Part One of this analysis covered the dramatic and disruptive technological transitions to electronics components (vacuum tubes to semiconductors) and the tortuous changes in the cell phone since the early days of the ubiquitous Motorola "brick" and "clam shell" mobile phones took the world by storm. In this second and concluding commentary, let's analyze the automotive industry, one of the largest and most important businesses in the history of mankind. The automobile, in around one-hundred years, has brought mankind from depending on horses and oxen to unbelievable advances in motorcars.
Over the past several decades, these incredible Integrated Circuits in every vehicle have controlled a motor running gasoline (or diesel fuel). Electronics sample the air intake and regulate the fuel intake to get the most out of the vehicle as altitude, temperature, and other variables are managed to get the spark plugs to fire in the best possible sequence and create exhaust gases that are the least objectionable to air quality. The motor is matched to the transmission to optimize the power transfer.
All seems well, and it is. The modern technology is fantastic, amazing, and in danger of being usurped by a new wave of innovation. Welcome to the next fifty years!
We are seeing the precursors already. The Tesla electric car along with other versions such as the Chevy Volt and Nissan Leaf are leading edges of the all (or nearly so) electric vehicle. But look closer: the real change is like the final victory of Apple and Google with the cell phones. Yes, they made a call, but the real change, the disruption that killed Motorola, Nokia, Blackberry, and others was the use of the Internet. Let's state the fundamental rule again:
The Internet Changes Everything
Okay, now that this is clear, take a look at where Tesla, Apple, and Google/Alphabet are headed. Its "Autonomous driving." A quick look at the word "autonomous" provides this definition: Acting independently or having the freedom to do so.
Tim Cook of Apple cites a three-pronged approach: self-driving technology based on the Internet; electric vehicles; and ride hailing. And what does the first of these mean? At least, getting from place A to place B using an "autonomous vehicle," probably w/out a human driver. Clearly, this is not going to happen overnight, but don't bet against any of these mega-trends, especially one that involves the Internet as a key enabler. Apple has a track record of providing solutions to problems and needs that most of us don't know we have/need at this time.
While Elon Musk of Tesla is moving fast into manufacturing wonderful cars and the batteries that power them, Apple probably will avoid the actual "making of the cars" per-se, but introduce the technology and either license it to car companies, or at some time acquire some of the car firms that become financially weak and fall behind. That's why the stock market valuation is a leading indication of change.
At the present, the top ten automobile companies worldwide include (in order of new cars and trucks sold ... numbers, not revenue):
- General Motors
Who would like to bet against some combination of Silicon Valley or other disruptive technology leaders being in this list fifteen years from how? Don't be so sure. The only thing about change is change itself. Does anyone think that in fifty years we still will be driving ourselves in gasoline-powered vehicles? There is a zero chance of that, to be sure. The only question is when the change takes place. Surely vehicles will be self-driving for the most part, with human assist available for a transition period. Which firms will be on the Top-Ten list in twenty-five years? Fifty years? One-hundred years? Who knows, but it won't be the same ten companies listed above. That's for sure.
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