Tech giants could displace automakers

Could tech giants one day displace OEMs? According to IDTechEx, the shift that the industry is experiencing and the trends that are underway (electrification, self-driving, software-defined vehicles) could see technology and consumer electronic companies take on a much bigger role in the automotive industry.

New approaches such as online car-buying, servicing initiated through an app, and new features and recalls carried out over-the-air are now spreading across the industry and providing more opportunities for tech companies, said IDTechEx in its news release. 

“In late 2023, Hyundai and Amazon launched a strategic partnership to sell vehicles on, and Sony entered a joint venture with Honda to leverage Sony’s experience with AI, entertainment, and augmented reality,” the company said. “But as the automotive industry electrifies, and the combustion engine is no longer the defining feature, is it possible that this trend could go beyond tech companies providing the infotainment for an automotive OEM and start producing vehicles themselves?”

IDTechEx sees the key challenge being that these industries have different strengths. The traditional and OEM aspects of manufacturing vehicles at high volumes, and with excellent quality control, is something that tech companies and startups seem to lack. However, IDTechEx also notes that this is a challenge that can be overcome by companies that are better financed to set up the required manufacturing infrastructure and get the industry expertise they need.

Take Electronics manufacturer Foxconn for example (known for producing Apple’s iPhones): the company started producing EVs and “aims to take 5 per cent of the global electric vehicle market over the next few years.” And Chinese smartphone maker Xiaomi has already unveiled an EV. 

The question now, according to IDTechEx, becomes: “what is the more difficult route, an automotive OEM developing the technology required for the future consumer or tech giants developing the manufacturing skills needed for mass market automotive applications?”

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