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Special report: Will tech giants ever become automakers? Special report: Will tech giants ever become automakers? Copyright statement Published in December 2020 by :
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Contributors : This report contains forward-looking statements that reflect the Mike Quinn authors’ current views with respect to future events. Such Christoph Gauger statements are subject to risks and uncertainties. If any of the Alex Koster assumptions underlying any of these statements prove Freddie Holmes incorrect, then actual results may be materially different from Xavier Boucherat those expressed or implied by such statements. The authors do Jack Hunsley not intend or assume any obligation to update any forward- looking statement, which speaks only as of the date on which it is made. Production: Anmol Mothy All the estimates are based on assumptions, the authors’ calculations and publicly available data. Automotive World Ltd is © Automotive World Ltd 2020 not liable for misrepresentation or misuse of such information or validity of publicly available information. Cover image courtesy: Daimler i Research by Automotive World Special report: Will tech giants ever become automakers?
Table of contents
Executive summary iii
Could tech giants become automakers? 1
Big tech scandals not likely to affect consumer trust in the 5 digitised vehicle
Partnerships key for tech giant automotive ambitions 8
Cost of a car factory no concern for tech giants 12
Car manufacturing does not fit the big tech business model 16
Tech giants can be automakers, but it will take time 19
Would self-built vehicles further Big Tech’s position in 22 future mobility?
Research by Automotive World ii Special report: Will tech giants ever become automakers?
Executive summary
• Modern vehicles contain scalable central existing models like the Chrysler Pacifica and compute clusters, embedded artificial Lexus RX. Zoox, the self-driving car company intelligence (AI) capabilities, and connected acquired by Amazon, recently showcased its experiences. These all rely on the Big Tech own in-house prototype ecosystem, and some believe big names such as Apple, Amazon or Alphabet could choose to • Tech giants might also choose to launch an EV monopolise the entire value chain—expanding to grab a slice of the new vehicle market. from technology provider to vehicle Around 95% of all new cars sold today have a manufacturer gasoline or diesel engine, and EVs will serve as their replacements over the coming decades. It • Finding the cash to get a factory up and running is an unlikely venture that arguably strays too would not be a problem. Tech giants earn far from the business M.O. of those in Big Tech. billions of dollars each quarter, and in some An electric delivery van would seem more cases tens of billions. Some tech giants are in a feasible, with Amazon the most likely player to position of such financial strength that, if they take a punt on its own vehicles. The fact it has wished, they could very plausibly acquire an already placed orders with electric van start-ups automaker. Reports suggest that is exactly what would suggest otherwise Apple attempted with Tesla in 2013 in a deal that went sour • With a stable and profitable business model in tow, vehicle production looks an unnecessary • But cash is not everything: it takes an risk for tech companies to take on. The low- experienced team of experts who have margin world of large-scale vehicle overseen the planning and development of car manufacturing is not likely to appeal to these plants before. Understanding how to keep the high profit players. It simply does not fit the facility profitable and in sync with deliveries business model from suppliers would also be a new world of complexity. Today, most consumer electronics • Instead, tech players are more likely to secure giants outsource production of their devices their share of the automotive value chain through partnerships with the incumbents, • Indeed, if tech giants were ever to begin making much like Waymo has with FCA. The leading AV their own cars they could simply pay someone developer will fit future FCA models with its else to do it. There are a handful of revered autonomous ‘Waymo Driver’ platform, merging contract manufacturers around the world that its tech expertise with the automaker’s century would gladly accept the business, and many plus of engineering skill start-ups have already taken advantage of their in-house expertise when it comes to designing • Considering the connected vehicle a revenue- and producing vehicles en-masse. At a basic generating platform could also entice tech level, this would avoid the need to run a car giants to invest in vehicle manufacturing. Many factory at all, along with the associated risk and of these companies already have inherent maintenance expertise in future mobility megatrends, and more specifically in software and batteries • A tech company may choose to make its own vehicles as an end-to-end robotaxi provider. • No tech giant is expected to unveil a bespoke The company would produce the self-driving vehicle in the short term. Partnerships such as computer and software, and integrate it within Amazon and Rivian’s, Apple's continued a purpose-built vehicle that has been designed automotive-focused hiring spree and Sony’s in-house. Waymo has had a stab at this already Vision-S prototype suggest the possibility with the Firefly pod, but has largely relied on should not be ruled out entirely iii Research by Automotive World Special report: Will tech giants ever become automakers?
Could tech giants become automakers?
There are cases for both sides of the argument, but such a move would come with risk. By Mike Quinn, Christoph Gauger and Alex Koster
he notion that cars are becoming These trends are only increasing as tech T“computers on wheels” is already an companies turn their attention to the auto outdated expression, and shortchanges the industry seeking to grow and extend the reach direction in which the automotive industry is of their ecosystem. Apple introduced the heading. In future electrical architectures, ability to unlock vehicle doors based on cars are becoming “servers on wheels” with iPhone proximity. Alphabet-owned Waze is scalable central compute clusters, embedded being built into infotainment systems. Amazon artificial intelligence (AI) capabilities, and made arguably the most diverse push with connected experiences delivered through Amazon Key package deliveries to a vehicle’s tech ecosystems. trunk, Echo Auto as an aftermarket device, and voice activated payments for gas at Exxon This direction is directly in the wheelhouse of and Mobil stations. tech giants like Microsoft, Apple, Amazon, and Alphabet. An increasingly common question BCG’s Center for Digital in Auto expects to see a within the industry is whether these tech giants fundamental shift happen over the next two to will move from being a technology provider to four years as Tech Giants embed their software an actual automaker. into the vehicle—with each playing to their strengths. Microsoft is focused on the cloud, establishing a leading position with its The landscape is already Connected Vehicle Platform and bringing edge computing capability to vehicles. Alternatively, changing Alphabet is working from the operating system out, using Android Open Source Project to To start, it must be recognised that tech giants make Android the de-facto in-vehicle are currently active in the automotive space at infotainment (IVI) operating system across an unprecedented scale. Their services are most of the industry. This positions it to deploy integrated into vehicles with Android Auto and Google Automotive Services (Maps, Voice Apple CarPlay becoming table-stakes across Assistant, AppStore), deepen access to vehicle virtually every automaker. Additionally, Amazon data, and offer creative bundling to drive has made a strong push to embed its voice adoption of Google Cloud Platform. assistant, Alexa, into numerous vehicle lines. Recognising these actions as posing a threat to
Research by Automotive World 1 Special report: Will tech giants ever become automakers?
Alphabet’s Waymo is leading the pack with autonomous vehicles, but will it ever produce its own?
Amazon’s cloud position in the automotive moving from technology providers to space, AWS announced an integration with automakers. To answer that, some of the QNX, one of the leading automotive real-time advantages and disadvantages of moving into operating systems. hardware should be addressed.
Looking at self-driving vehicles, tech giants are Controlling the entire platform to protect at the forefront with Waymo leading the the experience. This is what Microsoft and charge, publicly stating it has no intention of Alphabet have done with the Surface and producing a car and instead focusing on the Pixel, respectively. However, in both cases the technology innovation. Likewise, Amazon’s move to enter hardware came after they acquisition of Zoox provides an interesting began to lose key control points. In backdrop for how the AV technology landscape automotive, they never had control to start may evolve. and, as noted above, are already making significant headway without having to own the hardware device. Advantages and barriers of Launch a completely net-new product. This moving into hardware is the Echo/Alexa argument. Amazon would not have been successful if it just produced the With all this activity, the burning question is voice service without hardware. It needed to whether tech giants will take the next leap be tightly coupled at the start, with the
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hardware subsidised. In automotive, this isn’t producing a self-driving car. Consumers cited the same dynamic. traditional car companies as their primary source of trust (46% of respondents) over tech Disrupt an existing market while companies (16% of respondents). Interestingly, generating accretive margins. However, there was also an overwhelming recognition trying to gain market share as a manufacturer that traditional automakers would need to in automotive would cause large economic work in cooperation with tech companies (69% damage, in particular to Alphabet and of respondents) as opposed to going it alone Microsoft, making it unlikely that investors (10%) or relying on the current automotive would give them permission to enter a suppliers (17%). market with such high capital intensity and significantly lower margins. Scenarios that could play out Gain access to a unique dataset. Automotive does represent an opportunity in this respect. One trend working in the tech giants’ favour is However, going into direct competition with the rapid adoption of battery electric vehicles the automakers will doom being a service (BEVs). By 2027, BCG expects there to be ~90 provider to them. This would be a huge deal for unique native BEV platforms, but only 13% at- AWS, Azure, and Google Cloud Compute, and scale. The remaining 87% sub-scale platforms not a risk they are likely to take just for a new would be at a 15-20% cost disadvantage to data source. their shared alternatives. This, combined with the simpler BEV architecture relative to ICE BCG has carried out a joint study with the and reducing cost of battery technology, World Economic Forum, which investigated provides an opening for contract who consumers were most likely to trust in manufacturers to drive new at-scale shared
Established ca r manufacturers are the preferred pro ducers of SDVs
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BEV platforms. If this type standardisation have the industrial scale to support diversifying does come to fruition, the automotive into automotive manufacturing. They would industry starts to look more like the smart face similar risks, though, of putting their Tier 1 phone sector, reducing the barriers for new supplier businesses at risk by competing with entrants. With that dynamic, there are three their OEM customers. wildcards in this discussion, each with their own logic to enter the market. Summary First, Apple could look to disrupt the automotive consumer market. It can design Will tech giants become auto “makers”? In unique hardware, sensor technology, short, no. They are already making rapid software, and services, and does not face the inroads to win critical control points in the car same cloud coopetition risks as its peers. that drive customer value and differentiation With automakers unlikely to fully relinquish without owning the rest of the vehicle— control of the user experience, the only way especially when the economic, strategic, and for Apple to control the end-to-end ecosystem consumer lenses just don’t make sense for would be to also own the vehicle. If Apple them to go into manufacturing. makes a move into automotive, its entry path would rely on a contract manufacturer, However, with the rise of BEVs, it’s certainly similar to its approach in consumer possible for a tech company to work with a electronics, as opposed to manufacturing a contract manufacturer to design a compelling vehicle itself. vehicle—which Sony and Magna have demonstrated. Given that, could traditional Second, Amazon could further vertically automaker-made vehicles powered by integrate the commercial vehicle landscape. Microsoft and Google software and services It has shown a willingness to enter lower share the roads with Apple cars built on margin markets and is actively building out contract-manufactured BEV skateboards and its logistics network and capabilities. Amazon Rivian/Zoox-powered Amazon delivery vans? has opted to invest in Rivian rather than It’s certainly possible. bringing vehicle development and manufacturing in-house. It is now working A final observation: traditional automakers are together to integrate Amazon technologies making unprecedented investments in and rethink the delivery van to improve software capabilities. They fully recognise the driver productivity and route efficiency. disruption threat and are not sitting idle. The Amazon’s path to becoming an automaker automakers that digitally reinvent themselves could be to acquire Rivian, but only if that the fastest—becoming a company that looks helps its delivery network economics. more like Apple or Peloton with compelling hardware but driving their business growth Lastly, Korean and Japanese electronics through recurring software services and conglomerates represent an interesting experiences—are the OEMs that will win. proposition because they have expertise in Conversely, it could also be argued that such both software and battery design, which are automakers would have the scale to add building blocks of future vehicles. They also themselves to the list of future tech giants.
About the authors: Mike Quinn leads Boston Consulting Group’s Center for Digital in Automotive & Mobility for North America, which Christoph Gauger leads globally, and Alex Koster in Europe
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Big tech scandals not likely to affect consumer trust in the digitised vehicle
New automaker partners like Google, Apple & Amazon have all been the subject of scandals in recent years, but this will do little to put people off in the showroom. By Xavier Boucherat
he world’s tech giants do not appear to be Tech companies understand they do not need Ton the verge of building their own cars, yet to make their own cars to grab a significant the likes of Apple, Amazon and Alphabet are chunk of the automotive value chain: increasingly present both inside the vehicle and navigation services, voice assistants, e- the showroom. Several major automakers have commerce and more are must haves in now established partnerships with big tech in tomorrow’s connected vehicle, and for order to bring to their cockpits the digital automakers, the thought of going toe-to-toe services which consumers know, love and with big tech, which has spent the better part increasingly expect. of 20 years refining these services, will be far from appealing. Renault, Audi and Volvo, for example, have all integrated Google apps into their models. However, when it comes to issues of branding Speaking in an FT Live webinar in December and trust, does big tech have a problem? In 2020 , Catherine Brel, Vice President, Legal & recent years, Silicon Valley’s reputation has Deputy General Counsel, Groupe Renault said suffered a number of crises. The death of Elaine the automaker’s decision to partner with Herzberg, fatally run down by a self-driving Google Automotive Services was of strategic Uber undergoing testing, is an extreme importance. “Our customers now have access example. Others, such as the Facebook- to services which provide a better customer Cambridge Analytica data scandal, the 2018 experience,” she explained. “The fact is that we Google data breach and revelations that Apple are in a situation where digital is everywhere, contractors were able to listen to private Siri and we must use it to perform… Tomorrow’s recordings, could make potential customers value will lie in autonomous vehicles and uneasy. Do the benefits of these technologies mobility services, where companies like outweigh concerns? And do customers want to Waymo are already the best in class.” see big tech brands in the showroom?
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It depends on where and when
Kristin Kolodge, Executive Director, Human Machine Interface and Driver Interaction at J.D. Power, points to 2018 research from the group which suggests that attitudes will vary depending on market and product. “Asked whether they would trust a tech brand versus an automaker brand, consumer responses varied according to global region and subject matter,” she says. “Consumers recognise that a Amazon’s Alexa is among the Silicon Valley technologies vehicle is a different level of complexity that have found their way into the car compared to a phone.”
For example, a discussion of autonomous one about electric vehicles (EV), where vehicles (AV)—a heavily tech-dependent traditional OEM engineering expertise is venture—prompts different responses than more highly prized. A response which Kolodge singles out from the research reads, “auto companies couldn’t get airbags right, and as such I am sceptical about them doing AVs.” The Takata airbag scandal, referenced here, is not the only failure automakers have found themselves at the centre of in recent years, with VW’s Dieselgate and multiple “Asked whether they fatalities involving Tesla’s Autopilot coming would trust a tech brand to mind. versus an automaker Complicating the problem is that scepticism around projects such as the AV agenda is, in brand, consumer general, high. In Q3 2020, J.D. Power’s responses varied quarterly Mobility Confidence Index for self- driving vehicles in the US—a measure of according to global people’s opinions on whether they will be a region and subject successful technology—fell to 35 out of a possible 100. Similarly, a 2019 study from matter. Consumers pollster Ipsos found that only 6% of new car buyers in the US would purchase a fully recognise that a vehicle autonomous vehicle if offered the choice. is a different level of But as the Renault Google partnership complexity compared underlines, the tech companies offer a lot more to a phone than autonomy. Mark Schirmer, Director, Cox Automotive, said that the likes of Apple CarPlay and Android Auto are clear indications that consumers want the technology. “We also know that consumers are beginning to accept
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Amazon’s Echo Auto in the car,” he adds, “and that they want more connections to their phone, enabling unlocking, remote start and system checking. It is already underway.” Apple, Amazon and Android, he says, are Automaker products will already a part of many consumers’ lives, and “ having secured themselves positions as be made better with important suppliers to vehicle makers, their exclusion would only do harm. “Customers technology from the giant don’t necessarily want an Apple car, but they tech companies, but they certainly want Apple technology in their car,” he says. will continue to be mobility brands at their “There will absolutely be value for automaker brands in partnering with recognisable tech core. For someone names,” agrees Kolodge. That said, there will be a question of which names will resonate, looking to get from point and in turn will truly help to amplify value: A to point B, Toyota or “Not all brands are created equal. Within the industry we know that names like Waymo and Ford will likely continue to Mobileye are strong and successful players. play the leading role But will these names resonate with the average customer like Apple or Intel might? Most likely not.”
aftermarket, but particularly servicing, means Trust is a precious thing that automakers remain very consumer-facing. Phone mirroring software such as Apple Historically, the big automaker brands have CarPlay and Android Auto may be hugely commanded high degrees of confidence, with popular, but in the event of a problem, some boasting a place in the public consumers will still turn to the vehicle consciousness for over a century. History, says manufacturer. “They’re still on top of the Kolodge, can help, but moving forward, hierarchy,” explains Kolodge, “even though it’s carmakers must grip the importance of an Apple or Google product.” Ultimately, the maintaining their customers’ trust and loyalty. ability—and responsibility—to create trust and This is especially true as they explore new loyalty still lies with the automaker. mobility business models and services, with scepticism around AVs a case in point. “There “Strong auto brands such as Ford, GM, Toyota needs to be a high degree of sensitivity in and Tesla will continue to be trusted building trust, and this will depend on transportation brands in the decades ahead,” experiences,” she says. The automaker which says Cox Automotive’s Schirmer. “Their leaps into things quickly and recklessly risks products will be made better with technology destroying its reputation. from the giant tech companies, but they will continue to be mobility brands at their core. In To some degree, automakers will be taking on other words, for someone looking to get from responsibility for those tech brands they bring point A to point B, Toyota or Ford will likely inside the car. The nature of the automotive continue to play the leading role.”
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Partnerships key for tech giant automotive ambitions
Tech giants are looking to combine their computing expertise with automotive know-how. By Jack Hunsley
echanical and engineering expertise are Messential competencies for automakers, but the last few decades—and in particular, the last few years—have made new requirements. With electric vehicles (EVs), connectivity and There are other people autonomy all maturing, industry stalwarts have “ been forced to diversify. The need to adapt has that are very, very good opened the door for digital technology experts at making cars, and they to enter the market. should do that, and we’d However, vehicle manufacturing is no easy gig, as attempts from Dyson and others have love to work with them shown. Best known for its bag-less vacuum, the company’s N526 project sapped up more than US$500m in funding before it was axed and James Dyson told media that each EV would vehicle technology development instead. The have cost US$182,000 to make. Rather than project has also been through peaks and troughs, make cars, the majority of tech giants have with Apple culling employees from Titan both in opted to focus on self-driving and connectivity 2016 and 2019. However, the re-hiring of Tesla projects. Just how far have they come? Engineer Doug Field—who oversaw the production of the Model 3—in August 2018 suggests it is still pursuing its automotive goals Apple and said culls were merely restructuring efforts as claimed. Field is currently responsible for the The most elusive player in this category is Apple, day-to-day aspects of the project. which despite six years of rumours and snippets has revealed precious little on its ‘Project Titan’. How deep Apple aims to delve into automotive is What is known is that the original goal was to unclear, with Chief Executive Tim Cook’s most build an EV, but industry trends have since recent interview on the topic—back in 2017— pushed the company towards autonomous suggesting Apple is more interested in the AI
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Waymo has added heavy duty trucks to its self-driving portfolio in 2020
challenges AVs present rather than becoming an Apple’s hiring decisions suggest it sees a role in automaker outright. “We’re focusing on automotive. Over the last decade, it has autonomous systems. It’s a core technology that brought in employees from Tesla, Ford and we view as very important. We sort of see it as the GM. Battery experts from A123 Systems and mother of all AI projects,” he told Bloomberg . Samsung have also been poached, the former leading to a since settled lawsuit against Apple. News in December 2020 that Titan leadership is to be passed onto John Giannandrea, Senior Vice President of Machine Learning and AI Waymo Strategy and Apple’s Siri chief, reinforces this theory. This update was also notable in that it is Google’s Waymo doubled-down on a self- the first concrete news Apple has offered on driving future in 2020, announcing a full- Titan in recent years. Giannandrea’s resume blooded entry into the trucking space via its also includes a stint at Google running its Waymo Via project. Though it has been testing machine-learning and search teams. self-driving cargo delivery since 2017, in January 2020 it announced an expansion into In its AV endeavours, Apple was granted a Texas and New Mexico, eyeing deployment on testing permit in 2017 in California, where it “interesting and promising commercial runs Lexus SUVs in the city of Cupertino. It has routes.” This adds to existing pilots in also partnered with Volkswagen on its PAIL California and Arizona. (Palo Alto to Infinite Loop) shuttle programme, which will reportedly see Apple’s self-driving Its work in the passenger car space is software integrated into Volkswagen T6 continuing in tandem, with the company Transporter vans. However, no update has raising US$2.2bn in its first external funding been given on PAIL since 2018. round in March. In October, Waymo
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announced it would relax rider requirements for its Phoenix robotaxi service. Previously only members of its early rider programme were permitted to use its driverless vehicles, with these customers also having to sign non- disclosure agreements to do so. “In the near term, 100% of our rides will be fully driverless,” Chief Executive John Krafcik said at the time, though no official timeline has been detailed. Amazon unveiled the first of its custom Rivian-built electric In December, it announced plans to build a vans in October ‘replica’ city to test the Waymo Driver, and a new R&D centre in Menlo Park, California, which will focus largely on its Class 8 truck Amazon technology. “Together, these new facilities will enable us to advance the latest generation of In October 2020, Amazon unveiled the first of our fully autonomous driving technology across the 100,000 custom-built electric vans that will multiple vehicle platforms,” the company roll out into its fleet across this decade, built wrote on Twitter. with its partner Rivian. “We combined Rivian’s technology with our delivery logistics Waymo is not looking to enter the market as a knowledge, and the result is what you see standalone automaker, despite having here—the future of last-mile delivery,” said Ross previously built a small prototype AV known Rachey, Director of Amazon’s Global Fleet and as the Firefly. “Our goal is not to build cars. It’s Products. This may not make Amazon an to build the world’s most experienced driver,” automaker, although with the company’s logo Patrick Cadariu, Head of Vehicle Supply Chain emblazoned on the van’s front grille and Operations and Supplier Partnerships, told the steering wheel, the average observer may not Telegraph in 2019. “There are other people necessarily know better. that are very, very good at making cars, and they should do that, and we’d love to work Elsewhere, Amazon’s big 2020 announcement with them.” was its acquisition of self-driving start-up Zoox. No exact figure has been detailed, but the That motto remains the same in the understanding is the purchase would value commercial vehicle space, with Waymo’s Zoox at more than US$1bn, while also making recently announced partnership with Daimler the acquisition one of Amazon’s largest Trucks underlining its game plan. “There are so investments to date. The expectation is that many things you need to bring together to Zoox’s expertise will allow Amazon to compete create a self-driving truck. There is the self- in the emerging robotaxi and driverless driving stack, and this is something that logistics markets. Waymo probably does best. But in terms of getting that intelligence to move that truck, The launch of Zoox’s most recent AV in whether steering or controlling the engine, December also made headlines. The company that’s what Daimler can do,” Jean-Dominique claims its shuttle can operate for 16 hours on a Bonnet, Principal Consultant, Commercial single charge at speeds of up to 75mph. Zoox Vehicles, Frost & Sullivan, told Automotive plans to launch robotaxi services in San World in October. “Both parties will do what Francisco and Las Vegas. Zoox’s Chief they are good at.” Executive, Aicha Evans, also hinted that the
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company could yet move into the logistics million autonomous miles with its fleets in Russia, space too. “At some point we could move the US and Israel. By February 2020 that figure packages,” she told Bloomberg . had doubled. As Fokin detailed, the company is currently focused on building relationships with Could Amazon become an automaker? regulators to aid deployment. “We are like the Currently, there is little to suggest it has any Wright brothers in aviation. We’re just taking the interest in taking that dive. Instead, it looks set first flights and it’s impossible to formulate strict to continue investing in innovative start-ups regulations or strict standards at this current which can aid its core logistics business. stage just because there isn’t enough experience in the industry to be able to do that,” he said. “Based on our experience in the local market we can see exponential growth in car-sharing. I also have a very high expectation of not just self- driving technology, but in autonomous “We’re focusing on transportation uptake too.” autonomous systems. It’s a core technology that we Baidu view as very important. Baidu has made the most of China’s maturing home-grown automotive industry to rapidly We sort of see it as the accelerate its self-driving development. Despite mother of all AI projects having only worked on autonomy for three years, the internet giant has collaborated with more than 100 partners on its open-source Apollo self-driving platform.
Earlier this year Baidu Apollo also announced Yandex what it claims to be a world-first: the successful development of a production-ready Russia’s Yandex sees huge potential in the autonomous driving computer, the Apollo automotive industry, particularly in the ability Computing Unit (ACU). It aims to produce for shared AVs to revolutionise urban mobility. 200,000 ACUs annually. “The mass production The company has already dedicated plenty of of ACU indicates that we have significantly firepower in this direction, boasting what it advanced our capabilities in automotive-grade believes to be one of the world’s largest AV safety, commercialisation of autonomous fleets. “There are probably only three countries driving, and software and hardware supply in the world right now where you have more chain management,” says Yunpeng Wang, than 100 autonomous vehicles (AVs) on the Senior Director of the Technology Department road every day,” Artem Fokin, Yandex’s Head of Baidu’s Intelligent Driving Group. of Business Development, told Automotive World in October. “That’s the US, China and Again, partnerships have been critical for Russia. Judging by those numbers, we are in a Baidu, and it has made great use of China’s pretty good company.” flourishing automaker scene to tie in these collaborations early on. Partners include Geely, Yandex has hit several key landmarks since its WM Motor, FAW and BYD, while traditional first autonomous demonstration in 2017. In players such as Toyota, BMW, Volvo and Ford October 2019, it announced it had completed one have also penned agreements.
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Cost of a car factory no concern for tech giants
Contract manufacturers might offer a means for tech giants to expand into vehicle production. Whether they will is another matter. By Freddie Holmes
iven that modern vehicles have become Gincreasingly reliant on software and battery technology, there have been suggestions that the next generation of vehicles could be produced by familiar names from Big Tech.
Having already branched out to find new sources of growth, corporations such as Alphabet, Amazon and Apple appear the most likely. There is also an old adage to consider: if you aren’t growing, you’re dying. But does that justify a move into unknown territory such as Purchasing a car factory would be no problem for a tech vehicle manufacturing? giant, but operating it would be a different beast
Much of a vehicle is bought from suppliers, be Making vehicles at a profit it seating and interiors, stamped and moulded parts or the glass used for the windows. The Setting up a car factory takes time, but it can be drivetrain will also be procured, and in the case fairly straightforward with the support of an of EVs, the batteries as well. Complexity comes experienced team of experts. Important from coordinating the delivery of all these parts elements such as the paint shop—widely seen as at the right time, and negotiating costs. “Think one of the most important facilities in a vehicle of it as a perfectly in-sync logistics super-hub,” factory—can also be sold to a third-party says Andrew Bergbaum, Managing Director at operator, which helps to reduce the overall AlixPartners. complexity and costs of the operation. For some start-ups, the paint shop has been A bodyshop then combines parts that have skipped altogether , with vehicle bodies been produced in house, such as large body produced using coloured composite materials. panels, with the other elements delivered by
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Manufacturing lines are inherently complex, but the right team can get them up and running quite easily
sub-suppliers. Industrial machinery is required would produce in-house, and at what volume. to weld steel and bond aluminium. Structural A factory that produces 50,000 cars is quite adhesives might also be needed for plastics and different to one that produces 250,000 cars.” composites or when joining dissimilar metals. “The bodyshop is especially critical,” said Axel Ryan Martin, Research Director at market Schmidt, a Senior Managing Director who leads advisory firm ABI Research, highlighted the Accenture’s Automotive group globally, given inherent complexity of modern production that it determines the finished quality of a car. lines. “BMW relies on a network of 1,800 suppliers across 4,000 locations to deliver 31 Trim and final assembly is then completed on a million parts to its factories each day. There line that is typically shared by modular robots was a time when one production line would and human workers, where elements such as make one car, but today, one line can produce the seats and instrument panel are added. Most up to ten different cars, and one car is plants also have a rectification line or ‘off produced every 56 seconds,” he explained. track’, where any defects are corrected, and “This means production must not only be just finished vehicles must also be tested for water in time, but also just in sequence. Getting this ingress before being signed off. “With a team sequence right is incredibly important because that has done all this before, it is a fairly the cost of downtime in automotive methodical process,” explained Bergbaum. manufacturing is in the vicinity of US$30,000 “The biggest question a tech company would per minute.” have to answer is how much of the vehicle they
Research by Automotive World 13 Special report: Will tech giants ever become automakers?
Once a factory is up and running, attentions Accenture’s Schmidt is of a similar opinion, but quickly turn to capacity utilisation. If points out that experience cannot be production falls below a certain level, the overlooked when it comes to running a plant. marginal loss of profit can accelerate quite “It is far and away from being just a matter of rapidly. In this situation, explained Bergbaum financial power,” he explained. “Those OEMs “there are more workers on a shift than that the industry consider as traditional necessary and the supply chain is not being carmakers rely on their more than 130 years’ leveraged efficiently, which attaches additional experience in producing cars. Think about the costs onto every vehicle produced.” quality issues certain carmakers had in the past; rusty screws causing a recall for more “Occupancy rate is obviously tightly related to than 100,000 cars is just one of many the factory’s profitability,” added Schmidt. examples.” “This is the reason why large and multi-brand carmakers have an incredible advantage given In theory, one way to get a car factory up and the volume and the fact that they can use running would be to buy a plot of land and start interchangeable components during the from scratch, or take over an existing car production process.” factory. Consider Tesla’s acquisition of the Fremont plant from the GM-Toyota joint There are also huge capex requirements. These venture. A tech company might also be able to will not be one-off investments. An automaker repurpose one of its existing facilities. A site must consider what is required to meet the that is currently under-utilised, or is producing needs of increasingly stringent regulations on outdated or soon-to-be phased out products, safety and emissions, as well as the evolving might serve as a useful shell: lines can be CASE megatrends. Berbaum hazards that repurposed, new robotics can be bought in and hundreds of billions of dollars are being warehouses can be shuffled around. invested by automakers to remain competitive. However, taking on a car factory would be far more intense than the tech companies’ current Strategies involvement in manufacturing. The iPhone, for example, is designed by Apple but built by Becoming an automaker is a significant task to Foxconn. A more likely scenario would see tech take on, but one problem Big Tech doesn’t have companies outsource production in the initial is cash. A typical car factory costs in the region instance. of US$1bn and US$2.5bn to set up—spare change to some of the larger tech companies. Contract manufacturers In Q4 of fiscal year 2020, Apple reported revenue of US$64.7bn, and ended the quarter A contract manufacturer would relieve the with US$192bn in cash. Alphabet secured Q3 need for a tech company to invest in its own 2020 revenues of US$46.2bn, with operating facilities, and avoid the fixed costs and risks income at US$11.2bn. Amazon’s operating that come with running a factory. It would also income came to US$6.2bn in Q3 2020, guarantee a high quality product. spending US$12bn on capex in Q1 2020 alone. “Could a tech giant decide to begin producing A recent example is Fisker’s agreement to cars? It is very hard to do but as Tesla has outsource the production of its electric SUV proven, it is not impossible,” said Bergbaum. through Magna Steyr, one of the industry’s “If Amazon decided it wanted to make a car, for leading coachbuilders. The Austrian example, it would make a car.” manufacturing arm of Magna International is
14 Research by Automotive World Special report: Will tech giants ever become automakers?
Magna Steyr has produced models for various brands at its site in Graz, Austria. Could tech giants tap its expertise? renowned for its co-development capabilities, A speculative venture and often serves as a consultant for automakers. Alongside mass-produced models Can tech giants become automakers? They such as the Jaguar I-Pace, the company also certainly have the funds available, and senior produced the Sony Vision-S concept vehicle—a executives would be able to carve out a useful example of how quickly a newcomer can business plan to hit a particular vehicle produce a self-branded vehicle through a segment, consumer group or commercial contractor. Steyr has also helped Chinese start- application. up ArcFox produce the Alpha-T, which recently went on sale in China, and has even showcased The most likely route to mass production its own concept vehicles under the Mila brand. would be through a contract manufacturer, which could relieve the burden of committing Partnering with a contract manufacturer of this time, resources and staff to the creation of ilk would make good sense for any tech dedicated car factories. Tesla’s tales of company. “There is a real possibility that a tech production hell would illustrate the reality of company could use a contract manufacturer,” ramping up production for any start-up. said Bergbaum. “We know contractor Contact manufacturers have already built cars manufacturers like Magna Steyr produce good for players outside of the traditional products. It is a very high quality assembler.” automotive sphere, and are looking like the go- Other established automotive contract to solution for many start-ups. Whether tech manufacturers include Finland’s Valmet, VDL giants will add themselves to that list is unclear, Nedcar in the Netherlands and Avtotor in Russia. but not unlikely.
Research by Automotive World 15 Special report: Will tech giants ever become automakers?
Car manufacturing does not fit the big tech business model
Rumours that the tech giants will build their own vehicles are dying down as Silicon Valley’s intentions become clear. By Xavier Boucherat
t has been a staple rumour in the auto Iindustry for a number of years: the Apples and Googles of the world, with more money than they know what to do with, are preparing to take the plunge into vehicle manufacturing. Cars are an To casual onlookers, it may have seemed more “ than just idle talk: Google’s Firefly, the steering- indispensable part of the wheel-free prototype used in early testing, was consumer’s ‘connected at one point synonymous with self-driving technology. Apple’s secrecy on all matters life’, and tech giants will automotive has only stoked the rumour mill, with whispers of the top-secret ‘SG5’ lab just strive for a relevant share recently resurfacing. And when Sony shocked of it and look for CES 2020 with its Vision-S electric vehicle (EV) concept, it showed just what tech companies opportunities to connect were capable of. the car to other touch
Sony, a company which had never made a points in a customer’s motor before then, was quick to play down any digital ecosystem suggestions it would be entering the automotive business, with project lead Izumi Kawanishi telling Japanese press that the Vision-S was the company’s own small contribution to the evolution of the car. Of far Therein lies the strategy which tech giants greater import were the technologies inside the appear to be converging around: technology car, such as the panoramic screen dashboard supplier. Google, since dubbed Waymo, has and the advanced camera monitoring system. been adamant since at least late 2016 that it will The car was, in effect, a demonstrator for not make a car, but will supply the technology products which Sony hopes to supply in large that will one day drive all manner of vehicles, quantities to automakers. as evidenced in the recent tie-up Daimler
16 Research by Automotive World Special report: Will tech giants ever become automakers?
Many commented on how close Sony’s Vision-S concept looked to production readiness, but the vehicle was intended purely as a showcase for advanced, in-vehicle technologies
Trucks. As the company’s business case vehicles, just as a company like Michelin is becomes clear—and its lead in the self-driving focused on developing the best tyres for mass space becomes increasingly evident—the notion produced cars,” says Schirmer. of them building cars has died with it. It is a less a question of whether it could, and more why This is not to suggest things have always been should it? this way: last year it was revealed that back in 2013, Apple had tried to buy Tesla, with CNBC reporting that the deal soured when Elon Musk The real opportunity is was told he would have to step away from the business. Rainer Mehl, Managing Director, autonomy Manufacturing, Automotive at Capgemini Invent, points out that the leading US and “We are doubtful the tech giants will choose to Chinese technology companies have a market take on the burden of automotive design, capitalisation far higher than any traditional development, assembly and distribution,” says automaker. “The reality is that if it were to fit in Mark Schirmer, Director, Cox Automotive. to a tech giant’s business strategy, it could “The tech giants will likely stay focused on the potentially look at acquisitions in the lucrative business of software and technology automobile space,” he says. development, and not the low-return business of large scale manufacturing and retail.” “However,” he adds, “that’s unlikely in my view, as an acquisition would not improve a Schirmer references the words of Waymo Chief tech giant’s market valuation. We are more Executive John Krafcik, who has said the likely to see technology players establish their company’s mission is to develop “the best presence within specialised automotive driver possible,” and not the best self-driving applications, or as part of an ecosystem with car. “Waymo is focused on technology and automotive companies, just as we’ve seen with hardware to integrate into mass produced Waymo and Fiat.” Finalised in July, Waymo’s
Research by Automotive World 17 Special report: Will tech giants ever become automakers?
agreement with the automaker will integrate Not a free ticket the ‘Waymo Driver’, its autonomous driving system, into light commercial vehicles, with Level 4 technologies to follow for other models None of this guarantees tech companies an easy in the future. ride into the automotive industry, especially when it comes to autonomous tech. As Uber’s More partnerships of this nature are likely. recent departure from the sector following its “BCG research has shown that whilst 46% of sale of Aurora shows, the space is a highly people trust automakers to be the primary costly one, and returns are not forthcoming. manufacturer of autonomous vehicles (AV), The company’s core business has been battered only 10% believe they can do it alone,” said by the COVID-19 pandemic, and only those with Mike Quinn, Managing Director & Partner at sufficient resources and robustness will secure Boston Consulting Group. “Nearly 70% believe a place. they need a tech partner, so we believe we will see more OEM-tech partnerships play out.” “Tech giants will likely have a role as technology suppliers in the mobility value Partnerships between automakers and tech chain, but that is not guaranteed,” says giants, which seek to combine manufacturing Schirmer. “We are bullish on the ability of and tech expertise, are just one of the models major automakers to stay relevant and the industry can expect as autonomy is further competitive in the space… The major tech embraced, says Quinn. Another approach players with deep pockets and desire will have could be that seen in Daimler and BMW, in a role, for certain, but we are doubtful that one which investment on AV technologies is shared. will stand alone at the top of the food chain.” A third example may include those automakers attempting to develop the technology in house, Besides autonomous and connected tech, or in partnership with the traditional Tier 1s. another area of competition for tech companies “All three models have the potential to prevail, will be the vehicle interior, says Mehl. “The and there will be winners and losers in each battle to dominate the interior experience is category,” says Quinn, adding that scale will be ongoing. Sony’s Vision-S was one of the most critical in each. popular exhibits at this year’s CES,” he says. This was despite Sony’s insistence it was not Mehl agrees that more partnerships are likely entering the market. What grabs people, moving forward. “This will be particularly true explains Mehl, is the evolution of the digital for those automakers that de-prioritise their environment. “Cars are an indispensable part own connectivity and digital ambitions,” he of the consumer’s ‘connected life’, and tech says. “These players will need to partner with giants will strive for a relevant share of it and technology firms that have the know-how. look for opportunities to connect the car to Invariably, this means that in the future other touch points in a customer’s digital ecosystem, those automakers will define ecosystem.” themselves primarily as car manufacturers.” This is in contrast to those automakers with For now, at least, it seems fairly safe to put the ambitions of becoming mobility service idea of Apple or Waymo the carmaker aside: providers, operating across the spectrum of there is already too much stake inside the shared, connected and autonomous mobility vehicle for tech companies to busy themselves along with the traditional business model. making the things.
18 Research by Automotive World Special report: Will tech giants ever become automakers?
Tech giants can be automakers, but it will take time
Technology giants could be huge disrupters in a connected, autonomous mobility industry. By Jack Hunsley
very year CES throws a surprise or two, and “It is important to see this launch in context. Earguably the biggest of the 2020 iteration CES is not a car show, it is a consumer was Sony’s fully working electric car. Though electronics show. What Sony is demonstrating only a prototype, Sony’s Vision-S offered a here is not a piece of engineering, it is a whole surprisingly comprehensive and aesthetically new use-case for connected technology,” Jim pleasing package. Prior, Global Chief Executive of consultancy Superunion, wrote for Automotive World at the The Vision-S came stuffed to the rafters with time . “It is sending a profoundly important bespoke AI, 5G and cloud technologies, as well message to traditional automakers, which the as an array of in-car entertainment offerings industry needs to heed.” and sensor tech. And, despite having no plans to offer it to the public, Sony has continued developing the prototype throughout the year, Partnerships documenting its return to Magna’s engineering centre in Graz, Austria in January and its arrival Disrupting an industry which is more than a in Tokyo, Japan in June through short teaser century old will be no easy task. However, there videos. The latest word is that the car is are clear opportunities for newcomers to expand “currently under development for public road their portfolios. One potential option is in testing this fiscal year.” contract manufacturing, a concept with which several big tech names are already well If Sony has no plans to sell the Vision-S, why acquainted. Sony, for instance, teamed up with build it in the first place, and why look to test it automotive manufacturer Magna to create its CES publicly? Sony boss Kenichiro Yoshida told prototype. This might not qualify tech giants as media in Las Vegas that the goal was to automakers in the traditional sense—though it is “deepen our understanding of cars, in terms of worth noting that Magna also produces the their design and technologies.” However, in electric I-Pace for Jaguar Land Rover—but it could today’s increasingly digital-focused automotive allow these newcomers to understand more industry, could the Vision-S be a sign of things about the processes and challenges in vehicle to come? A future where tech giants are also manufacturing, and get answers to important automakers. questions directly from engineering experts.
Research by Automotive World 19 Special report: Will tech giants ever become automakers?
“Magna supported Sony in many areas, from engineering to integration with other suppliers,” Magna Engineering’s Project Leader, Manfred Pircher, wrote on the collaboration. “When you have new entrants in the automotive business, they ask a lot of questions. ‘Why do you do it that way?’ was a familiar query throughout the Vision-S process. It made us re-evaluate how we explain things to non-automotive people, what are the relevant processes and how to make the best documentation.” Sony caught the automotive industry by surprise when it unveiled its electric Vision-S at CES 2020
tech companies decide they want greater If you’re in the control over the end-to-end ecosystem the most “ obvious solution is to build their own vehicle in automotive industry, some capacity. then you should be worried by Sony’s Level playing field
Vision-S. It’s going to Another plus point is current electric vehicle change things more than (EV) maturity. Though a highly complex and expensive technology, the arrival of mass- you might think market EVs has undeniably levelled the playing field. The rise of Tesla is the go-to example, whose success across the last decade will not have gone unnoticed to other players mulling an It’s a route which technology companies are entrance, while many Asian players including already embarking on, the most prominent Sony are already familiar with software and example being Amazon via its partnership with battery design. This expertise could offer Rivian. In addition to pumping US$700m into interested parties a leg up in an electric mobility the electric start-up in 2019, in 2020 Amazon future. This is not to say success is guaranteed, unveiled the first of its custom-built electric however, with the trials and tribulations of vans, all prominently featuring Amazon’s logo. Dyson and Fisker showing the difficulty of getting production off the ground. Though Amazon shows little desire currently to become a fully-fledged automaker, its work Where the likes of Apple and Amazon differ to with Rivian has allowed it to have greater say in these companies, however, is their vast capital the design and production process. The van backing and pre-existing technology conscious comes with built-in Alexa integration, for customers. Would a new EV buyer be example. Though Amazon has already achieved comfortable spending at least US$182,000—the great success integrating Alexa into existing reported cost of producing each Dyson N526 vehicle platforms, few, if any, traditional EV—on a Dyson-built vehicle considering the automakers would be willing to offer Amazon company has never built a car? In contrast, such design freedom in the way Rivian has. If would Apple, which generated US$55.3bn in
20 Research by Automotive World Special report: Will tech giants ever become automakers?
already making significant revenue by offering their expertise and technologies to automakers. Microsoft, for example, has already gone as far as to publicly say it has no interest in making its own vehicle or running mobility services. “We partner across the industry. We are not in the business of making vehicles or delivering end mobility as a service offerings,” Sanjay Ravi, General Manager, Automotive Industry at Microsoft, wrote in 2019.
Producing their own vehicles could allow players like Amazon to integrate their automotive technology products at the ground-level net income in 2019, be as phased by these When you have new potential building costs? And would there be “ far more consumer interest in a vehicle built by entrants in the one of the world’s most prominent technology leaders versus a company known mostly for automotive business, making vacuum cleaners? they ask a lot of These tech giants are also already experts on questions. ‘Why do you many of the connected features which future vehicles are expected to require such as app do it that way?’ was a stores, digital payment capabilities, IoT familiar query throughout connectivity and infotainment offerings. Viewing future vehicles as not just a means of the Vision-S process. It mobility but as the latest revenue-generating made us re-evaluate how connected platform could also entice tech giants to invest, especially if initial manufacturing costs we explain things to non- can be cut by using contract manufacturing or acquiring successful start-ups. automotive people
Long-term goal Though in some respect a company would need It will take time for any potentially interested to make a vehicle of some kind to be classed as parties to make the jump. For instance, it took an automaker, as connectivity and autonomy Sony and Magna two years to develop the mature one could argue automakers are Vision-S prototype. Taking a mass-market becoming more akin to technology companies vehicle from drawing board to forecourt will be instead. If such a future comes to pass, a new- an even greater endeavour. look tech-focused industry could sway the balance of power towards those with this This is not necessarily a bad thing, however. inherent expertise. “If you’re in the automotive Internal combustion engine vehicles are still the industry, then you should be worried by Sony’s dominant powertrain solution on roads today, Vision-S. It’s going to change things more than and while EVs mature, today’s tech giants are you might think,” added Prior.
Research by Automotive World 21 Special report: Will tech giants ever become automakers?
Would self-built vehicles further Big Tech’s position in future mobility?
Freddie Holmes investigates some of the scenarios in which a tech giant might deem vehicle manufacturing a useful venture
he industry’s incumbent automakers have Tnever faced greater competition as new start-ups come to the table. And with leadership in the internal combustion engine (ICE) no longer necessary to succeed, opportunities are opening up to grab early market share in the next generation of electric and autonomous vehicles.
With established brands and unrivalled financial backing, it would seem reasonable that familiar names from Big Tech could also enter the fray. There are already examples Amazon-owned Zoox unveiled its robotaxi in December where established tech companies have delved into the automotive space. of Apple’s Senior Vice President for Machine Amazon recently acquired self-driving car Learning and AI strategy, John Giannandrea. company Zoox for nearly US$1.3bn, which in December showcased a sleek new prototype that Dyson announced ambitious plans to produce appears far closer to commercialisation than the an electric car, although the project ultimately original ‘golf-buggy’ vehicles used previously. fizzled out. In October 2019, its founder, James Dyson, conceded that it had proven to be Then there is Project Titan, Apple’s mysterious commercially unviable. Alphabet’s efforts in self-driving car project. Very little has been self-driving have been well documented, with publicly stated about the programme since Waymo widely considered the industry leader rumours began in 2014, but the focus appears to at this stage. Aside from a purpose-built be on the autonomous driving system as opposed driverless pod named ‘Firefly’, the company has to building a self-branded vehicle. Reports in primarily relied on existing platforms such as December 2020 indicate that Project Titan has the Chrysler Pacifica Hybrid and Lexus RX, but been given a renewed push under the direction many believe it could produce its own models.
22 Research by Automotive World Special report: Will tech giants ever become automakers?
With vans, trucks and buses going electric, delivery giants could choose to design their own from scratch
Autonomous vehicles vehicles today are based on existing cars and vans, and as such have conventional rows of seats and a steering wheel at the front. Many Indeed, one reason for a tech company to begin believe that if a driver is no longer required, the making vehicles could be to secure a leading cabin can be completely redesigned. position as an end-to-end robotaxi provider. The company would produce the self-driving computer and software, and integrate it within Electric vehicles a purpose-built vehicle that has been designed in-house. Another reason could be to enter the electric vehicle (EV) market, which is set to explode: James Hodgson, Principal Analyst at ABI around 96% of cars sold globally rely on a Research’s Smart Mobility & Automotive gasoline or diesel internal combustion engine research practice, notes that while it is difficult to (ICE), so practically the entire market is up for say conclusively, tech companies appear to be grabs. It seems reasonable that new players carving out a leading position at least from a would want to get in on the action, even if their technology perspective. “Waymo has been background is in consumer electronics. uniquely focussed on a robotaxi application for an extremely long time, and is beating much of “It can be done—just look at Tesla,” says the competition to the space,” he said. “It’s Andrew Bergbaum, Managing Director at ultimately about trying to build a go-to-market management consultancy AlixPartners. He strategy to monetise robotaxis, and I’m not sure believes it is perfectly feasible that an how important partnerships with OEMs are in established tech company could direct this respect.” investments toward an own-brand EV. The bulk of the investment would need to go It is unclear whether the natural next step toward the battery electric platform, often would be to design and manufacture a referred to within the industry as a complete vehicle, but it would mean that ‘skateboard’. To make such an investment cost vehicles could be designed with specific effective, these skateboards need to be qualities to suit a robotaxi service. Most AV test produced in high volumes.
Research by Automotive World 23 Special report: Will tech giants ever become automakers?
A challenge is that it takes time to design, test implication for delivery vans and trucks that zip and validate a battery electric platform for series in and out of the city with packages throughout production. This could mean that a gap in the day, often lingering curbside during drop- market closes before the tech company is able offs. The need to go electric could in theory to capitalise upon it. “The technology is clearly push the likes of Amazon to make its own fleet; evolving very quickly, and if a tech company an order for 100,000 electric vans made by were to start from scratch today it would have Rivian would suggest this is unlikely. to work very hard to get a commercially viable product,” explained Bergbaum. “Frankly, it is “It is unclear whether making delivery vehicles not clear why a tech company would want to in house would be the best solution. I could build an EV platform when its real unique certainly see this happening, but it would selling point is the consumer.” require significant infrastructure to be established in the countries where the company Throw in the fact that competition to launch a operates,” Bergbaum explained. “The return on new EV brand is already fierce, and the idea of capital employed might be in the realms of just a tech company building EVs seems 3% or 4%, so it does raise the question: why increasingly unlikely. “With the volume and would a tech giant want to invest in this kind of quality of EVs coming out of China in operation itself?” particular, you wonder whether it is worth a tech company putting billions of dollars toward this kind of development programme,” An unnecessary risk? affirmed Bergbaum. “We are in no doubt that tech companies could do this, but we can’t find Do tech companies stand to benefit from in- many reasons why they would.” house vehicle production, or is it something that should be left to the experts? With very little concrete evidence, it is difficult to make Electric delivery vehicles any firm conclusions.
There is also an emerging trend for purpose- Tech giants have existing business models that built electric delivery vehicles. These do away offer both high profit margins and relatively low with legacy platforms that have been built to risk. Vehicle manufacturing is by no means a accommodate ICE powertrains and instead way to generate rapid and sustainable profits, maximise cargo space. and so it would seem an unnecessary gamble to take. One justification may be to monopolise a Arrival, Workhorse, Volta and Rivian are some value chain or to prevent competition from of the most prominent start-ups to get in on the getting a leg up. action. StreetScooter, the electric van made by Deutsche Post DHL, is an interesting case study “From a business perspective, a tech company of the possible pitfalls. The vehicle was would only ever begin making cars for another designed from the ground up to meet the purpose, such as to control a mobility agenda, company’s specific needs as a delivery to lock-in a value chain or simply attract new company, but only lasted for six years. It was eyes for advertising,” concluded Bergbaum. “I announced in March 2020 that production of would assume that tech companies would be the StreetScooter would cease. happy to form investor relationships with existing automakers, or to have an arm’s length Cities around the world are imposing zero supplier relationship. Frankly, the notion of emissions zones, which ban the presence of tech companies wanting to become automakers diesel and gasoline vehicles. This has a stark is almost becoming a little old fashioned.”
24 Research by Automotive World