Why Are Phone Brands Developing Electric Cars?
Yes, it’s a question about which many are confused and wondering what is happening in the car market. The top phone manufacturers are now focusing on researching and developing electric cars. Some have even showcased their prototypes at many automobile events.
In January 2020, the Japanese tech company Sony unveiled the Vision-S prototype, i.e., an electric vehicle concept. Last year, LG said they were focusing on the growth of electric vehicle component devices and smart homes.
Huawei, the Chinese smartphone company, is making a big push toward the 5G industry and is also rumored to build a self-driving car. The rotating chairman of Huawei said, “If Tesla can do it now, we can all do it.”
The world’s third-largest smartphone maker, Xiaomi, announced it would focus on a new business aimed at EV manufacturing.
Now, how can Apple lag? It is the one thing the IOS never does (pun intended). In December 2020, Apple Inc. moved forward with self-driving car technology and is believed to be launching a passenger vehicle with a significantly optimized and improved battery.
So, what’s happening?
If you observe the changes in the car industry closely, you can find many parallels to the changes the phone industry went through 14 years ago.
When Steve Jobs announced the iPhone in 2007, Google upgraded to Android in 2008. Then all brands were focused on making smartphones with touch screens.
The car industry is going through the same level of changes the phone market went through in the smartphone phase. You may think, ‘the electrification of cars has been going on for many years, and there are already many electric cars on the road.’
Yeah, you are right, and that’s where you’ll see the parallels.
The iPhone wasn’t the first smartphone on the market. IBM created the first official commercial smartphone, which went on sale in 1994. It was the first combination of cell phones and personal digital assistants.
The same thing is happening in the car industry. Tesla was not the first to create the electric car, nor was it even the second or third. But what makes Tesla different is the way they push the limits with their cars.
People have started buying Tesla cars more and more now. It has now become a fashion statement and a source of pride to be a Tesla owner. The electric car is now preferred by many as fuel prices are going up. And with the drastic climate change, everyone is at least thinking about buying an electric car in the future.
Here, Elon Musk is playing the role of Steve Jobs in the car industry, and Tesla is the iPhone. The share price of Tesla is skyrocketing, which puts Elon Musk in the top 5 wealthiest people’s list. He was the richest person for a few weeks, then overtook Jeff Bezos.
What did Elon Musk do that brought about such a change in the automobile industry? Well, he made electric cars cool! Really Cool!!
He wanted to make his cars so cool that he put a Tesla Roadster on his Falcon Heavy rocket and shot it into space, with a human dummy in it! What a guy!
The carmakers have gained never-before-seen confidence by seeing the changes Tesla brought to the industry. So now the car industry is going through a lot of changes as the phone industry did.
So, what’s happening again? There is a revolution coming to the automobile industry, and in a few years, you can see a drastic change in this industry. It’s not just about the electrification of cars; there’s much more you’ll learn in this article.
What are the changes you can see in the car industry?
Many things are happening in the automobile industry, especially in the four-wheeler segment. The changes are listed below.
- Electrification
- Self-driving
- Always-on connectivity
- Increased adaptation of screen
- Software dependency for most of the features
These changes mean two things:
1. This changes the business of making and selling cars.
2. The new cars have nothing in common with the fundamental strengths that traditional carmakers have accumulated over decades.
Again, you can see the similarity with the phone industry.
The smartphone era has almost killed the feature phone market. The question is, will the traditional car brands face a similar fate as Nokia?
But the feature phones are still here, so can the traditional cars survive too?
Last year, carmakers spent 40% of the cost of an average car on electronics. In 2010, it was 27%, and 18% in 2000. It is expected to grow to 45% in 2030.
From a cost perspective, cars are already becoming more of a consumer item.
Now, drivers will spend more time looking at the screen (software) than on the road. Here, you can relate to the smartphone business. Phones were a hardware business in the beginning. But the moment it got connected to the internet, it became a software and internet business. That’s when the third parties started coming in.
There’s not much time left before the car owners will be bombarded with advertisements on their navigation/control screen. I hope that doesn’t happen while driving.
Buyers are more likely to choose cars based on their technological preferences than on factors such as mileage, design, interiors, and so on. The capacity, mileage, and quality of a vehicle are still significant, but the main focus of buyers will change a lot in the future.
Polestar, an electric performance car brand, is simply getting Google’s software for their cars rather than making one of their own. Polestar will feature Google Automotive Services, apps, and services like Google Maps and Google Assistant to communicate directly with the car. And that’s something we’re going to see many other car manufacturers do in the future.
The car business of the future will be very similar to the smartphone business of the present.
The carmakers are trying to electrify the cars entirely and make hybrids as well. Many are moving towards total electrification to avoid harmful emissions.
When the iPhone came out, Google, Snapdragon, MediaTek, and Foxconn joined hands with Android, and they started the smartphone revolution. They all knew that this was the next big thing.
Then the componentization happened: Foxconn assembled the phone cameras, and Snapdragon provided the chips for many Android phones. Following that, the production of phones became more assembly-line-like. Soon, a smartphone can have the camera of Sony, the screen of Samsung, and Microsoft’s operating system. Well, that has already happened, and now is the time for the cars to do the same.
If you observe the car manufacturing of the present, you can see the same thing happening here.
Elon Musk is now doing exactly what Steve Jobs did in 2007. The carmakers have seen what Tesla did and the market opening for electric vehicles.
Similar to Apple, Tesla has an aggressive and vertically integrated business model. The ecosystem-building is also similar to Apple’s. Tesla has charging stations and charging setups at home. Tesla developed its own chip and self-driving software. And finally, they are producing their batteries and a tunnel system to take Tesla cars to longer distances quickly by avoiding traffic.
Many tech and car companies are already developing charging stations and batteries and are also planning hyper loops to compete with Tesla.
After looking at these changes, one can easily say that the industry is moving towards full electrification and software-focused electric vehicles.
What does the future hold for the car industry?
As Tesla became the top-valued car globally, the car industry is going through an Android phase that started just after the iPhone was introduced to the market.
Recently, the AI development company Nvidia announced Drive Atlan, a system-on-chip (SOC) platform for vehicles. They developed a reference design kit called Hyperion, which includes the necessary sensors, circuits, and software for self-driving and intelligence.
A few months ago, LG & Magna (a contract manufacturer) announced that they’re working on an electric powertrain technology (the powertrain of an electric vehicle is a simpler system, comprising far fewer components than a vehicle powered by an internal combustion engine) like a motor, inventory, and on-board chargers that companies can build into their own cars.
The future seems bright for the car industry, or should I say the electric car industry? By 2030, the percentage of electric cars on the road will be so high that when one says the car industry, s/he means the electric car industry.
Volkswagen recently surprised everyone by introducing its Modular Electrification Toolkit (MEB), a modular system for manufacturing electric vehicles. A modular vehicle is a type that has substantial components that can be interchanged.
A modular vehicle can contain the power system, suspension, and wheels in a single module or chassis.
The start-up AImotive and Sony are working together to create software for self-driving cars.
You can now see the Android moment in the car industry. Just like every phone manufacturer rushed towards creating their own smartphone, the carmakers are already in the process of creating their own electric car.
We have to look forward to the default software or system that these cars will have in the future. Just like the componentization and standardization that created a default operating system for smart gadgets.
Now, everyone is waiting to see whether the same thing will happen to future cars. A single operating system or a few? Let’s wait and see.
We’ll see many brands choosing Google or other popular software services for their cars like Polestar did.
The big brands entering the competition will affect the small companies, and there could be a duopoly or oligopoly in the market. However, it is unclear when this will occur and what impact it will have on traditional automobiles.
The major brands are slowly adopting electric vehicles or are already making prototypes of them. Recently, Volvo announced that they are committed to becoming a leader in the premium car market and will become a fully electric car company by 2030. And that’s a piece of excellent news.
Many car manufacturers have promised to go fully electric by 2030. Brands like Jaguar, Bentley, Cadillac, Mini, and Lotus are committed to this vision.
Conclusion
Yeah, so why are phone brands making cars now? Because the cars of the future are not just cars. They will be loaded with software and screens, just like a smartphone and tablets.
Cars are going to be connected to our smartphones more and more from now on. So, seeing the future of technology and service in the car industry and eliminating the need to make smartphones compatible with different cars, it is best to make your own car with your operating system and services.
In the future, the operating system in a car will be the unique selling proposition (USP) for the manufacturer. People will decide to purchase a car based on the services provided by the brand, like the tunnel system, free charging for X years, charging speed, self-driving efficiency, and many more.
When mass production and research on electric vehicles increase, the price will come down drastically. An analysis from Bloomberg New Energy Finance revealed that falling battery costs would make electric cars cheaper. The battery costs almost half the price of an electric car, and the falling price means excellent news for those looking for a budget car.
Imagine a future where car brands launch three variants of the same model as Apple and Samsung do. It’ll not be long before we see a brand launch a car in three variants, like the Audi e-Tron Ultra, e-Tron Plus, and e-Tron Mini. Well, that might sound funny, but that could be the future.
Let’s brace ourselves for an exciting future. And if you’re like me, who hopes to buy an electric car in the future, let’s hope the competition intensifies and we get several options to choose from. I will buy a mid-range electric car if that’s a thing in the future.
