The era of the human-driven automobile, its repair facilities, its dealerships, the media surrounding it — all will be gone in 20 years.
A highly recommended article by Bob Lutz, former Vice Chairman of GM.
People that have never lived in China might never understand the importance of WeChat in the Chinese market. It is truly ubiquitous, as messenger, service provider, payment system, and general app for the everyday life. If you build a business in China, building on the WeChat platform is already the next evolution step of mobile first: it is “WeChat first”.
WeChat had already morphed beyond its roots as a chat service to become a one-stop app for everything, from banking to shopping to dating to dining. With each new feature and service it adds, users have fewer and fewer reasons to leave it, or to download other apps. Mini programs may eliminate the need altogether.
Tesla stock dropped more than 5% after hours as Musk explained what had gone wrong in the making of the new Model 3, the company’s first affordably priced electric car. Investors had sensed something was awry a month earlier, when Tesla said it had only made 260 of the Model 3 last quarter, well below the nearly 2,000 it had forecasted; some reports said the bottleneck was due to the carmaker assembling the vehicle by hand.
“Nine levels of production hell” are not unusual when you launch a new product. Especially if it is a product of such a scale never produced by the company before.
Fascinating Bloomberg article about former-iPhone-hacker George Hotz who has outfitted his Acura with cameras, lidar, and computing power to go for autonomous driving. His plan is to prove that he is able to build better technology and algorithms than companies like Tesla or other car manufacturers.
The technology he’s building represents an end run on much more expensive systems being designed by Google, Uber, the major automakers, and, if persistent rumors and numerous news reports are true, Apple. More short term, he thinks he can challenge Mobileye, the Israeli company that supplies Tesla Motors, BMW, Ford Motor, General Motors, and others with their current driver-assist technology. “It’s absurd,” Hotz says of Mobileye. “They’re a company that’s behind the times, and they have not caught up.”
In fact, Hotz has turned down an offer from Elon Musk to work for Tesla.
Hotz, though, broke off the talks when he felt that Musk kept changing the terms. “Frankly, I think you should just work at Tesla,” Musk wrote to Hotz in an e-mail. “I’m happy to work out a multimillion-dollar bonus with a longer time horizon that pays out as soon as we discontinue Mobileye.” “I appreciate the offer,” Hotz replied, “but like I’ve said, I’m not looking for a job. I’ll ping you when I crush Mobileye.” Musk simply answered, “OK.”
Hotz plans to get more data and experience with his prototype and then demonstrate it by “filming a video of the Acura outperforming a Tesla across the bridge, and then follow that up by passing the final test on I-405 in Los Angeles where Musk lives.”
Tesla remains skeptic on the success of Hotz, releasing a statement on their website accordingly:
We think it is extremely unlikely that a single person or even a small company that lacks extensive engineering validation capability will be able to produce an autonomous driving system that can be deployed to production vehicles. It may work as a limited demo on a known stretch of road — Tesla had such a system two years ago — but then requires enormous resources to debug over millions of miles of widely differing roads.
There was some media buzz during last weeks regarding a mysterious new billion-dollar EV company, operating out of a former Nissan site in California. The company called “Faraday Future” (FF) has assembled a strong leadership team consisting of former Tesla and BMW guys plus a couple of hundred other employees, and seems to be planning to launch a new EV vehicle around 2017.
First reports have indicated the possibility of Faraday Future being a dummy company for Apple’s EV project, given the lack of an known CEO and the seemingly extremely fast and high funding of the new company. A closer look at the incorporating documents has revealed, though, that FF’s chief executive is a partner of Jia Yuenting, founder of LeTV. Thus, Faraday Future is more likely to be the potential future home of LeTV’s SSE (Super Electric Eco-System) car project. This project is not just about the “old-economy” style “moving a car out to the dealer” type of business, but will try to treat the car more like a smart phone. Subscriptions, apps, car-sharing and other service revenue streams seem to be an integral part of the envisioned LeTV EV car project.
Uber is usually not afraid to go on the offensive with regulators all over the world in order to facilitate its rapid growth and expansion. Be it by filing complaints against several governments in Europe at the beginning of 2015, or using it’s large venture cash pool to hand out aggressive cash incentives to drivers in India in order to go against opposing “old-economy” taxi monopolies.
In Uber’s most important growth market China, however, Uber’s management is much more cautious and obedient, knowing that their usual strategy of disrupting the market could possible come to a dead stop at anytime at will of the strong central government. Additionally, Uber is still only the minor player in China, competing with the extremely strong local competitor Didi Kuiadi that has around 80% of the market and gets significant invest from sources close to the Chinese government.
Uber therefore seems to go now for a strict compliance strategy in China. After China’s Ministry of Transport has published a draft of a new rule set for private e-hailing services, bringing in far-reaching regulatory demands on licenses, drivers and IT infrastructure, Uber is happy to comply with any new rule. Unlike Uber’s usual way of ‘acting first and (maybe) asking for permission later’, Uber has already announced that “the company is in close communication with Chinese regulators and would follow all new rules”.
Additionally, Uber will fully separate its China business from its other business by setting up an own Uber China company, and is trying to work more closely with local partners in order to get a better standing in the Chinese market. It is a “comply or die” situation, and Uber is likely to go for the survival option.
Uber said that to localize its Chinese business, Uber China has officially registered in Shanghai as a separate entity called Shanghai Wubo Information Technology, run by Chinese managers. It has obtained the requisite licenses and qualifications as an Internet company and placed its servers in China, the company added.
China Tightens Oversight of Private Car-Hailing Services
The race towards the fully automated car has only just begun. Car makers and their new potential competitors from the Tech industry have different views on the best approach for a driverless future.
While car OEMs like BMW or Daimler (and even newcomers like Tesla) are adding more and more driver assistance features such as lane-departure warning, brake assist, traffic jam assist, or parking pilot, in order to increase automation step by step over the next years, Tech industry companies like Google think of “leap-frogging” to as much automation as possible.
There are good reasons for both approaches. The classic step-by-step approach is very much in line with technology development and refinement, and with the slow moving other stakeholders such as governments and insurances. Ultimately a fully autonomous car would challenge the existing regulations and insurance schemes intensively, bringing up many unsolved issues of liability. What happens, for example, if a malfunctioning autonomous car hits a pedestrian? Driver or car maker liability?
The fully autonomous car, though, has the potential to be much safer than a car steered by a human, so naturally there is some incentive to go to as many automated functions as fast as possible. Especially as there are some indications that drivers in a only partly-automated car might be too slow to take over control in a situation that the partial automation cannot handle. As Chris Urmson, Head of Google’s Self Driving Car program, said in a recent article: “The better the technology gets, the less reliable the driver is going to get.”
Depending on the level of automation and intensity of alert, some drivers took an average of 17 seconds to respond to a takeover request and regain control of the vehicle, in a study just released by the National Highway Traffic Safety Administration and supported by Google and several leading automakers and suppliers. In that time, a car traveling at 60 miles per hour would travel more than a quarter of a mile.
Automakers, Google take different roads to automated cars
Tech Industry players, such as Apple, Google, Samsung, Baidu, or Alibaba, are increasingly looking for potential future growth opportunities in the automotive industry. The activities are manifold, ranging from providing data services to even building .
Forbes magazine had a close look on the innovation / patent side of this development. Interestingly, if looking at the number of new patents in the automotive area that are filed by tech companies, we can observe two things. Firstly, the number of new patents did not really take off until 2013. Secondly, the overall number is still low compared to the thousands of patents from car manufacturers and suppliers which are filed every year. The increase in patents since 2013 shows quite well the increasing interest in the automotive market, though.
The biggest contributors to the increasing number of patents were Samsung and Google, followed by Microsoft and Apple.
But in terms of who has the biggest war chest in patents so far, Samsung far exceeds all its competitors. For automobile-related patents filed in the past 10 years, Samsung leads with 510, Google GOOGL -1.70% with 308,Microsoft MSFT -0.98% with 222, and finally Apple AAPL -0.47% with 83, according to patent numbers pulled by SmartUp Legal.
Samsung Amasses Largest Patent War Chest Among Tech Giants For Cars Of The Future – forbes.com
Samsung obviously contributes with a lot of patents from its batteries division, however we can see as well patents for HMI components such as a transparent Head-Up-Display, which would make Samsung compete with Tier-1 suppliers such as Continental. On Google’s and Apple’s side Forbes notes down the main interest in digital data processing and navigation, as well as autonomous driving (Google) and User Interface / Interaction (Apple).
There is usually not much that connects a Seattle-based IT company (Microsoft) with a Swiss-based watchmaker (Swatch). Unless you look a bit closer on what former and current chief executives of the two companies think about competitors and innovation.
First, enter Steve Ballmer, former CEO of Microsoft. In 2007, shortly after the launch of the first iPhone, Steve Ballmer made a legendary statement to USA Today about the new innovative iPhone coming from Apple, and was even literally laughing at the iPhone in another video statement.
“There’s no chance that the iPhone is going to get any significant market share. No chance. It’s a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I’d prefer to have our software in 60% or 70% or 80% of them, than I would to have 2% or 3%, which is what Apple might get.”
Steve Ballmer – CEO Microsoft – 2007
Yep. Sounds about right… The 2% or 3% are going to be for Microsoft’s Windows Phone, though. What has happened over the next years – Microsoft buying Nokia assets, Microsoft writing off Nokia assets – is history.
How does the Swiss watchmaker come into play now?
Enter Nick Hayek Jr, CEO of watchmaking corporation Swatch. Nick has been in a quite comfortable situation so far, heading a diversified watch company with products and brands from entry-level to luxury, and around 9.5 bn USD sales with a 15% profit margin in 2014. Nick wants to occupy your wrist with his watch products. And as a good CEO – of course – he is always on the lookout to survey the market and the competitive situation. What do you do if you have suddenly a twenty-times (~180 bn USD) bigger company than Swatch that is launching a watch product? A product that directly competes for the same space on customers’ wrists t as your own products?
Well, it seems that Mr Hayek is not particularly impressed by Apple’s Watch that launched this year – and “only” sold a couple of million units so far. For Mr Hayek, the new competitor product is only an “interesting toy”:
“The Apple watch is an interesting toy, but not a revolution. These devices, which all eat so much power that they last no longer than 24 hours without needing to be plugged in. In addition, the user immediately loses control of their data. I personally don’t want my blood pressure and blood sugar values stored in the cloud, or on servers in Silicon Valley.”
Nick Hayek Jr – CEO Swatch Group – 2015
Let’s hope that the toy will not suddenly appeal to a large group of adult customers.
And while Nick Hayek Jr. is still laughing about the new competitor toy in his backyard, let us quickly remind ourselves that threats of new competitors entering our individual industries are more prevailing than ever. We are facing not only just increased pressure from known players in our current industry, but also from companies from other industries, which are looking at our market as potential future growth opportunity.
In the Automotive industry, for example, car OEMs might suddenly be challenged not only just by new entrants such as Tesla, but also potentially from “IT / Consumer” companies like Apple or Google. And on the supplier side, companies should have a close look at high-tech companies like Huawei that have the potential to enter the market very quickly and thoroughly. A “non-automotive-grade-quality-no-automotive-experience” company, product, or innovation, could potentially very quickly bring the the perfect storm even into an established Automotive industry.
This examples can be found for basically any industry, and it will be an crucial competitive advantage for strategic leaders to sense, plan, and act accordingly. Don’t laugh at your potential competitors, but try to learn from them instead.