Posts Tagged ‘oem’

The Tech Industry’s Interest in Cars is increasing

Google Self Driving Car - google.com

Google Self Driving Car – google.com

 

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 a (self-driving) car.

 

Increase in patents from tech companies in automotive area - forbes.com

Increase in patents from tech companies in automotive area – forbes.com

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).

 

 

The Tesla Approach to Sales And Distribution

Have you bought a Tesla car yet? If not – which is actually quite a high probability given the car price – you haven’t seen how easy it is to buy a car with just a few clicks.

You go to Tesla’s site and click the prominent red order button. It is directly on the frontage:

The big red button - teslamotors.com

The big red button – teslamotors.com

 

You get some options in the design studio for configuration, but basically you can as well just simply click on order…

 

Press the red button - teslamotors.com

Press the red button – teslamotors.com

 

… and the only thing you do is to pay the 2,500 USD  (for the Model S) down payment. You can even do that by paypal! Your car will then be delivered to your door later this year.

 

Deliver my new car - teslamotors.com

Deliver my new car – teslamotors.com

 

(By the way: their process is standardized world wide. So if you are in China and want to order your Tesla, it looks and feels the same. You can simply 订购 and get your car delivered. Of course Alipay is supported as well.)

Sounds and looks familiar? Looks like online shopping for books or DVDs? Exactly! Tesla is a car manufacturer, but in its processes it incorporates a lot of ideas from the tech industry. It is not just for the order process, though. There whole sales and distribution is optimized to be different from classic car OEMs. This is partly due to their (still) low volume of car production, which makes it difficult to attract dealers without getting lost and compete in a sea of gasoline cars around them.

A more important aspect for Tesla is to be able to control the product experience from build to customer service. Elon Musk, Tesla’s Chairman, wrote a blog post a while ago on this topic. They want to educate customers about the product and use outlets such as own stores and gallery locations with high foot traffic for that. The product specialists at those outlets are not on commission though, and thus will never have to pressure for customers for sales. As Elon wrote: “Their goal and the sole metric of their success is to have you enjoy the experience of visiting so much that you look forward to returning again”.

With their “build-to-order” approach they enjoy advantages such as low inventories and being able to build the right product-market-fit close to their customers. With their order-and-pre-payment model they generate additional cashflow from the deposits they get from the customers several months in advance before delivering (or even building) the car. Their tight control of the service chain allows them to offer compelling after-sales packages for customers for more customer retention. In fact, they even integrate loyalty / affiliate programs such as the newly announced referral program. “For every referral that current owners generate, they’ll get $1,000 — and the new buyers will get $1,000 off their purchase. (…) The referrals will be made through a custom link offered to current owners, which makes it sound a lot like any other referral program on the internet”.

However, Tesla does have to battle other challenges in their existing model, especially if their car volumes are continuing to grow. They have to deal with a potential logistics nightmare of direct selling and delivering more and more cars to end consumers, they still have to invest in their showrooms and outlets, and they still have to provide service for the cars somewhere. For customers it means that they cannot simply walk into a Tesla outfit and buy one on the spot, which might harm their sales in markets, such as China, which appreciate the instant availability.

Time will tell how much benefit Tesla and their customers will get. One thing is for sure: for Tesla those different approaches to sales and distribution could be a long-term differentiator to other “classic” OEMs, as a lot the things Tesla does you can only do if you do not have a legacy structure of existing dealerships and service locations.

Intelligent Transportation Systems (ITS) Market Value to grow over 38 bn US$ by 2020

ITS Overview. Source: www.etsi.org

ITS Overview. Source: www.etsi.org

 

Growing number of vehicles and increasing population has led to the need for effective traffic management. An Intelligent Transportation System (ITS) integrates the transportation network with ICT (Information and Communications Technology) to improve performance, enable multimodal transport and help alleviate road accidents and optimize fuel consumption.

(…)

The global intelligent transportation systems market was estimated to be valued at USD 14.59 billion in 2012 which is expected to reach USD 38.68 billion by 2020, growing at a CAGR of 13.0% from 2014 to 2020.

Grandview Research

 

The car – and other modes of transport – are just at the beginning of their digitalisation. It is not just about to make transport safer and more efficient, but the prospects of having a bright future in selling software, hardware, and services, which attract the various companies into the market. Classic automotive players such as OEMs and suppliers will have to face serious competition from the non-automotive tech companies such as Apple, Google, Alibaba, Huawei, etc. in the future.