At first glance, the world of cars doesn't seem that glamorous to the likes of Google, Apple and Amazon. Besides the clunky factories and large amount of people needed to build cars, the world's top 10 carmakers have a meager operating margin of 5%, while the tech giants enjoy a 34% margin. Why then are tech giants drooling over autonomous vehicles? Well, it's to get the last drop of people's attention spans during their waking hours.
Americans on average spend 308 hours behind the wheel (6 hours a week). That is a large amount of time someone could have spent on their tablet or phone, watching a mindless Netflix show or aimlessly scrolling on Instagram. By 2030, autonomous vehicles will be a $2 trillion industry and 58 million vehicles globally are expected to be driving themselves. Big tech has the means, from AI to huge data and engineering capabilities, to disrupt this industry.
Apple has brought back its plans for an Apple car after previously focusing only on the software. Google owns Waymo, which was the first to have an autonomous ride on the road and last year began testing self-driving trucks. Microsoft has partnered with Volkswagen on self-driving car software and Amazon is backing electric car maker, Rivian, and last year bought driverless startup Zoox. (driverless cars as part of Prime membership will be lit tho)
Short Squeez Takeaway: With the deep pockets the tech giants have, they can afford to put large amounts of money into this venture. One thing's for sure, whichever one of them is able to free up time behind the wheel in a meaningful way, will have a good chance of capturing the lion's share of the market, similar to what Apple did with the introduction of the iPhone (>50% share in the US).