With AI and other tech becoming more prominent and the dominant part of vehicle design, will Silicon Valley companies replace the car manufacturers of today?
Silicon Valley companies have really deep pockets, far deeper than the car manufacturers. They also have expertise in areas of car technology that are becoming the future roadmap.
What tech firms lack, however, is the infrastructure to manufacture and distribute vehicles to the end users.
You’d be forgiven for thinking the natural solution here would be partner up. However, both sides (one side in particular) are known to be pretty arrogant so it’s hard to envisage that actually happening. I have been watching tech and automotive try to work together on worldwide projects since 2000 and seldom do you see the collaboration work in reality.
There are very public Joint Ventures out there but you wonder how much of this is PR noise to show the competition “we are doing things and winning the race”.
I look at Apple, Google (Waymo) and Tesla and think the boardroom has a vision message in it saying 'beat the establishment, beat the manufacturer'. Let's face it, in some of the tech firm cases they can throw £1bn at a R&D project and not even get nervous. That's not quite the case for the manufacturer.
As a kid, I remember my dad talking about this place called Silicon Valley that in the 1980s was all about building better hardware. That got lost when it became all about software but it does feel like the automotive space may bring Silicon Valley back to its pioneering days.
Car manufacturers are making big decisions about next-generation mobility. Do they stay as manufacturers and designers of vehicles? If yes, then they have to decide if they should offer conventional vehicles? Connected only? Connected and electrified? Or autonomous?
Then they need to figure out if they supply mobility services and if so what type and for which users. Everything I see from Volkswagen Group and similar firms suggests that hardware for them becomes a small percentage on their revenue line in comparison to services and gives them revenue for the full life of a the vehicle, not just a one off sale.
Once they get their head around this, if they do partner, who do they partner with? That must be tough. I keep seeing companies partner with Uber but really? That doesn't make sense for me. I see people talk about Google and Apple but won’t that feel like an arrogance vs arrogance meeting of minds? I can just imagine a car manufacturer boss telling someone like Steve Jobs that he needs to design, build and package in a certain way.
I still go back to my thoughts around Apple vs Microsoft, Netscape vs Microsoft in the 1990s. Everyone wants to be ‘the’ platform that when Dell, HP, Gateway sold desktops and laptops, their product was shipped with it. Maybe the Fords, Volkswagens, BMWs and Toyotas are the HP, Dell, Gateways and Acer and the guys who want to be the Window 95 or Internet Explorer shipped out are some of the same players from the 1990s plus the new faces from the Valley and China.
Either way I think who will win, if there is a winner at all, is far from clear and it will be interesting to see how things unfold and who might end up out of the competition or indeed a very different brand.