Tech Companies Downshift Ambitions for Electric Vehicle Manufacturing
![Technology companies continued to curb their ambitions for manufacturing electric vehicles in 2019. At one point, Apple was reportedly planning to launch an electric vehicle by 2019, but after much hype around its secretive initiative called Project Titan, the iPhone maker shifted gears on EVs several years ago. While Apple continues to file automotive-related patents, its efforts now appear focused on infotainment and autonomous driving software rather than building a car from scratch. In October of this year, U.K. consumer electronics firm Dyson dropped its plans for what was described as a “fantastic car” after failing to drive down costs. “Though we have tried very hard throughout the development process, we simply cannot make it commercially viable,” acknowledged founder and chairman James Dyson in a letter to staff. TOP ARTICLES MOST POPULAR MOST COMMENTS The Remaining Challenges in Understanding Energy Storage... Why is Wind + Storage Getting Short Shrift? The Reality Behind Green Hydrogen’s Soaring Hype WHITE PAPERS The Role of the Utility in the Rise of Electric Vehicles DOWNLOAD > Transitioning the Utility Business Model from Kilowatts to Kilobytes DOWNLOAD > Related Reports U.S. Solar Market Insight DOWNLOAD NOW > Global renewables forecasts, H1 2019 DOWNLOAD FOR FREE > Dyson’s EV development project was part of a £2.5 billion ($3.2 billion) investment that kicked off with the purchase of solid-state battery startup Sakti3 in 2015 and included the creation of a manufacturing plant in Singapore last year. “What you’re seeing is that it is still hard to make cars,” said Colin McKerracher, head of advanced transport at the analyst firm Bloomberg New Energy Finance. “Making an automobile that’s going to be on the road for 15 years in rain and wind and snow is still a remarkably complex manufacturing and engineering feat. The automakers that have been doing that have been honing their craft for decades.” "Never very realistic" to make cars Even the most ambitious tech-driven automotive venture to date, from Google, has stopped short of manufacturing vehicles. Google spun its self-driving car project out as an Alphabet subsidiary called Waymo in 2016, and the company started operating driverless taxi services in Arizona this year. But the self-driving technology is mounted on third-party vehicles such as the Chrysler Pacifica hybrid and the Jaguar I-Pace rather than Waymo-manufactured cars. “Look at the battle around autonomous driving. That’s an area where the tech companies definitely still have strong interests and a role to play,” said McKerracher. “But the idea of, ‘We’re going to make our own car’? I think that was never...very realistic.” Mark Lashbrook, technical manager for innovation at the U.K. electric vehicle battery specialist M&I Materials, said the landscape for EV manufacturing has changed in recent years. Earlier on, “high-tech companies saw an opportunity to enter the automotive market, which is very much dominated by a small [number] of major players," Lashbrook said. "Maybe initially that looked attractive, [but] the reality of building cars in mass production has bitten back a bit. It’s a very cutthroat industry.” Lower margins and brutal competition There are several reasons for tech companies' pullback from EV manufacturing, and none of them suggest the trend will reverse course any time soon. To begin, companies like Dyson have found that automotive manufacturing offers far lower margins than consumer electronics or software. That reality explains why companies like Apple are still focused on infotainment for EVs. Then there's the fact that the EV market is more crowded than it was even three or four years ago, with most of the major car manufacturers now engaged in major EV programs, following Tesla's lead. At the same time, a growing number of Chinese electric vehicle startups are vying for market share. China’s EV hopefuls have easy access to capital, low-cost manufacturing and the world’s biggest lithium-ion battery supply chain. Rather than fight these companies, some tech giants are investing in them, noted McKerracher. Harmony Futeng, for example, is backed by the Chinese mobile app leader Tencent Holdings, while Xiaopeng Motors counts online retailer Alibaba as an investor. Tencent also holds shares in Tesla. Such investments could help tech firms retain an interest in the automotive sector without having to go through the messy process of actually building cars.](http://cdn.shopify.com/s/files/1/2532/3934/files/GettyImages-510078384_large.jpg?v=1577497782)
Technology companies continued to curb their ambitions for manufacturing electric vehicles in 2019.
At one point, Apple was reportedly planning to launch an electric vehicle by 2019, but after much hype around its secretive initiative called Project Titan, the iPhone maker shifted gears on EVs several years ago. While Apple continues to file automotive-related patents, its efforts now appear focused on infotainment and autonomous driving software rather than building a car from scratch.
In October of this year, U.K. consumer electronics firm Dyson dropped its plans for what was described as a “fantastic car” after failing to drive down costs.
“Though we have tried very hard throughout the development process, we simply cannot make it commercially viable,” acknowledged founder and chairman James Dyson in a letter to staff.
Dyson’s EV development project was part of a £2.5 billion ($3.2 billion) investment that kicked off with the purchase of solid-state battery startup Sakti3 in 2015 and included the creation of a manufacturing plant in Singapore last year.
“What you’re seeing is that it is still hard to make cars,” said Colin McKerracher, head of advanced transport at the analyst firm Bloomberg New Energy Finance.
“Making an automobile that’s going to be on the road for 15 years in rain and wind and snow is still a remarkably complex manufacturing and engineering feat. The automakers that have been doing that have been honing their craft for decades.”
"Never very realistic" to make cars
Google spun its self-driving car project out as an Alphabet subsidiary called Waymo in 2016, and the company started operating driverless taxi services in Arizona this year. But the self-driving technology is mounted on third-party vehicles such as the Chrysler Pacifica hybrid and the Jaguar I-Pace rather than Waymo-manufactured cars.
“Look at the battle around autonomous driving. That’s an area where the tech companies definitely still have strong interests and a role to play,” said McKerracher. “But the idea of, ‘We’re going to make our own car’? I think that was never...very realistic.”
Mark Lashbrook, technical manager for innovation at the U.K. electric vehicle battery specialist M&I Materials, said the landscape for EV manufacturing has changed in recent years.
Earlier on, “high-tech companies saw an opportunity to enter the automotive market, which is very much dominated by a small [number] of major players," Lashbrook said.
"Maybe initially that looked attractive, [but] the reality of building cars in mass production has bitten back a bit. It’s a very cutthroat industry.”
Lower margins and brutal competition
There are several reasons for tech companies' pullback from EV manufacturing, and none of them suggest the trend will reverse course any time soon.
Then there's the fact that the EV market is more crowded than it was even three or four years ago, with most of the major car manufacturers now engaged in major EV programs, following Tesla's lead.
At the same time, a growing number of Chinese electric vehicle startups are vying for market share. China’s EV hopefuls have easy access to capital, low-cost manufacturing and the world’s biggest lithium-ion battery supply chain.
Rather than fight these companies, some tech giants are investing in them, noted McKerracher. Harmony Futeng, for example, is backed by the Chinese mobile app leader Tencent Holdings, while Xiaopeng Motors counts online retailer Alibaba as an investor. Tencent also holds shares in Tesla.
Such investments could help tech firms retain an interest in the automotive sector without having to go through the messy process of actually building cars.