Tech companies, software suppliers and the big car companies are mustering their forces for an assault on the connected and autonomous vehicle market. As cars change from mechanical miracles to wonders of technology, I believe the tech firms hold an edge over carmakers.
Tech firms have a history of disrupting an existing marketplace and overtaking the traditional manufacturers. At the start of the century, few would have believed a relative minnow like Apple could overturn Nokia’s dominance in the industry and become the world’s largest company in the process. Now technology companies are unleashing a fresh wave of innovation and moving into new markets.
Their chief advantage in driverless cars comes from their software. It is this element, above all others, that makes a car driverless and the tech firms have more technical ability, programming skills and understanding than any other sector to put a computer behind the wheel. We have already seen Google trialling a driverless car in California and Apple, despite saying nothing official, are rumoured to be not far behind.
Traditional car manufacturers know they must respond to a major threat in their market. A KPMG report indicated that by 2030 all new cars on the road would have some element of connectivity, and a quarter would be fully autonomous.
Yet the carmakers are a step behind tech companies before they even begin. Despite snapping up skills from Silicon Valley, carmakers have old supply chains and a way of approaching development that will be difficult to shake. As a result, they are forced to adapt their existing vehicles to include a driverless component, rather than having a free hand to create. The ultimate driverless car might look more like a sci-fi style pod, but Ford or Volvo would find it much harder to conceive this than a Google or an Apple.
Established carmakers have to innovate while still developing and producing conventional vehicles. That will require significant extra investment for years, perhaps decades, to come and so strain balance sheets further.
Tech firms also have the upper hand in terms of the operating systems. We are already seeing the convergence of multiple applications into handheld smartphones and tablets and people will want to use these to communicate with their cars, whether that be to shop online, work, watch films or video with friends. Since most people already use the Android or iOS operating systems, the advantage lies with the tech firms that developed them.
It is undoubtedly true that car manufacturers have lessons in vehicle safety to pass on to tech companies. That is why I believe collaboration, where each stakeholder sticks to their area of expertise, is essential to create these futuristic vehicles.
Carmakers, tech firms, infrastructure operators, government, insurers and others must all have to work together to get driverless cars on to the roads. Car manufacturers want to take the lead, but it makes more sense for the tech firms to take control of tech innovation.