[이코노미스트] IT Dinosaurs and Automakers’ Speed ​​Battle

Resolving uncertainties in early growth in the EV market… Simple OEM automaker’s prospects

The automobile industry, which was called’chimney industry’ No. 1, is turning into an information technology (IT) industry. Amid the rise of electric vehicles and autonomous driving technology, global IT companies, so-called IT dinosaurs, started to transform into automobile companies by cooperating with automakers. The’Apple Car’ collaboration between Apple and Hyundai Motor Company, which appeared earlier this year, was the beginning. Chinese and Japanese IT companies such as Baidu and Sony have also entered the electric vehicle market. Ho-joong Lee, a senior researcher at the Korea Automobile Research Institute, said, “The competition for leadership in the future car market is in full swing.”

Currently, large IT companies such as the US, China, and Japan are taking drastic steps with the preoccupation of the future automobile market in mind. According to the Korea Automobile Research Institute, it is known that Apple is planning to launch an autonomous electric vehicle Apple car from 2024 and is seeking cooperation with automakers such as Hyundai Motor Company. In China, global IT companies have already entered the electric vehicle market by joining hands with automakers. Baidu, a Chinese IT company that announced its entry into the electric vehicle business in January, said, “We established’Baidu Motors’ in cooperation with Geely.”

Recently, IT companies’ entry into the electric vehicle market is getting faster. On January 11th, Sony of Japan unveiled the driving video of a prototype of the electric vehicle’Vision S’at’CES 2021′, the world’s largest home appliance and information technology exhibition. ‘Vision S’is the first electric car model that Sony unveiled at’CES 2020′ last year. In addition, Google’s parent company Alphabet announced the commercialization of a self-driving electric vehicle-based robotic taxi this year, and Alibaba, a Chinese internet eater, is also planning to launch a new electric vehicle within this year as an electric car manufacturer’Zuji Car,’ established with Shanghai Motors.

The reason why IT companies jump into the electric vehicle market is because they believe that now is the right time for investment and joint venture. Electric vehicles are growing so fast that there is a forecast that they will occupy about 30% of the global finished vehicle market in 2030. Morgan Stanley predicted, “With the tightening of global carbon dioxide emission regulations, battery electric vehicles will account for 31% of the global market by 2030.” In Norway, which has banned the sale of internal combustion locomotives since 2050, electric vehicles have already exceeded sales of internal combustion engine vehicles last year.

There is also a forecast that the share of electric vehicles in the automobile market in 2040 will reach 60%. This is because countries around the world are in sync with the movement of internal combustion locomotives to electric vehicles. China, the world’s largest automobile market, will ban the production of general internal combustion vehicles in 2035. Japan also plans to withdraw pure internal combustion engines by the mid-2030s. The European Union (EU) started to foster the electric vehicle market to achieve zero carbon dioxide (CO2) emissions by 2050, and the US has also proposed a zero carbon emission target by 2050.

Tesla’s success is also considered as the background for IT companies to enter the automotive market. Founded in 2003, Tesla directly developed, produced, and sold electric vehicles, and suffered a cumulative deficit of 8 trillion won by 2019, making the first surplus two years ago. Principal researcher Ho-jung Lee said, “The uncertainty in the early transition of the automobile industry, represented by electrification (electric vehicles) and autonomous driving, has disappeared with Tesla’s success.” “IT companies with capital, brand awareness, and development and production capabilities are We are holding on to the market entry within a short period of time.”

In particular, IT companies see future mobility such as electric vehicles as closer to electronic equipment than automobiles. In fact, electric vehicles can use electricity more easily than internal combustion locomotives, so electronic equipment and stable power and communication operation are considered as core competitiveness. There is no need for production technologies such as engines and transmissions, which were considered core competitiveness of automakers in the automobile industry centered on internal combustion locomotives. Professor Ho-geun Lee (automobile) at Daelim University predicted, “The competitiveness of electric vehicles will be determined by the level of autonomous driving and convenience specifications such as electronic devices.”

Automakers are looking positively at the joint venture with IT companies. This is because future automobiles are turning into spaces where people can take a break from autonomous driving technology, so cooperation with IT companies can be beneficial. In fact, in September of last year, Hyundai Motor Company teamed up with LG Electronics to unveil the concept car’cabin’, a future electric vehicle that emphasized personalized space. A clothing manager, shoe manager, coffee machine, and refrigerator were installed in the cabin. Hyundai explained, “The cabin is a car as a space that makes customer time valuable.”

It is also beneficial to automakers that IT companies, which have made large-scale investments in the AI ​​sector, have considerable autonomous driving technology. For example, Baidu, a joint venture between Baidu and Geely, is expected to be equipped with the autonomous driving technology that Baidu has cultivated under the name of’Apollo’ in 2017. When Geely makes automobile hardware such as a car body, it is a way to put software from IT company Baidu. In fact, Baidu emphasized, “We will become an innovator of future mobility by using accumulated artificial intelligence technology and autonomous driving technology.”

Automakers are in a hurry to launch platforms exclusively for electric vehicles. This is because how to place batteries, etc. in the places where the engine and transmission are missing, raises marketability such as electric vehicle efficiency, and increases the possibility of cooperation with IT companies. It is analyzed that after the Apple car cooperation proposal that Apple handed to Hyundai Motor Company earlier, Hyundai’s electric vehicle platform’E-GMP’, which was released in December last year, was located. E-GMP has a’skateboard structure (a structure that puts the battery on the floor and raises the body)’, which has high production efficiency and has an advantage in diversifying vehicle types.

Currently, there are about 5 places with dedicated electric vehicle platforms, including Hyundai Motor Company, Tesla, GM (BEV), Volkswagen (MEB), and Toyota (e-TNGA). In fact, Volkswagen started selling a platform exclusively for electric vehicles by unveiling the MEB platform in 2019 by unveiling a MEB platform supply contract to e.GO Mobile, a German electric vehicle startup. However, some are concerned that as the competitiveness of electric vehicles changes to autonomous driving and convenience devices, the role of finished car makers may become a consignment manufacturer that provides a platform and makes electric vehicles.

Magna, which established a joint venture in the field of electric vehicle powertrains with LG Electronics, produces Jaguar electric vehicle I-Paces in a manufacturer-designed manufacturing (ODM) method, but the operating margin of the finished vehicle division was only 1.1% in 2018 and 2.1% in 2019. The profitability is very low. Senior Researcher Ho-joong Lee said, “In the future, the automakers will seek to internalize the software capabilities of IT companies, and IT companies will try to strengthen control over the automakers.” “The cooperation and competition will repeat.”

Reporter Bae Dongju [email protected]