(Bloomberg) -- At first glance, the forays Apple Inc., Google and other technology giants are making into the world of cars don’t appear to be particularly lucrative.
Building automobiles requires factories, equipment and an army of people to design and assemble large hunks of steel, plastic and glass. That all but guarantees slimmer profits. The world’s top 10 carmakers had an operating margin of just 5.2% in 2020, a fraction of the 34% enjoyed by the tech industry’s leaders, data compiled by Bloomberg show.
But for Apple and other behemoths that are diving into self-driving tech or have
“Why are tech companies pushing into autonomous driving? Because they can, and because they have to,” said
A market projected to top
What’s at stake, essentially, is something even more valuable than profitability: the last unclaimed corner of consumers’ attention during their waking hours.
The amount of time people spend in cars, especially in the U.S., is significant. Americans were behind the wheel for 307.8 hours in 2016, or around six hours a week, according to the latest available data by the American Automobile Association.
That’s a fair chunk of someone’s life not spent using apps on an iPhone, searching on Google or scrolling mindlessly through Instagram. Any company that’s able to free up that time in a meaningful way will also have a good chance of capturing it.
The world’s inexorable shift toward intelligent cars that are better for the environment is impossible to miss. If governments haven’t already declared plans to be carbon neutral by, in some cases, the end of this decade, there’s plenty of research that shows combustion-engine cars are going the way of the dinosaurs.
BloombergNEF’s annual
Against that backdrop, it’s unsurprising that after years of chipping away at self-driving cars, tech companies have been stepping up their activities and investments in earnest.
Autonomous cars are only as good as the human drivers they learn from — so the people who teach these systems need to be excellent drivers themselves.
Over the past several months, Apple has prioritized plans for the “Apple Car” after previously focusing on making an autonomous driving system, Bloomberg has reported. That’s fueled intense speculation over which automakers and suppliers the company behind the iPhone may partner with to realize its vision. While Apple has
There’s also
Microsoft Corp., too, is backing several autonomous initiatives,
Amazon.com Inc., meanwhile, has thrown its weight behind Rivian Automotive Inc., which is making
“Each of these companies, including Facebook, want to be a part of or even control and dominate, every part of citizens’ lives,” said Professor
Although Apple has dominated phones, tablets and smartwatches and put up a decent fight over computers for the past few decades, it’s been a laggard in the artificial intelligence, voice and smart-speaker spaces, areas now led by Google and Amazon.
The company would benefit from the release of a breakthrough new product. While it’s had successes with the watch, released in 2015, and services, such as Apple TV,
At Google, executives have long framed investments in autonomous cars, along with moonshots in biotech and drones, as risks that venture capital and less deep-pocketed firms don’t, or won’t, take. Waymo has discussed potential business models around taxi services and long-haul logistics.
The onslaught has automotive incumbents girding for battle. Industry titans such as Ford Motor Co., General Motors Co. and Toyota Motor Corp. have stepped up their own rival efforts in self-driving. The Japanese automaker is
In China, it’s the biggest tech companies throwing their hats in the ring. Giants from Huawei Technologies Co. to Baidu Inc. have pledged to plow almost $19 billion into electric and self-driving vehicle ventures this year alone. Smartphone giant Xiaomi Corp. and even Apple’s Taiwanese manufacturing partner Foxconn have joined the fray, forging tie-ups and unveiling their own carmaking plans.
Automakers defending their turf is understandable but
The existing businesses of Amazon, Apple and Google already require them to become proficient at AI, handling massive amounts of data and designing complex systems. Essentially, they’ve made the upfront investment in core technologies needed to design and build driverless cars, and they now have legions of engineers eager to solve more complex problems, not to mention an appetite for disruption.
But perhaps one of the clearest examples of a tech company with the ability to change up its own stomping ground is Amazon. The web retailer would benefit hugely from the lower costs of delivering packages to homes using cars that drive themselves.
Amazon also has a habit of transforming its own tools into businesses that can be sold to a wider swath of customers, much like it did with cloud computing, which was originally created to support the company’s online retail operations. Having morphed it into a computing and data-storage platform used by Netflix Inc., the U.S. government and others,
While the coronavirus pandemic put a temporary damper on consumers’ appetite for new cars, demand has roared back. A semiconductor shortage means many traditional players
“Even for companies like Apple and Google, this is a massive market,” Rajkumar said. “CFOs and CEOs literally drool, since first movers are likely to have a major edge. Each of these companies wants to be the predator, and not become the prey.”