars of their own, that push isn’t just about entering a new market, but about defending valuable space.
Why are tech companies pushing autonomous driving? Because they can and because they have to, ”said Chris Gerdes, co-director of the Stanford University Center for Automotive Research. “There are business models that people don’t know about.”
It’s hard to ignore a market that is projected to exceed $ 2 trillion by 2030. By then, more than 58 million vehicles worldwide are expected to be self-driving. Big tech companies have the means, from artificial intelligence and big data, to chip manufacturing and engineering, to disrupt this century-old industry.
What is at stake, essentially, is something even more valuable than profitability: the last unclaimed corner of consumers’ attention during the day.
The amount of time people spend in cars, especially in the United States, is significant. Americans were behind the wheel for 307.8 hours in 2016, or about six hours a week, according to the most recent data available from the American Automobile Association.
It is a good part of someone’s life, in which they stay away from iPhone applications, from Google searches or without being on Instagram. Any company that can significantly free up that time will also have a good chance of capturing it.
It is impossible to ignore the relentless turn of the world towards smart cars, which are better for the environment. If governments have yet to declare plans to go carbon neutral, in some cases by the end of this decade, there is a lot of research showing that combustion engine cars are going the way of the dinosaurs.
BloombergNEF’s annual electric vehicle outlook, released earlier this month, forecasts that global oil demand from all road transport will peak in just six years, assuming no new policy measures are introduced. By 2025, electric vehicles will reach 16% of global passenger vehicle sales, increasing to 33% in 2030 and 68% in 2040. Eventually, autonomous vehicles will completely reshape the automotive and cargo markets.
In that context, it’s not surprising that after years of dismissing the idea of self-driving cars, tech companies have stepped up their activities and investments.
Self-driving cars are only as good as the human drivers they learn from, so the people who teach these systems must be excellent drivers.
For the past few months, Apple has prioritized plans for the “Apple Car” after previously focusing on creating an autonomous driving system, Bloomberg reported. That fueled intense speculation about which automakers and suppliers the company behind the iPhone might partner with to realize its vision. While Apple recently lost several top managers on the project, it still has hundreds of engineers.
There’s also Waymo, which is in talks to raise up to $ 4 billion to accelerate its efforts. Founded in 2009, the company that was previously Google’s self-driving car project was the first to complete a fully autonomous driving journey on public roads. It became an independent company in 2017 under Google’s parent Alphabet Inc., launched an autonomous transportation service in Phoenix in 2018 and last year began testing autonomous trucks in New Mexico and Texas.
Microsoft Corp. also supports several autonomous initiatives and has partnered with Volkswagen AG on autonomous vehicle software.
Amazon.com Inc., meanwhile, supports Rivian Automotive Inc., which is making electric trucks, and last year bought autonomous driving startup Zoox Inc. It may be looking to include autonomous travel as part of its Prime membership program. .
The auto industry prepares for battle. Industry titans like Ford Motor Co., General Motors Co., and Toyota Motor Corp. stepped up their own self-driving efforts. The Japanese automaker is building an entire city around autonomous driving at the base of Mount Fuji, while South Korea’s Hyundai Motor Co. will spend $ 7.4 billion to build electric vehicles in the US and develop unmanned flying taxis.
Original Note: Apple’s Car Obsession Is All About Taking Eyes Off the Road (4)
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