If Tesla is the Apple of EVs, is GM the Nokia?
We can see clear parallelisms between smartphone and electric vehicle industries. Could VW, Toyota, and Ford fall as Nokia, Motorola, and Siemens did?
As electric vehicles production rises, it comes to my mind how this industry is developing in a similar way as smartphones did ten or fifteen years ago.
This could give us a clue of what might happen in the next decade.
The birth of the smartphone
Twenty years ago there was a booming mobile phone industry based on voice services. Those terminals were small and sexy with tiny screens that would let us talk with our friends while walking on the streets and text our beloved ones. These would be the times when Nokia, Motorola, Alcatel, Sony, and Siemens ruled.
Also, some primitive “smartphones” would let you check your email and a few years later have the possibility to browse the internet with basic text-only software. This is when BlackBerry kicked in.
It’s no wonder that, when the first rumors of an all-screen device with no physical keyboard started to be whispered among the industry, many of the leaders said that such a phone was impossible to make and some others would suggest that, if it was built, the battery would only last one hour.
It was back in 2007 when Apple unveiled its new product: the iPhone. It was a magical device. Multi touch screen, fluid scrolling, full internet browser, and lots more. A couple of years later the App Store was presented and our world changed forever.
Steve Jobs used to say that consumers don’t know what they want and it should be the company who would show them what they need. Not me. I did want a mobile phone like the iPhone. I knew someday it would exist. It was not an unknown need for me. It was real.
Also, Google developed their Android software so other manufacturers could start making their own devices creating a standard that would make billions.
You just have to take the subway to see how this amazing technology has changed our lives. The smartphone has become a ubiquitous device with which we spend four to eight hours per day. To get information, to communicate, to create, to entertain…
For a huge part of the world’s population, it is their only connected device and their window with their community and the rest of the world.
Today, this industry is shared between a small bunch of companies: Apple, Samsung, and LG and a few Chinese giants such as Huawei and Xiaomi. None European among the leaders although in the year 2000 there were three among the top 5 (Nokia, Siemens, and Ericsson).
The car becomes the “smart car”
Some people are forgetting that EVs are in the same category of products as ICE vehicles. They serve the same purpose as a means of transportation. This suggests that consumers will buy whichever product gives them the best result compared to their price.
Most consumers are not going to take into account how much they pollute or how noisy their cars are. They will just buy the biggest price-quality ratio for the vehicle that meets their needs.
They don’t even expect new technology vehicles to be a completely different product than the ones they have now.
And when, in a decade, we will look back at 2020, we will be able to understand how different those vehicles will be from those that are on our roads today. The car industry is about to change as the mobile phone industry changed at the end of the 2000s.
New cars will still have four wheels and will take you from one place to another, but they will handle the drive in a completely different manner thanks to a bunch of technologies that have converged at the same point of time: batteries, artificial intelligence, cloud computing, and high-speed communications.
Car industry leaders
In 2021, the car industry leaders are a group of a few companies. Most of them are global but still, there are a bunch of local enterprises in largely populated countries like China and India.
The top 5 are Volkswagen, Toyota, Daimler, Ford, and Honda. If we take the 6th which is General Motors, we have two American, two European, and two Asian. This list, according to the geographical localization, looks a lot like the mobile phone list of leaders in 2000.
They all have great plans to converge to electric on the paper, but mild based on the expected EV sales in the coming years.
Also, let’s not forget that the revolution won’t only come in the form of an electric motor and battery. To lead the “smart car” disruption you have to be a leader on software and these companies are outsourcing their infotainment systems, leave alone autonomy software where most of them either don’t have plans or they have small teams when it should be a bigger investment and challenge than electrification itself. These companies, that we call legacy automakers, are too big to change their factories and processes fast enough.
On the other hand, we have a few new companies: one American (Tesla) and a few Chinese (Nio, Xpeng, and BYD) that are one step further. They don’t have the heavyweight of traditional automakers that prevent them from steering and they bet completely on electric and connected vehicles.
There could be an exception from this rule in Hyundai/KIA. They have been making, for years, a set of very compelling vehicles that can stand face to face with the new contenders.
In 2021, these new vehicles are more expensive than ICE cars with similar capabilities but, in a few years, when battery production increases and total EV production gets to the millions, they will reach price parity and consumer will choose them.
The future of the car industry
I don’t think I have to say any more about how much this is starting to look a lot like the smartphone market.
I like to think that Apple is Tesla, Samsung and LG are Hyundai/Kia, and Huawei, Xiaomi and Oppo are Nio, Xpeng, and BYD.
And where are the European leaders in this picture?. I don’t know. It is very difficult to imagine giants like Volkswagen, Daimler, and BMW falling as it was difficult to predict Nokia falling in 2005, but they are running out of time.
I think we will see big mergers in the coming years to try to be relevant enough and I hope this could create a big European conglomerate to compete in this tough market.
This could also happen with the US leaders, Ford and GM. They seem to have great plans for the electrification of their products but, it is not easy from the point of view of multi-decade companies with their huge structures to accomplish such a big change.
Only time will tell what the future holds, but legacy automakers should look at themselves and wonder if they are ready to make, not only electric vehicles but smart cars. Because once consumers have them they won’t want the old ones anymore.
The same way I knew I needed a smartphone 20 years ago, I know today that I want a smart car in the next 10 years. A self-driving, safe and cheap car that can solve transportation needs in the meantime I can continue with my life and not stare at the boring road.
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