Google, Apple, Qualcomm and Nvidia provide the brains for the auto industry. Why don’t they just build their own cars?
The Google Car was only a prototype and was not mass-produced. Getty Images/Eric Piermont
As cars become more and more digital, tech companies are playing an increasingly larger role. They provide the brains of modern cars, which in particular make semi-autonomous driving possible and drive the operating systems. Apple will even be able to take over the user interface from manufacturers like Porsche this year when the new Apple Carplay is integrated. But if the tech companies are already taking over the heart of a car and fully autonomous cars will dramatically change mobility in a few years – then why don’t they build their own cars?
There was a lot of discussion about a car from Apple and Google also had its own vehicle. The spherical vehicles were a test vehicle. But they quickly disappeared again because they cost huge amounts of money to produce. The cars presented by Sony or Huawei bear their names, but nothing more. The vehicles are built by established manufacturers such as Honda.
The money would be there
Of course, the tech giants would have enough money to set up their own production. Elon Musk once calculated that the first few years of production cost him between 15 and 20 billion. Apple’s cash reserve alone is around $35 billion. But the Tesla example also showed that it is difficult to set up your own production.
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The challenges start with production. Buying or building a factory is the smallest problem. Tesla continues to be more concerned about quality testing. While the established manufacturers have built up an almost watertight quality management system over many decades, every new manufacturer has to start from scratch. The Chinese manufacturers have made do with hiring experienced car managers from Germany who have brought their production up to speed. But that too took almost 15 years.
The other problem is the sales and workshop network. At the beginning, Tesla sent its own vehicle technician to every buyer if there were problems. Partner workshops have now been found that can also take care of a Tesla. This is not trivial, because electric vehicles are far more complex to handle during repairs than many combustion engines. And you can’t get these workshops overnight.
The tech companies are well positioned
The costs of setting up your own production facility are immense and there are few arguments in favor of it. Tech companies are already widely represented in the automotive industry and earn a lot of money. It makes little sense for Google and Co to take complete control of vehicle production. In addition, they will become an integral part of modern cars in the future anyway. It is an extreme effort for manufacturers to replace a technical service provider.
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The tech companies have an optimal position in the car market. Without their help it doesn’t work, which also means that to a certain extent they can dictate prices better than other suppliers who are put under enormous economic pressure by the manufacturers. They have created a market worth billions without having to deal with the problems of their own production or distribution.
It is therefore no wonder that the share value of tech companies continues to rise while the car companies are also under pressure on the stock market. You therefore do not need a car under your own name.
Don Dahlmann has been a journalist for over 25 years and has been in the automotive industry for over ten years. Every Monday you can read his “Torque” column here, which takes a critical look at the mobility industry.