This will sound outrageous, but the “Car Industry” will have so much in common with the “Smartphone Industry,” and these similarities have been noticeable only in the last couple of years. This is only possible with the likes of Tesla, Nio, etc. In this article, let us look at Why the Car Industry is going through a massive change and why Tesla will be the iPhone of the Car Industry.
Car Industry is where the Smartphone Industry was in 2008
With Tesla becoming the most valuable Car company, one might wonder – How is that possible when Tesla was founded in 2003 while Toyota has been making cars since the 1930s?
Well, Tesla is more of a tech company. Therefore it is valued in a similar fashion.
The iPhone was launched in 2007, and it completely revolutionized the smartphone industry. While in its initial stages competing brands like Blackberry, Nokia didn’t care to pay any heed to it, but as soon as it gained traction, the shift was notable.
The next year Android was coming in with full aggression. With its open-source nature, it became a huge success, with different OEM adapting to it. We can almost say – It would be a far-fetched desire to have a major competitor to Apple’s IOS if Android was not an open-source project.
It is well documented that Google has never been that good with Hardware, even if they make some of the best Software products out there.
Parallels between Car Industry of this Decade and 2008 Smartphone Industry
This is 2007 of the Smartphone Industry: Tesla makes its own Battery, Motor, Software, and Tesla is proprietary with its Charging technology and connectors. Do you know who else has a similar philosophy since the beginning? Apple, yes, Apple has been making everything on its own. This gives them the control which every brand wants over their products.
2008 of the Smartphone Industry: Now let’s talk about Androids of the Car Industry. Almost every major Smartphone company is investing heavily in coming up with a Car. With the likes of Sony, LG, Xiaomi, all of these brands have already announced their investment in cars, Sony and LG already showcased their concepts at CES 2020. And a lot of brands are rumored to be working on a car.
Apple is also rumored to be working on a car for quite some time now. So it would be interesting to see Apple and Tesla going at each other.
With Nvidia announcing their Automotive solutions like NVIDIA DRIVE Atlan. This is the componentizing of the car industry, which opens the door for car companies to get their hands on the technology needed to drive that change and give competition to Tesla. With a host of brands partnering with Nvidia to build their Self-Driving and technologically advanced cars on top of Nvidia’s Self-Driving and automotive solutions.
The Android Moment of Cars: All of these give instant access to advanced technologies like AI, NLP, DL, etc. If these were left alone for the car companies to figure out, they would never establish themselves in this new age of the automotive industry. Unfortunately, most traditional car companies have always been more focused on the wheels and Engine than the Software, which makes the level playing field for all.
Tesla will be the iPhone of the Car Industry
When we think of Apple’s iPhone, what do we see? Their Privacy focused premium product! But the larger picture is the ecosystem which we fail to acknowledge. Apple makes many hardware and software products, and once you get an iPhone, you can be easily lured to get more Apple products. For example, suppose you’re in the market for a SmartWatch, you already have the iPhone. What option will you look at? Of course, it will always be the Apple Watch as it will work best with your iPhone, and no Android-based watch can give you the experience that these two together can.
Now, you are a Human, and you love music. Would you go ahead and subscribe to Amazon Music? There’s a very slim chance you will, and you are most likely to go with Apple Music.
When someone buys an iPhone following are the implications
- You can’t use any charger to charge your iPhone, and you either use Apple provided charger or a third-party charger where the pin is proprietary to Apple.
- You start using Apple software services like; iCloud, Apple Music, iMessage, etc.
- Your iPhone always works the best with a Mac, Apple Watch, AirPods, AirTag, etc. This makes you believe getting any of these will improve the overall experience using your iPhone.
You get the point! Once you start getting into this ecosystem, it becomes very hard to jump the fence to move towards something else. The largest number of consumers start with an iPhone as their first Apple product, and iPhone is the cow-cash for Apple. Apple is arguably the only company on the planet that is this successful in building this ecosystem. While many other brands have tried emulating this strategy, they weren’t that successful, and I couldn’t say it any subtly.
Tesla is trying to build this ecosystem, and I would say it is on the right path. Tesla makes their Chip, Software, Motor, etc. Tesla sales home Solar system, Tesla’s charging is proprietary, and this gives them a head start with building the ecosystem.
With a host of companies supervised and managed by Elon Musk, he can integrate each of these one at a time. The Boring Company will use Teslas’ to transport people underground from Point A to Point B. Consumers get access to Tesla’s supercharging stations for free.
Who knows, in the future, Tesla owners will have some incentives in using products and services offered by Elon Musk Companies. For instance, Starlink, the division of SpaceX all set to revolutionize the broadband industry forever. I am pretty sure Elon is already working on this integration. While I cannot think of anything where SpaceX and Teslas’ can be integrated, but there’s a lot more that can be. And hey, there’s still so much more for Tesla to come up with, which can improve their ecosystem.
Technification of the Car Industry
In the early days of smartphones, they were merely hardware businesses. Smartphone companies were just dependent on the hardware sales for its revenue until it was connected to the Internet. Once it had the power of the Internet under its belt, the business opportunity became endless in number.
You could see how it created revenue streams for smartphone companies along with independent developers around the world. The Internet brought a host of services smartphone companies can offer within their smartphones creating additional streams. Some of the examples are Apple Music, Samsung Pay, etc.
The Car industry is almost on the horizon, seeing that incoming change where cars are becoming more and more of an Electronic product than an Automobile. So let me explain – Tesla cars receive OTA updates now, the rise of Autonomous Technology in cars using all sorts of radar, cameras, and lidar systems to see the road ahead, storing and analyzing data transmitted from the Car to the company which is used to improve the overall experience and in improving the self-driving technology.
It is not far that the Car industry will have several revenue streams, just like the smartphone industry. It can be anything from software services included in the Car, personalized ads on the infotainment system, etc.
The Future of Tesla and The Car Industry
The car industry will be more of an electronic industry, with technology being the driver of this change. Just like the smartphone industry, the car industry will see some componentization.
Foxconn recently agreed to assemble cars for EV startup Fisker, just like how they assemble a host of electronic products, mostly known for assembling iPhones for Apple. This also makes the change in the car industry very visible, Foxconn being the biggest contract manufacturer in the world.
Also Read: Top EV Startups in India
Tesla will be at the forefront of this technological advancement, and just like how Apple paved the way for innovation in its initial years, Tesla will lead the way.
It is just to be seen how drastic the change would be. So tell us in the comments section below what do you make of everything that’s going on?