Your Move, Messrs. Page, Musk And Cook

The car will be an accessory to the phone, and that decides winners and losers

Cars

I’m impatient to see a breakthrough in cars. I have high expectations for what Apple will do and great respect for what Tesla has already done. I agree with Peter Thiel on the we-were-promised-jet-cars-but-got-140-characters thing, and with Larry Page who worries that Silicon Valley doesn’t throw the ball down the field enough.

So, it was nice to see a new round of coverage on the car topic last week:

  • It started with The Verge (TL;DR: GM wins CES with its 200-mile, all-electric Chevy Bolt)
  • Went on to Wired’s cover-story on the Bolt (TL;DR: what a surprise that this great new car came from Detroit, and it looks like they’ll win)
  • Got a wonderful dose of Stratechery’s Ben Thompson (TL;DR: change in cars will come very slowly, then all at once)
  • And closed with tech journalism’s Cronkite-equivalent, Walt Mossberg (TL;DR: Apple and Google are most qualified to take over dashboards)
  • ps: US Transportation Secretary Anthony Foxx also announced Obama’s $4B plan for self-driving cars.

They’re All Screwed

My first instinct was to think through all the competitors’ positions.

GM: Somehow those lovable goofs in Detroit snatched victory from the jaws of defeat (as Wired pointed out, they killed EV1 and sold a mere 80K of the hybrid Chevy Volt in five years).

Tesla: After 10 years of him predicting exactly this showdown for the Model 3, it would finally be time for Elon Musk to compete in the brutal business of $30K cars with someone who’s been to that end-zone before (Mary Barra and GM) and to figure out how he will create demand for 10x as many vehicles per year as he sold in 2015.

Apple: By 2019, Tim Cook will be three years behind Mary (and two behind Elon) and while that’s not been a fundamental problem for Apple in the past, he’ll need to ship a v1.0 of Car that’s more like iPhone than Watch.

Google: To be honest, after the non-announcement announcements and non-denial denials at CES, I’m mostly just confused about whether they’re building cars with Amazon or with Ford. Or both.

Then it hit me: at sub-$30 oil, they’re all screwed.

$2-gallon-of-gas is so toxic to electric vehicle demand that sales in 2015 actually went down year-over-year (to say nothing of their pathetic 1.4% share of the market).

As gas prices started to ease, America’s forward-thinking consumers ran back to buying Dodge RAM trucks with the 6.4L HEMI V8 (which is why Chrysler is crushing it).

Turns out that Mary’s surprise victory, all of Elon’s hard work, those 100 acres Tim bought in North San Jose so he can cover them and do their Project Titan R&D beyond spying aerial eyes and all of Larry’s millions of autonomous miles driven are all pointless, because we just want to drive trucks.

Sigh.

It’s NOT About The Propulsion Stupid (apologies to Carville)

But, wait. Don’t despair at the prospect of more of the same. This will be the disruption you’re looking for. However, …

The coming upheaval in cars won’t be about metal, drive-trains or batteries. It will be about the experience inside.

For all but the car enthusiast, a car is not about the car. Or even about the driving. It is about getting somewhere in a way that does not suck.

Put another way, if you could have someone drive you everywhere, you would.

For more than a hundred years, driving has been mostly about handling the car, some about your comfort, and a tiny bit about your cabin experience.

In the next 5–10 years, as we are increasingly — and eventually entirely — relieved of having to handle the car, driving will be nearly 100% about the cabin experience. Whether you are being moved by fossil fuels or electricity will be incidental (beyond Ben Thompson’s excellent point that electric vehicles are a playing field reset that enables the disruptors).

In the cabin, beyond your comfort — which has been commoditized — it is content, connection and interface that will make all the difference.

Sound familiar?

The car will be an accessory to the most popular device in our lives: the phone

When in the hands of Silicon Valley’s user experience experts, this will be so much more than large displays in the dashboard featuring the content, apps and interfaces a billion of us are already familiar with extended to the context of the car.

It will be a re-imaging of the entire interior experience in which we will eventually consider things like windshields without wall-to-wall integrated transparent displays as anachronistic as physical keyboards on our phones [don’t scoff, your windshield is smaller than a 65" TV, 4K versions of which are already down to $1,500 today, and millimeter thin, transparent displays of that size have already been shown by LG, Panasonic and Samsung].

That — pardon the terrible category name — is a smartcar.

Another Look At The Competition

Remember that ugly 2015 market share picture for electric vehicles?

Replace “electric vehicle” with “smartcar”, and I think the picture will be very different.

I’ll admit to a lazy comparison given the greater than 100x difference in price between cars and phones, but there is no reason 2019 smartcars can’t be to cars as 2007 smartphones were to PCs: The beginning of a very big share shift (although total volume will not go up as it did with smartphones and PCs).

In the context of that shift, here’s another look at the players:

  • “GM” (GM and other auto incumbents): Look at the interfaces inside of your car. Do you love them? Turning the rearview mirror in the Bolt into a screen that shows the rear-facing camera is a nice touch, but the incumbents are bringing butter knives to an interface railgun fight.
  • Apple CarPlay and Android Auto: Can the incumbents save themselves by turning a screen over to the apps we know? I’ve used Apple CarPlay in the Volvo XC90 and it’s a sad-face shadow of an Apple experience. Not quite Motorola ROKR bad, but not the winning move.
  • Google: Responsible for 80% of our smartphones and leader in autonomous car systems. Presumably the supplier to everyone who will not build a completely vertically integrated smartcar. May win on volume, but like Android, will lose on profits. That’s a success.
  • Tesla: The best in-cabin experience today (by a country mile). May become Google’s biggest future customer, beating all but ...
  • Apple Car: Never get involved in a land war in Asia. Never tangle with a Sicilian when death is on the line. And never, ever get into a user experience battle with the hardware / software integration — not to mention velvet handcuff ecosystem — of Apple. While they admittedly appear to be missing other large pieces of the smartcar puzzle, including manufacturing, autonomous systems and retail and service, you simply cannot bet against them with three years to go.

BOTTOM LINE: Apple wins. Google supplies the rest.

Next stop in this saga is Tesla’s announcement of the Model 3 in March.