Auto Makers Threatened By Both Tech Company Autos And Ridesharing (caranddriver.com)

An anonymous reader quotes Car and Driver: For automakers, the first bit of bad news is that people seem quite receptive to buying a vehicle from a tech brand such as Apple or Google, according to Capgemini's 17th Cars Online report, which surveyed some 8000 consumers in eight countries... Consumer interest in buying cars from tech brands has grown from 49 percent in its 2015 study to 57 percent in the latest report... There is also the growing popularity of ride-sharing services offered by the likes of Uber and Lyft. Fewer people will feel the need to have their own car if it's easy and inexpensive to order up a cab on their smartphones. Capgemini's survey found that 34 percent of car buyers see ride sharing and related services as a genuine alternative to owning a vehicle.

Comments

So join them

[ranton]

The car companies already realize all of this, which is why they are also getting into the autonomous car and ride sharing business. They are late though, and they will probably move too slowly because of fear of cannibalizing existing sales. But they at least see the writing on the wall so time will tell if they can get their act together in time.

Re:So join them

[ShanghaiBill]

they are also getting into the autonomous car and ride sharing business.

The problem is that that is a much smaller market. A normal car is idle 95% of the time, so a ride-share car that is idle on 50% of the time, can replace 10 normal cars.

I used to rent cars when I arrived at an airport. Now, I just take Lyft. It is cheaper, more convenient, and saves me half an hour at the airport both coming and going.

But that means fewer cars need to be manufactured.

Re:So join them

[Bender0x7D1]

A normal car is idle 95% of the time, so a ride-share car that is idle on 50% of the time, can replace 10 normal cars.

You assume an even distribution of use. However, 99% of cars are idle at 3:30am; but only a small percentage are idle during rush hour.

The only way that will change is if we have a massive shift in how people live, work, and socialize. However, even then, most people will be active during the day - and at home at night. Which will still skew the demand curves.

Re:So join them

[johanw]

Even if that were so, the car would also be used up much faster than before. My car is 15 years old and I don't plan on replacing it unless I get some serious maintenance costs. Their bubble are the people who buy a brand new car every few years and they forget about all others who use second hand cars.

Re:So join them

[dave420]

Well, if the car really is engaged in ride sharing, it is only transporting other people when the driver wanted to go somewhere specific, so its utilisation time is not increased, just the number of passengers it is carrying on these journeys. Hint: Uber isn't ride sharing :)

Everybody wants a car

[rsilvergun]

Period. There's just too many advantages. Plus when you're a teenager cars get you laid.

That said, it's never been possible for everyone on earth to have a car. There just isn't enough metal to go around. Add to that burgeoning wealth inequality making cars unaffordable (just bought a 1 year old entry level sedan and by the time I'm done with insurance & warranties it'll run me $380/mo. And before you ask the warranty's only $40 and I have a spotless driving record in my 40s. Full coverage's a bitch) people just can't have cars anymore.

It's gonna be fun, because building cars was something high profit enough that the scraps companies leave their workers let them live a middle class life. Meanwhile I'm still seeing people blame rising minimum wage on the death of the American class. Oh well, now I'm just rambling.

Re:Everybody wants a car

[ShanghaiBill]

There just isn't enough metal to go around.

The earth's crust contains about 2.5e18 tons of aluminum and 1.25e18 tons of iron.

There are roughly 7 billion humans, so there is enough for each person to have 2.8 billion tons of aluminum and 1.8 billion tons of iron.

Re:Everybody wants a car

[viperidaenz]

Perhaps they meant there isn't enough metal that is economically viable to extract from the earth's crust to go around.

Re:Everybody wants a car

[ShanghaiBill]

Perhaps they meant there isn't enough metal that is economically viable to extract from the earth's crust to go around.

That is not even close to true. There are billions of times more that we need, and far more than a billionth of it is economically extractable. The price of both steel and aluminum is going down, and the world is awash with excess steel capacity, while at the same time cars are using less, replacing metal with carbon composites and plastic.

Perhaps you also think we are going to run out of carbon? After all, it is hundreds of times rarer than either aluminum or iron. There is only enough for each person to have a few million tons.

Abundance of elements in the Earth's crust

The real big advantage of tech companies.

[140Mandak262Jamuna]

There are many advantages of tech companies. They are used to stiff competition, fast life cycle of products, etc etc. But the biggest advantage they have is, they would not be running the race with 25 lb dead weights strapped to their ankles, so to speak. The past agreements the automakers have made with the National Association of Automobile Dealerships are extremely one sided and very onerous. NADA has the monopoly of all the autos made/imported into the USA. They have extraordinary political clout, some are exempt from the monopoly and restrictive trade practices act, and they are a strangle hold on the manufacturers.

Their clout is so high, it is not being talked about as much as the pension obligations of the big three, or the clout of labor unions over the manufacturers. If the cars made by tech alliance by passes the NADA, it would be a boon to the consumers.

When haven't car companies felt threatened?

[mykepredko]

In my life, I have read about how the North American car companies have been threatened by:
- Japanese Imports
- The Gas Crisis
- Better Japanese Imports
- Korean (and other low-cost geography) Imports
- Technology
- German Imports
- Electric and Hybrid Vehicles
And have stayed in business. If anything, the greatest risk to their businesses is their own complacency and unwillingness to recognize deficiencies in time to allow external threats to establish themselves as niche (and larger) players.

And now Google Apple, Uber and Lyft's are a threat? Maybe and I would expect that GM & Ford (along with Fiat Chrysler) will miss the initial wave, but will offer competing solutions that will maintain their positions in the automotive food chains.

Re:When haven't car companies felt threatened?

[Anonymous Coward]

It's pretty hard to fail when the government decides you're never allowed to fail and will bail you out.

Re:When haven't car companies felt threatened?

[vtcodger]

And don't forget that two of the big three US car companies have been through bankruptcy in the past decade.

Re:Automakers forget they make hardware

[ShanghaiBill]

I think key problem is that automakers forgot that they are in the hardware business.

GM is a hardware company. Tesla is a software company. Tesla is worth 100 times as much per unit of revenue.

Automakers know they are in the hardware business. They also know they need to get into the software business in a really big way.

Distopia

[fluffernutter]

I think people have a very lofty view of the condition that a shared car with no driver will be in. I think they also are dreaming if they think the response time for these cars will be any better than a taxi. Apps will give these companies all the flexibility in the world to multiply your charge if you are slightly out of the norm, and people will have to pay it because everyone else will be out of business. Right now with a vehicle in my driveway if i am stuck for a lunch to feed my kids in the morning it takes me 15 minutes to go to the grocery store and back. If personal ownership becomes unaffordable then that freedom is gone. I do not believe we are headed for a good place.

Re:And this is why software engineers are idiots.

[ShanghaiBill]

They have a huge manufacturing infrastructure

They have a tiny manufacturing infrastructure by auto industry standards, about 1% of what GM has.

But they also employ some software engineers

Their manufacturing infrastructure gives them 1% of their value, so where is the other 99%? Software and other intellectual property.

Therefore they are a *software* company.

In terms of value and future potential, yes.

Re:And this is why software engineers are idiots.

[sinij]

The other 99% is market hype and bubbles.

When I am buying a dishwasher, a pair of shoes, or a car I want hardware. It is CRAZY to force me into SaaS or Cloud or even just apps in these cases. This is pets.com all over again.

So you think "high P/S ratio" means "SW company"?

[Brannon]

They have a high P/S ratio because they are a fast-growing company and the market is betting they are going to have much larger revenue eventually. Any company that went through a rapid growth phase will have a high P/S ratio.

Tesla has a high valuation because they are a first mover & technology leader in the EV market. They have good engineering, a solid battery supply chain, a global fast-charging network, and have already sold >$20B worth of EVs. They're also a leader in self-driving and it is clear the world is heading that way; and certainly self-driving has a significant software dimension--but you are hopelessly clueless if you think 99% of Tesla's value comes from software.

Calling Tesla a software company is about as accurate as calling them a "leather seat" company.

Need to get rid of dealers and pimpmobiles

[knorthern knight]

Yes, we need repair shops/garages and service/tune-up centres. We don't need blood-sucking-leeches middlemen raking a percentage off the top of every sale. A salesman gets a Y-U-U-U-G-E commision for selling a new car. That's why the car's price drops drastically the momemt you drive it off the lot.

The dealerships also stock up on pimpmobiles. Safety features are one thing. But try to find a new car on the lot without a sun-roof, satellite radio, infotainment system, privacy-invading-constant-tracking (OnStar/etc), etc/etc. With a desktop PC or laptop, I have a choice between...

1) Ordering online from Dell and specifying the options/hardware I want/need.

2) Going in to Best Buy, picking from a limited selection the model that sort of comes close to my needs, and putting up with 20 minutes of nagging to buy extended warranty, etc.

I, and a lot of other people, prefer option 1) for computers. It would also be nice for cars. Right now car-buying is like buying a PC from Best Buy.