Tech giants are moving in on the electric car industry

Foxconn and Fisker, Apple and Hyundai, Huawei and…? Tech giants are increasingly being named, or rumoured, in partnerships with automakers, underlining a transformation in the auto industry that accompanies the shift to electric vehicles.

The transition to electric cars will undoubtedly represent the biggest shift in transport technology since the introduction of the internal combustion engine, but it is not only drivetrains – the machinations that underpin a car’s ability to move – that are undergoing a transformation.

Rather, this new chapter in transport is accompanied by – or rather, enmeshed in – a broader change that is known as the fourth industrial revolution, a fundamental change that is having an impact on just about every aspect of life, from how we power our homes to how we communicate with each other to how we move from A to B.

And while much of this is driven by the increasing need to shift away from inefficient fossil-fuelled technologies towards electricity generated by renewable sources, it is also driven by a shift towards increasing digital efficiency and connectivity.

In cars, this is becoming more apparent with every new model, it seems. Driver-assist technologies are becoming more prevalent, and it is unthinkable that a new car should not have full smartphone connectivity.

This blurring of car and digital technology that goes hand in hand with increases in efficiency and safety is also driving another shift in the auto industry – that of the car manufacturer to tech giant.

This shift in what a car manufacturer actually is has already been highlighted in analysis of EV pioneer Tesla’s share values, which soar far above the price-to-earnings ratio of traditional carmakers.

Rather, as has been observed by The Driven editor Giles Parkinson, Tesla is more akin to a tech company than a legacy carmaker, and in January Barron’s noted (using Tesla’s fully diluted 1.2 billion share count, and the then-current value of more than $US830 per share) that it became a trillion-dollar company joining the likes of computing behemoths Microsoft and Apple, online retail giant Amazon and Google’s parent company, Alphabet.

Tech giants look to self driving

In fact, two out of four of those tech giants listed above – Amazon and Alphabet – are already dipping their toes in the automotive game, or are at least connected to it via investments in EV start-up Rivian in the case of Amazon or in the development of self-driving technology in the case of Alphabet’s Waymo.

A third – Apple – has yet again been the subject of huge speculation as rumours emerged recently that the computer and smartphone innovator is still thinking about making an electric car under the codename “Project Titan”. Don’t expect it to have a steering wheel.

While reports flew back and forth in February that the iPhone maker was in talks with Hyundai and Kia to make an electric car until the two South Korean carmakers officially denied the claims, now the big news on the tech giant/EV maker front is that Apple’s partner Foxconn that makes the iPhone will make a new electric car with start-up Fisker Inc.

Fisker Inc – not to be confused with the original Fisker Automotive which made the Fisker Karma – already has an all-electric Ocean SUV on the drawing board, but the deal with Foxconn will produce an entirely new vehicle that CEO Henri Fisker says will see the partnership making 250,000 EVs a year by 2023.

In an interview with CNN Business on Friday, Fisker said his conversation with Foxconn CEO Young Liu centred around, “What could a car look like if it came from a tech company rather than a car company.”

For Foxconn’s part, Liu noted via a statement that Foxconn’s participation encompasses its, “exceptional vertically integrated global supply chain and the best supply chain management team in our industry.

“Coupled with our accumulated engineering capabilities, Foxconn has been critical to the success of many ICT companies over the past 40 years and we look forward to extending this success with Fisker.”

Both comments underline the merging of the two sectors, and how cars will increasingly shift from not just transport devices but also tech and communication devices (and energy devices – see this article on batteries on wheels and V2G).

The deal with Fisker is not Foxconn’s first foray into automotive either. In January it announced it is partnering with Chinese carmaker Geely (whose parent company Zhejiang Geely Holding also owns Volvo), to provide “OEM and customized consulting services relating to whole vehicles, parts, intelligent drive systems, automotive ecosystem platforms”.

Geely, on its side, has also inked a deal with Chinese search giant Baidu, becoming a minority shareholder and manufacturing partner in a new standalone electric vehicle company.

The direction towards device-on-wheels of course includes the integration of 5G technology into cars, one that is perhaps fuelling the latest speculation – that Chinese telecommunications giant Huawei is looking to get into electric cars too.

Reuters reported on Friday (US time) that sources say the telecom equipment maker is planning its own electric car brand, and is in talks with vanmaker Changan to use its factories, and state-owned BAIC Group’s BluePark New Energy Technology about a possible manufacturing partnership.

While the timelines the sources claim (ie, several models by the end of 2021) are dubious, a Huawei spokesperson did tell Reuters that, “Huawei is not a car manufacturer. However, through ICT (information and communications technology), we aim to be a digital car-oriented and new-added components provider, enabling car OEMs (original equipment manufacturers) to build better vehicles.”

What is clear in both the Foxconn and Huawei reports is that partnerships between carmakers and tech giants are on the increase, and whether borne out of a marrying of industries or of internal development such as the proprietary AI chip developed by Tesla, the line between carmaker and tech giant is already smudged.