Smartphones are making Electric cars

Apple, Xiaomi, Huawei are making EV

when steve jobs announced the first iPhone in 2007 and google leaned all in on android soon after most of the tech world saw that change was on the horizon but few could predict just how thoroughly and quickly smartphones would sweep away everything in their wake an entirely new form factor combined with new consumer preferences supply chains and business models through one's invincible industry titans off balance for just long enough to let new entrants from apple to Xiaomi enter and take the entire industry for themselves the car industry today is roughly where the phone industry was in 2009 it has passed its iPhone moment already its android moment is happening now and there are parallels everywhere if you just look close enough it is no coincidence that every major smartphone company in the world from Xiaomi to Huawei LG to sony they are all entering the car business now and in the 73rd episode of the story behind the series.

I will break down what we can learn from the smartphone revolution of the past and what we can apply to the car revolution of the future the major trends of the car industry so electrification self-driving always-on connectivity and the increased adoption of screens and software these all have two things in common one they fundamentally change the business of both making and selling cars and two they have nothing to do with the core strength traditional carmakers have accumulated over decades there are few visual metaphors more striking for this than BMW a few years ago lighting up their iconic headquarters building modeled after the cylinders of combustion engines to present them as if they were batteries instead oh the irony sure the cars of the past will have a lot in common with the cars of the future, after all, they will all have wheels seats windshields and such but much like the feature phones sharing components with the smartphones weren't enough to save industry titans like Nokia and Ericsson it's far from certain that being great at bending metal plates or designing blinkers for example will let car companies like BMW or Toyota survive the the onslaught of the dozens of new competitors that are coming straight for them either last year 40 of the cost of the average car was already spent on electronics which was up from 27 a decade ago and 18 a decade before that so from a cost, perspective cars are already on track to become more consumer electronics items than they are a collection of engines and seats anyway and as drivers will spend less time looking at the road ahead of them and more time looking at the internet-connected to giant screens in their vehicles in the future it's likely that revenues will soon follow to some companies already let users upgrade self-driving software over the air or purchase upgrades for things like their headlights via paid software updates and it's not hard to see that trend accelerating in the future phones were almost entirely a hardware business at first but once they connected to the internet and our wallets conveniently and open up their app stores to third-party developers they became an internet and software business to spawning a real cottage industry of third-party software companies around them software eats the world as the a famous quote from mark Andreessen goes and it will inevitably eat the car business too where consumers will buy software get bombarded by ads and will likely choose cars based on the tech that they have at least as much as they will choose them over the luxurious wooden panels or heated leather seats or whatever in other words both the costs and the revenues of cars will increasingly be tied to the tech going forward making the car business of the future more similar to the smartphone business of today than the car business of the past, traditional car companies can of course today already see the iceberg on the horizon and they're trying desperately to avoid it they're adding electrification self-driving better software and so on to their cars as we speak but if the phone giants of the past have taught us anything it is that big ships are really slow to turn and just seeing the iceberg doesn't mean that the company will be able to avoid it interestingly the car industry is starting to parallel the phone industry is yet another fundamental way too when the iPhone first launched it quickly became clear to the industry that this the the fundamental model could and in fact had to be emulated so a web of suppliers from google to Qualcomm MediaTek corning as well as thousands of manufacturing companies across Asia sprung into action and brought around the android revolution in record time their important achievement was componentizing and standardizing this new form factor suddenly making a smartphone became less like art and more like assembling Lego blocks new startups like Xiaomi could have access to the same apps processors camera sensors etc 

As Nokia and sony Ericsson for example and they could even have contract manufacturers like Foxconn assembled the phones for them at similar quality levels too so they just had to focus on designing and selling their phones this componentization really leveled the playing field and an almost exactly parallel revolution is happening in the car industry right now as well the iPhone moment of the car industry came of course in the form of tesla much like with the iPhone it took a few tries to find the necessary polish but not only was tesla incredibly right about the fundamentals from electrification to self-driving and software driven interiors they also emulated apple's business model by aggressively pursuing vertical integration and ecosystem building tesla builds its own software it designs its own chips it develops its own self-driving algorithms to run on those chips it makes its own batteries lately and it has an exclusive the ecosystem of fast chargers on the road batteries to mount at home and soon an exclusive tunnel system to shuttle tesla owners around underground as well Tesla is a vertically integrated exclusive ecosystem business just like apple is and now that it has shown the world what all the building blocks of this new form factor is and created consumer demand for them the rest of the industry is jumping in to compete in the same way too seeing tesla's rise from nothing to become the world's most valuable car company in just a couple of years has really opened the eyes of everybody in the industry and they all realized that this model not only could it had to be emulated and so the car industry as a the whole is experiencing its own sort of android movement right now a few weeks ago Nvidia announced oren and Atlan their next-generation socs for cars as well as their reference kit called Hyperion which also includes all the necessary sensors circuitry and software to let carmakers basically add intelligence and self-driving capabilities to their cars like a lego a few months before that LG and contract manufacturer Magna announced that they'll be working on electric powertrains including motors inverters and onboard chargers etc that companies could easily build into their own cars and are rumored to have the apple car as one of their first customers before that Volkswagen surprised the world by making its entire MEB electric platform available to license this includes the motors the batteries the powertrain etc of their most mass-market electric car the id3 and ford has already signed on to build a car on it there are startups like ai motive that develops the entire self-driving capabilities on behalf of their clients contract manufacturers like Foxconn who are getting into the business of assembling cars on behalf of others and standardized charging networks are being built out all over the world by industry alliances to take on tesla's supercharger network to the android moment of the car industry is truly upon we and it will likely be just as disruptive for cars as it was the phones about a decade ago componentization and standardization has created a default the operating system on computers and phones so it's likely to do the same on cars in the future too replacing most of the weird custom user interfaces manufacturers of the past have pushed on users over time with sony Huawei and many others trying their hands at the modern solution already and new companies like polestar announcing that they are simply embracing google software for their cars instead of even trying to build their own and once even new entrants will have access to basically the same world-class engines batteries charging networks self-driving tech manufacturing etc as the big guys the playing field will well and truly be leveled and there'll be nothing holding back these small companies from taking on the established giants not only that the consumer psychology will likely change too devaluing the decades-long brand building exercises car makers have spent billions on after all if new brands use the same core components as the existing ones and consumers actually know about that they will be much less likely to believe that a Mercedes or Audi is actually worth paying double, for now, a very interesting example of a car being built by a tech company using this new componentized model is division s by sony which the company has recently started road testingand I'll see you later.