How Tesla, Apple and Amazon will disrupt the automotive industry
Taking it from where I left off in my previous blog post, one of the biggest disruption AI brings to the world is to the car industry. Take for example Tesla, BMW, Volvo and others.
It all started by the general necessity or trend to reduce emissions and move towards environmental friendly transportation. Thus, car companies are looking for alternatives to internal combustion engines, gazing at other types of fuels as well as battery electrical sources. The future of cars is electricity. And with the help of Artificial Intelligence they will combo to create autonomous driving and zero emission vehicles.
Basically, AI will totally change the way cars are built, the way cars are sold and bought. The biggest problem is that electric AI empowered cars will have to be built from the ground up, throwing away things. Conventional engine management software will be replaced -not updated- because electrical engines function differently. Imagine that emission control and traction control systems and a whole bunch of experience and knowledge will be obsolete. Throwing away things creates internal space, better design, better car frames and ultimately opens the road for innovation.
If we are right about the future, then entire investments will change focus, car industries will have to shift their departmental focus to completely new ones. Some divisions will lose their power while others will be boosted. However, what we need to understand is that new companies will get involved and “completely new supply chain partnerships have to be forged. And all of the executives and engineers who have made your company great on the back of internal combustion engines have to accept that they are back to close to zero.
A lot of the engineers won’t have any role in the new world, or any way short of significant re-education and starting from junior positions to stay employed.” The battle of two worlds will begin. Old fashioned internal combustion partisans will try and retain their position in the market by combining ICE with hybrid motors and technology while on the other hand we will have the Teslas of the world allied with Apple and Google to establish the future of cars.
The time has already come if only you consider the following: BMW’s i8 and i3 combine a gas engine with electric motor components but still not 100% electric. Tesla on the other hand has created 100% electric cars combining AI technologies and electricity. What is more depressing is that many of the major car companies will strongly refuse to open their eyes to the future and will not adapt to the electrification of transportation.
New players in this game are Apple, Google and Amazon. They might not have the same level of experience in car production and car sales but they have the necessary means and vision to create appropriate software, products and make sales. When mass production of electric cars is achieved then the overall price will drop and consumers will benefit from reliable products with low service costs.
Today’s car dealership model is based upon service expenses in order to survive. Spare parts and all the rest that comes with them are like a long term loan that has to be paid by the consumer. In the future we are talking about service cost will drop as their will be no need to visit your mechanic very often. Many of the problems will be fixed just by updating the firmware/software of your car. Furthermore, buying a car would be done online just like you do with so many other products in Amazon.
Moreover, to take it even further, the unforeseen consequences of the advent of electric cars will be felt much farther than “the demise of dealerships and significant shifts in market share in the auto industry”. Oil producing countries will see their profits -and influence- drop significantly based on the fact that “70% of oil goes into cars and trucks” according to Business Insider. We are talking about major shifts in alliances and power.
Finally, if you think all of the above just science fiction think about what happened to Nokia some years ago. During Nokia’s golden times no one thought that Apple’s iPhone would overthrow the dominant cellphone manufacturer. “It had too much institutional knowledge. It had hundreds of engineers who tried to add IQ to a dumb phone.
They were attempting to convert Symbian, a dumb phone operating system, into a smart phone operating system. Despite Apple showing Nokia how the smartphone should look, they couldn’t see their product as a smartphone but rather just as the next iteration of a dumb phone.”