‘The car is not dead, the traditional car industry on the contrary…’
Klaus Kaldemorgen from the DWS investment fund thinks that there is a bright future for the automobile, but not really for the current car industry. According to him, the digital data and logistics companies will be the first to benefit from the changes.
“The car is not dead, it’s just rejuvenating,” says Kaldemorgen. “The car of the future will not pollute and will help the driver initially. After a while, it will take over entirely. In the end, it will become a giant source of data, serving a whole ecosystem of services.”
Bad news for the current car industry
“But this will not be at the benefit of the current, traditional car industry. Digital competence will replace production competence and engineering performance. And this digital competence is not to be found in the classic car industry.”
“The development of this digital competence costs a lot of money, and can only provide benefit in the long run, providing that you can have economies of scale that are practically inaccessible for current car manufacturers.”
Today, every year, 250 million personal computers are sold worldwide, against some 83 million cars. It will be impossible for every car manufacturer to create his data exploitation system and integrate it into its cars.
On the other hand, we see Sony present its electronic car at the CES in Las Vegas. Of course, they are not so interested in the car itself, but more in the electronics and logistics built-in. At the same time, Amazon is trying to integrate its personal assistant Alexa in cars. That will allow offering electronic trade on board, in all its aspects.
Digital in front
These are just a few examples showing that the digital content of a car will continuously increase. And most probably, the digital giants of this world are most fitted to lead this evolution, not the current car manufacturers.
The same can be said about the suppliers. If they want to survive, they will have to invest heavily in this digital revolution. Supplier giant Bosch has already announced it will equip all its products with a sort of artificial intelligence before 2025.
Smartphone on wheels
The main beneficiaries of these changes are the semiconductor specialists who concentrate on car production. They provide the link between the analog and the digital world; they connect the sensors with the necessary calculating capacity.
Even electric cars require very complex electronics to steer everything. “The calculating power is augmenting every year, the image of the car as a “smartphone on wheels is no far future anymore,” concludes Kaldemorgen.
Of course, the stock market has already reacted to these evolutions. Where traditional car manufacturers have to live with a price-earnings ratio of one single number, the digital specialists register figures going up to 30 for the same ratio.