A New Way of Thinking About the Automotive Industry

By Thomas Klaffke

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Over the last couple of decades, Silicon Valley has been responsible for inventing and reinventing all kinds of gadgets and technologies: the music player, the phone, the watch, the TV and the computer itself. Recent trends suggest that the automotive industry might be next on Silicon Valley’s disruption list.

Besides a surge of auto tech startups and Tesla’s success, Silicon Valley’s new affair with the automotive industry is heightened by chatter about a secret car project by the most prominent disruptor of them all: Apple. Dan Akerson, retired CEO of General Motors, recently commented on Apple’s alleged entrance into the automotive market with the following remarks:

“We take steel, raw steel, and turn it into a car. They have no idea what they’re getting into if they get into that.”

But is this really true? Does Silicon Valley really have no idea what they are getting into? Or might the Valley just have a drastically different idea of the future of the automotive industry?

Are We Reaching Peak Driving?

One reason for Silicon Valley’s interest in the automotive industry is the theory of “peak driving”. In the U.S. and Europe, people are buying fewer cars, driving less and getting less driver’s licenses, suggesting a major cultural shift away from individual car ownership. This is especially true when one looks at the behavior of 16-30-year-olds living in urban areas.

While car sales in other markets, such as China, are still growing, a look at cities, here too, signals that this trend won’t hold for long. For example, in Beijing, a driver wishing to purchase a vehicle with an internal-combustion engine must first enter a lottery and then wait up to 2 years before receiving a license plate.

Consulting firm McKinsey expects such vehicle use restrictions to grow even more stringent in emerging countries as the level of urbanization and air pollution increases. Globally air pollution already accounts for 6.5 million deaths annually. It is such developments, among others, that attract Silicon Valley disruptors to enter and redefine the industry.

Changing the Worldview About Cars

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The purpose-driven Silicon Valley entrepreneurs and executives, following their “change-the-world-mantra”, are viewing the shortcomings of internal combustion engine cars as global challenges, solvable by innovative technologies and business models.

In their view, cars are an old, inconvenient technology, destroying lives, polluting the air, and contributing to global warming. For executives like Eric Schmidt, chairman of Google’s parent company Alphabet, the argument for disrupting the automotive industry is obvious. Referring to the over 1 million deaths and 15 million injuries caused by car accidents globally each year, Schmidt speaking to shareholders in 2016 bemoaned: “How could you accept that? Why is this not a national crisis?”

Furthermore, from the perspective of Silicon Valley, cars are not only destroying lives and the environment, they are also extremely narrow “computers on wheels“. While cars have become increasingly more computerized, they are still relatively unintelligent, inefficient, and rarely connected to the Internet with Go to the full article.

Source:: Business 2 Community

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