The Valley Can Only Juggle So Many Auto Goliaths

Tech companies, especially those that self-identify as “disruptors”, tend to build their businesses around the idea of pushing the establishment out of their own industry, portraying them as inefficient and greedy dinosaurs that make customers worse off. In many cases this is true, but there may be ways to incentivize them to work with you rather than against you. 

Most trendy tech chooses the obstinate path – confronting the establishment head on. It’s never easy, but, as Netflix and HBO will attest for their respective industry, the results are almost infinitely positive. There’s a big difference, though, between taking on Big <insert industry> and confronting Big Auto. That’s because when you try to disrupt this particular industry in the way that Tesla, Google, and others want to, you don’t just get hunted by Big Auto – you get hunted by Big Oil, Big Gas Station, Big Insurance, and Big Auto Dealer. Any of these 5 groups would be a mammoth to take on, but all 5 is pretty much suicide. They collectively have enough money and lobbying power to probably ex-communicate Tim Cook from America if they tried hard enough.

I actually love the David-and-Goliath mantra of Tesla and Google, but I also think that within this endless war between incomer and establishment, there’s an interesting and perhaps more lucrative proposition for a young auto tech company looking to try their hand.

What would happen if you came up with a solution that made at least some of the incumbents money? You would be the industry white knight that no one (or at least fewer people) was trying to constantly beat into submission.

What would it take? Well, let’s look at where the different incumbents feel cornered:

Big Oil is my number one spouse if I’m trying to get an incumbent to play ball. They’re petrified of lithium-ion batteries because they have no expertise or IP to leverage or commercialize. That’s why they’ve been enthusiastic in flooding Hyundai and Honda and Toyota with funding and R&D support in developing hydrogen fuel cells; this is still a new fuel that no one has cornered yet, and they can retrofit their existing gigantic network of pump stations (that outnumber supercharger networks by like 1000:1). What would happen if a young tech company tried to get a new type of battery funded by Big Oil that they could realistically profit from?

Big Auto is afraid that they will become simply hardware suppliers to Apple and Google like Foxconn is to the iPhone. This is probably an overblown worst scenario, but showing carmakers where they can own the driver experience above what their smartphone can do may perk some ears. 

Big Insurance is worried that their profitable auto insurance business will shrink into oblivion with the dawning of crash less vehicles. I honestly don’t have an good thought here other than people will likely not want their driving habits to be monitored 24/7 in order to determine their insurance rates. Because if everyone is like me, we enjoy getting away with semi-illegal “fuck it” U-turns when we blow past the Taco Bell going ten over on one of those laughable 25 mph main streets. 

Big Auto Dealer has a target on Mr. Musk’s back for challenging the dinosaurs of a pre-digital shopping era. Over the past several years, dealers, content with profiting mightily off of the carmakers’ actual work, failed to transition or react to consumer changes. As such, Mr. Musk takes one for the team, and the industry will be better off for it. 

Point being that perhaps a few incumbents deservedly need to be taken on, but the world of New Auto will undoubtedly still contain many of the same players in the world of Old Auto. Best to choose your battles wisely, and perhaps consider the fact that many incumbents maintain assets and capabilities that could advance new technologies faster and more efficiently than the cash-flush tech companies – gasp!

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Connected Cars: Moving from gimmicky jargon to the bedrock of future cars

connected_car_litmus_loop
Photo courtesy of litmusautomation.com

Quick pedestal rant: with anything new or trending, media outlets and business leaders love to name and then profusely overuse their bestowed name for a movement, new business trend, or scandal. They add “-gate” as a suffix to any trivial scandal that probably takes away from the severity of Watergate and they add the words “disruption” and “innovation” to situations and ideas that are probably not either in the hopes of garnering audience attention.

No doubt this type of jargon showboating is effective in bringing new ideas to the public. In the automotive industry, “autonomous”, “access over ownership”, “internet of things”, and “connected” sound cool enough to go viral, yet vague enough for leaders and the media to use them superfluously without ever actually having to explain what they mean or how we accomplish them.

The term “connected car”, above all other auto jargon, leaves a particularly unpleasant tang on my tongue – mostly because carmakers describe connected features more like cute gizmos that you’ll use as much as you use the cigarette lighter for it’s intended purpose rather than game-changing capabilities that enable the driver in unprecedented ways.

WiFi hotspots, a proprietary suite of apps, and using your car to pay for gas are the various touted features of connected vehicles. Groundbreaking. My iPhone does all the same things. There is no value to customers in these features, and there sure as hell isn’t a business case for them either. To be fair, things like WiFi hotspots will lay the groundwork for over-the-air updates which does add value, but carmakers seem very hesitant to say or do anything beyond these gimmicky features.

Ironically, the tables are turned on the autonomous front, technically also a connected technology. Every carmaker has checked the box for buying a very expensive “testing ground” for the technology, touting how fast they’re going to bring a fully-autonomous car to market while confusing customers through their lackadaisical distinctions between automated and autonomous driving, two starkly different concepts.

Another consequence of overusing jargon, terms like “connected” generally lose their meaning as stakeholders and journalists layer on their own definitions and point of view. Fundamentally, connected technology is based on leveraging the internal sensors, transmitters, software, and network connectivity to enable everything from autonomous cars to over-the-air updates to vehicle-to-vehicle communication and beyond.

Connected cars are truly the bedrock of the new automobile, centered around developing and honing the driver-car relationship beyond what we’ve ever been able to accomplish. We’ll create performance cars that respond viscerally to your fingertips on a screen, off-road SUVs that leverage on-board sensors to show the driver the most effective path to take through a HUD (heads-up display) windshield, and luxury vehicles that know your preferences and desires without you asking.

As mentioned, the basis of the connected car is the relationship with its driver. Cars have been probably the one product we purchase with which we genuinely bond. Connected cars will connect (sorry for the pun) people with their cars to forge deeper bonds than has ever been possible. In doing so, we’ll start alleviating some of the pain points with driving (namely traffic and crashes), create cheaper options and ownership methods to enable more people to access cars, and lay the groundwork for an even farther out vision of connecting multiple forms of transportation through the car (think of being able to jump in your car in San Francisco, take the high-speed train to LA, and drive to your office all without leaving your car.)

“The cars of the future will undoubtedly be amazingly connected,” but we’re passed the point at which it should be acceptable to end the sentence with that phrase. If we’re ever going to get there, we have to get beyond WiFi hotspots and proprietary app stores, beyond how fast fully autonomous cars will come to market, and focus on what is going to truly bring value to the driver. The question before any business decision is made with regard to new car tech should be: How does this strengthen the relationship between car and driver? Unconvincing answers should be scrapped.

New Car Dealerships Are Starting To Write Their Own History

The iconic American car dealership, with its glistening lots of new cars and flashy showroom halls on expensive real estate, is one of the few remaining relics of a pre-information era. The idea of a dealership originally came about as a way for unknowledgeable consumers to feel comfortable about purchasing such an expensive item – one they knew little about and relied on the reputation of the dealer to deliver a quality product. 

Dealers have made their living through being able to charge consumers a price without the buyer knowing if he was paying more than someone in another town; in other words, relying on information asymmetry. They also relied on their reputation as a dealer of quality products to retain customer loyalty and expand market share. TrueCar, AutoTrader, and the Internet in general has done a decent job at slashing nationwide pricing information asymmetry, leaving margins for dealers shrinking to a measly 2% in 2014 (NADA DATA 2014 Report). What’s more, consumers don’t associate reliability of a new car to a specific dealer, but rather to the manufacturer (used cars are a slightly different story, so I’ll stick to new cars for now.)

So what value do new car dealerships add to the automotive buyer’s purchasing process and overall product satisfaction? I’m not sure. And if the latest investments by CarMax and AutoNation, the nation’s two biggest dealer networks, are any indication, the dealers themselves can’t come up with an answer either. Which is why AutoNation specifically has invested over $300 million in a new online selling platform that boasts the fact that your time at the dealership will be limited to 30 minutes. Mike Jackson, AutoNation’s president, almost brags at the fact that this platform will solve the one part of the automotive customer life cycle that everyone collectively hates – the dealership experience. 

If the president of AutoNation sees that the best long-term solution to customers hating dealerships is to reduce the time customers spend at dealerships, then the obvious winner of this strategic plan is the dealer who eventually gets rid of the dealership experience altogether. Not a particularly phenomenal long-term plan.

If you think it a bit premature to call for the death of dealerships, that people still value “kicking the tires” and “looking the dealer straight in the eye and shaking his hand” and test driving 10 different cars before finding the perfect one, you either haven’t bought a car in the last 3-5 years and/or your generation’s letter comes before Y. Customers purchasing cars today do most of the research online before they show up to the dealership, and once there, they test drive an average of 1.6 cars before purchasing. Often, the car that customers test drive is not the eventual one they purchase, especially for special factory and pre-ordered cars, and manufacturers are including more all-inclusive maintenance warranties on new cars that ensure the car is quality.

To bring this seemingly far-fetched downfall of American dealerships a bit closer to home, consider Johan de Nysschen’s (head of Cadillac) latest move to convert 400 of the smallest Caddy dealerships into purely virtual showrooms that provide home test drives and delivery services while drawing inventory from existing regional distribution hubs. Customers will be able to conduct almost the entire purchase process online, from selection to purchase and financing, and then have their new car delivered to their home without leaving it.

Does the dealership of today potentially have any role in the car-buying process of tomorrow? Probably, and for the next 5-10 years, the dealership of today will probably remain unscathed. But as more selling moves online and the value that dealers used to provide to customers no longer is appreciated, there will eventually be many fewer dealers operating more as distribution centers than salesmen. The biggest players, like AutoNation and CarMax, will probably be the ones tapped to run these distribution centers, leaving the thousands of smaller dealers to pack up and head elsewhere. But at the margins that dealers are getting today, would being bought out be such a bad thing?

This article comes on the heels of the following article appearing in Automotive News: http://www.autonews.com/article/20160222/OEM/302229958/cadillacs-de-nysschen-pitches-virtual-stores.

Upping The Ante: Why Toyota’s Push for ‘Intelligent’ Over ‘Autonomous’ Cars Just Might Work

Last week, the New York Times’ John Markoff explored the new investment by Toyota in intelligent car research through partnerships with Stanford and MIT lab researchers. See the full story here.

My first blog post ever was written about how Toyota firmly believed in the driver having the final say in a car’s decisionmaking, a stark divergence from the autonomous crowd that started with Google and now Apple and has bandwaggoned even the most performance-leaning carmakers.

Toyota is thinking much differently, and as the world’s largest automaker, people should be taking notice when the frontrunner goes against the grain of the rest of the industry on such a pivotal area of the business. Toyota has a history of making bold decisions that end up confounding industry experts and other companies. The most prevalent being the Toyota Prius legacy that launched the hybrid drivetrain revolution by bringing eco-friendly cars within reach of the middle class. More recently, Toyota has rebuffed Apple and Google’s intrusion into the car by heavily investing in their own user interface and infotainment centers rather than concede defeat. And the next frontier they will do battle is in the autonomous car age.

How Mr. Marchionne Can Be So Right And Yet So Wrong about the State of the Auto Industry

I can only dream of being remotely close to the caliber of businessman and leader that Sergio Marchionne has been to FCA, but to me, I find his constant condemnation of the automotive industry’s state of affairs annoyingly obvious, and his solution more than a bit misdirected.

In short, Marchionne believes that there are too many companies producing too many similar-enough products for it to not make sense to consolidate, citing the industry’s poor average return on invested capital in relation to other industries.

“Consolidate!” he screams to anyone who will listen. The only way to achieve better margins is through combining more existing brands into conglomerates, like VW has done with their 13 brands. For each brand to have its own manufacturing and supply chain operation is wasteful and costly. Fair enough, and any business class would tell you that’s usually a safe bet in achieving better economies of scale and reducing manufacturing overhead and downtime. But we aren’t talking about what the class would tell you, we’re talking about an industry and a product that in many ways is as cultural and emotional as it is mechanical. And economies of scale and ROIC are merely two tools to assess an industry. Granted, they’re super important ones, but they still only tell a portion of the story.

Which brings me to my next point: people have agendas, and when you figure out why people are choosing to say the things they are, the picture is usually less opaque. Despite how right Marchionne is on the state of the industry, any business undergrad could have (and has) pointed out the same low ROIC of the industry as rationale for a lot of things, consolidation included. It’s not rocket science, and he’s not the first person to think something needs to change in the industry. Not to mention the similar industries also plagued by low ROIC – airlines and industrial equipment typically have lower returns on average than most carmakers.

While creating a splash in headlines, Marchionne’s intended audience is pretty much any carmaker willing to talk about consolidating with FCA, as well as any activist investor itching to get more out of their auto stock holdings. As background, Marchionne joined Fiat in the early 2000s, and returned Fiat to profitability while simultaneously completing the merger with Chrysler in the depths of the recession to emerge as a top ten global auto player. He’s technically a law graduate, but he’s a finance guy, and that’s the lens through which he views the industry. And he’s not done yet. He still sees his empire as not quite big enough (see Ferdinand Piech’s wiki page). To get to be bigger, he sees another mega-merger on the horizon. And time is running out – he gives up the CEO chair in 2018. Hence the immediacy in his tone.

“Why GM?” is the first question I will ask Marchionne if ever I get the chance. (Marchionne’s golden goose in his consolidation rant and search for a mega-merger partner is General Motors. He’s been courting them harder than a senior in high school who forgot that prom is tomorrow and there’s only one not-asked girl still available.) It doesn’t matter how many beautiful reports and facts you have about the gains and synergies that could be realized with the hypothetical merger of FCA and GM. God himself could bless the move and it still wouldn’t happen, for a reason more obvious than the blatant fact that the automotive industry has poor returns – GM is still healing from the last time someone thought it’d be a good idea to have a lot of brands under one roof.

While Mr. Marchionne was busy bailing out Chrysler, the U.S. government was busy bailing out GM. You know how GM got themselves back together again? They got rid of Pontiac and Oldsmobile and Hummer and Saab and Saturn. You know what Ford did? They sold Jaguar, Land Rover, Aston Martin, and Volvo. When crisis hit, the answer was to split brands up, not pull them together, except in Chrysler’s special case. Yes, economies of scale go down in some instances, but often times they’re more than made up for with a focused product line free of beareaucratic conglomerates trying to “create synergies” and “share knowledge capital” across brands. And if you look at the success of GM’s slimmer portfolio as well as Jaguar-Land Rover, Aston Martin and Volvo compared with Chrysler’s performance under the FCA umbrella, it’s not a stretch of an assertion.

Mr. Marchionne’s second point in his consolidation pitch is his view that customers no longer care about what platform and engine is in their car, and he believes that cars could all be built on shared platforms and engines as a result of consolidating carmakers. No one in the industry would argue, and guess what: it already happens on a fairly regular basis.

But the problem for GM back in 2008 was that they were so obsessed with synergies and sharing parts between the brands that customers forgot what differentiated the brands at all. This isn’t a big issue when the economy is running full-steam, except when it isn’t. When the economy contracts, customers put their money with the brands and products that deliver the most value to them, and if you are caught with a host a homogeneous cars within undifferentiated brands that are trying to be everything to everyone, customers will take their business to someone who understands them better. GM learned that the hard way. VW does the conglomerate thing much better – they share platforms and tech but the brands are wholly distinct and follow an obvious pecking order. This works for them. But that is by no means saying they’re a case study for why FCAGM should exist or any other amalgamation of acronyms.

Final point: saying everyone should consolidate is painting the brush way too broadly. Are there some OEMs that could use it? Sure. Could others be hindered by it? Of course. VW has done well with 13 brands, but so has Toyota and Ford and Subaru, who combined have fewer brands than FCA, but sell way more cars at a better margin. Subaru is the poster child for customer targeting, and it’s worth mentioning that Subaru has the highest margins of all the automotive companies.

So yes, Mr. Marchionne is right that the automotive industry could be allocating capital and resources better, but consolidation is just one way to go, and plenty of carmakers have already tried and gotten burned by it. And let’s not forget that although FCA has done well since the recession, many other global players are performing much better, leaving many to wonder why they would want a less-than-stellar company to tie up with. Jeep and Dodge have basically kept FCA afloat due to their intense focus on the specific traits of their customers, Chrysler and Fiat and Alfa Romeo have barely moved anywhere, and the only reason Maserati is doing well is because they made a cheaper version. Let’s check the log(s) in FCA’s eye before we start talking about the stick in everyone else’s.

How Design Thinking Can Help Cars Become More Than Smartphones On Wheels

September’s Harvard Business Review focuses on the concept of design thinking and its application to how businesses function and strategize across a number of industries. This is my take on how carmakers can integrate this design mindset to create a product that goes beyond any other device. (See original article here)

My mom’s old car that was handed down to my sister is a 2002 Acura MDX, a staple mom-car that sold as many units as it could make through the early 2000s. It has a decent, somewhat fidgety navigation unit that is also a touchscreen climate control built into a nicely wood-trimmed center stack, and has Bose surround sound and heated folding mirrors.

As I approach car buying thirteen years later, I myself would love a car with those same features, and if properly disguised, that 2002 Acura MDX could look a heck of a lot like the new models you can buy today. There’s more functionality in today’s infotainment systems, of course, but the systems aren’t any better integrated into the total car experience than they were in 2002. If I were to take a 2015 infotainment console from a new MDX and put it in my mom’s 2002 one, people who didn’t know cars super well would have a hard time differentiating the new car from the old. Why? Because the tech that they’ve put in cars from before 2002 and into 2015 has been designed as a slap-on – an extra option that doesn’t really belong in the driving experience, but sits on top of it all like a superficial nice-to-have. It has no real “roots” in the car’s physical design and experience – the screens still look like they’ve been pasted to the dashboards as an after-thought, the user interface is as much a nightmare as it was in 2002, and once you locate the gadget that somehow controls it all, everyone’s reaction seems to be along the lines of “what the hell am I supposed to do with this?” or “God this is taking forever,” and then they pull out their smartphone.

So why are the technologies from my mom’s ’02 MDX no better integrated than today’s ample technologies? Because automakers are so obsessed with keeping pace with the smartphone by cramming more features into the screens that they don’t see past the features themselves to creating a holistic car driving experience. Hence, the “smartphone on wheels” was born.

I think we can point at a number of factors behind the “smartphone on wheels” mania that has occurred, but it boils down to the automakers being absolutely petrified of Apple and Google, and for good reason. Customers today care about the tech (particularly smartphone) elements in the car equally if not more so than the technical, physical elements. But that’s only the beginning of the story – if automakers better integrated the digital experience to enhance and cater to a deeper physical experience, I’m willing to bet more people wouldn’t just care about being able to use apps from their smartphone.

The real magic that has made smartphones increasingly more valuable as time goes on are the apps that they run and the products they connect to that are powered by non-Apple/Google companies. This is why Apple/Google drool at the car – because there are huge possibilities for what the phone can do in a car, not unlike what a phone can do with smart appliances like thermostats.

So really what keeps OEMs up at night is the possibility of becoming just another app, just another appliance like a smart thermostat whose real value proposition is that it is controlled through the user’s coveted smartphone. If this were to be the case and all everyone cared about was the fact that the car connected with their iPhone, there would be fewer automakers producing cars for much less profit.

So carmakers need to decide whether they want to be the app company or they want to try their hand at beating Apple/Google. While Apple/Google are light years ahead of automakers when it comes to digital design and experience, carmakers excel at physical experiences. And the beauty of knowing how to create an awesome physical experience full of emotion is that integrating the digital experience can deepen and bring to life the physical experience of the car.

I tend to think carmakers can win the battle in creating a holistic experience designed to integrate both digital and technical features. But in order to do so, they have to stop playing by Apple/Google’s rules of cramming endless features into screens, stop trying to make a better smartphone on wheels where virtual and physical experiences are silo’d, and start focusing on how the design of the digital and physical user experiences together could make a car way cooler than anything Google’s little self-driving teletubbies could pull off.

The first step to this strategy is realizing that although the definition of what a car means to certain people has changed since the ’60s, cars still can and do evoke a range of vibrant emotions for the people inside, and, if done correctly, the digital component can enhance the physical and emotional feel and relationship we have with cars tenfold further than simply integrating smart phone capability. The car must be digitally and physically what people need it to be when they need it, meaning it should be able to transform seamlessly from soccer mom carpool car to personal assistance commuting pod to track-ready performance car in a matter of seconds.

One teaser example: you bought a normal car and got one with special features catered to racing and performance. You have a free bit of highway in front of you on a casual Saturday and the light is about ten seconds from turning green. You bring up the performance screen, which tells you that a combination of torque vectoring, a higher RPM rev rate, and a lower center of gravity will produce the optimal balance for you to leave everyone else at the line. You adjust different aspects of the car on-screen based on its recommendations and hit submit, and in a matter of seconds you feel the car growl a bit louder and sink a bit lower to the street as it sets its new stance (whew – I just got goosebumps thinking about it). You may very well say that the days of performance cars are over, but sales figures say differently. Just ask the people in charge of the Dodge Hellcat line or the Mercedes AMG line what their bonuses look like this year compared to their peers.

Second more mundane example: you’re late for a meeting, so the self-drive mode isn’t going to fly today because it’s too cautious and slow for right now. You’re trying to edit the final moments of a presentation while also driving like a lunatic. The car knows your route to work, and is suggesting lane changes to weave through traffic through your heads-up display, while asking if it’s ok to alert your teammates that your ETA is three minutes after the meeting starts so they might want to consider kicking it off without you. The car also notices that your eyes are on the road only about 6 of every ten seconds, so it becomes extra vigilant about detecting possible collisions, and when necessary, making a lane change or overriding your lead foot. You speed to the front of your office and find an open parking place and run inside without feeding the meter. You check your phone after the meeting and your car says that it detected you parked in a reserved space, so it moved around the corner and fed the meter. The only thing missing to this exchange was “I hope your meeting went well!”

Between these two scenarios, the first one makes you feel like a total bad ass, and now you and the car share this special “don’t tell your spouse” moment. In the second, the car is like any number of under-appreciated assistants on any number of TV shows and movies – you feel like you owe them something for all the sacrifices and help they’ve selflessly given you. Has your phone ever made your blood rush and feel like a bad ass or feel like you owed it something on an almost-human level?

Going back to my statement about seamlessly transforming to what a driver needs a car to be in “a matter of seconds” – that “matter of seconds” is in itself a cornerstone of what separates a car from a smartphone on wheels, and it only happens if the digital and technical aspects of the car are in complete harmony. Neither of the two situations elicit the same emotional feel without a thorough design strategy. In the first example, I never would’ve gotten goosebumps if I wouldn’t have felt the car sink into its haunches and snort as a result of my finger touching buttons on the screen. It makes you feel a bit on edge thinking about what you just unleashed under the hood. In the second example though, I want the car to know what’s happening without having to click an “I’m late please help” button. You never would’ve felt true empathy for the car had it not instantly known that you were late, known who your teammates were, known which route you always take, and instead of telling you to slow down like a pre-programmed system would, it gave you help like any co-pilot would and went one step further, a step that you wouldn’t have noticed until you came out and your car had been booted.

Does your smartphone need to be involved for these things to work? Probably for some things. But that’s not the point. The point is that the car owns the experience, and the phone is merely an aid, which is a different direction from where many automakers feel they’re headed – a car that’s just a smartphone with wheels.

A phone can tell you you’re going to be late, but it can’t physically help you be less late. A phone can recommend how to make your car perform better, but itself cannot move you from 0 to 60 faster. And a phone can tell you you’re parked illegally and then show you via a live camera feed the cop writing you a ticket, but it can’t do anything about avoiding the ticket. Car companies are great at creating beautiful physical experiences – the noises, the feel, the rhythm, even some of the self-driving tech is already applause-worthy. But in an age of technology inundation, carmakers need to realize and embrace the notion that tech isn’t superfluous or an add-on or bad.  With a cohesive design strategy based on integrating the virtual with the physical, a driver can forge a deeper emotional connection with the car – one based on a true relationship. 

From ‘Internet of Things’ to ‘Food Chain of Things’, Carmakers Can Beat Apple and Google at Their Own Game

Over the past week or two, everyone from GM to Volvo has announced the imminent introduction of Apple’s CarPlay and Android Auto in most new models, hailing them as the next great steps in automotive tech innovation. This reliance on such powerful, non-automotive companies for such a consumer-visible feature and differentiating factor is a fairly new concept to OEMs, who in the past have relied on ventures with automotive suppliers like Delphi and QNX to build special tech platforms for each distinct brand. 

That seems to be changing now that CarPlay and Android Auto will look and act virtually identically in every car, regardless of if it’s a Ferrari or a Honda. While this is great if you’re a driver (since you won’t have to learn a new platform every time you get into a different brand of car), it’s a dangerous precedent for automakers to set. Consumers today are buying cars more due to the unique tech features and less due to the car’s performance metrics. Rupert Stadler, CEO of Audi, recently stated that technology features will be more important to average consumers than horsepower by 2020. 

So what happens when the features that consumers most care about when buying a car are features that the car company themselves did not create or have any control over? Well, certainly nothing good for the margins of the OEMs as the supplier power of Google and Apple continues to grow. We’re at an intersection between what the car has been for a hundred years, and what it’s going to be in the next twenty years. For automakers to be successful against Apple and Google, they’re going to have to beat them at their own game. 

What is Google and Apple’s game? To create a platform by which every device in your life seamlessly interacts, thereby achieving a sort of tech ecosystem. So how do you beat them at this game if you’re a carmaker? By making the car, as Stadler also noted, the most powerful and important device in the consumer’s tech ecosystem. To me, the new age of the Internet of Things should be more aptly named the Food Chain of Things. Apple and Google have created a new battlefield for companies from a variety of industries to try to position their products higher up the Food Chain of Things than the next guy’s product, thereby making it less likely that the consumer views your product as superfluous and unnecessary compared to other devices. 

There are obvious, true advantages to automobiles over smartphones and iPads, mainly in their ability to physically transport people rather than just show Instagram pictures of where they could be. In this new era of Food Chain of Things, cars need to be more affordable like other devices we buy, and they need to seamlessly incorporate the virtual world while at the same time seamlessly incorporating the physical one. 

What might this look like in reality? New payment options and ownership flexibility, better traffic management and safety, and better incorporation of smartphone features are just the beginning. To solidify the car’s sustainable place in the digital age, carmakers are going to have to do battle with pretty much every consumer-facing industry that wants a bite of the Food Chain of Things, and nowhere is this more apparent than with Google and Apple. It’s an uphill battle, but luckily it’s a brave new world for everyone, not just carmakers.

Exploring the shifts in how we move people and things from point A to B through a business, technological, and societal context.