There are few greater insults for a business than to be a called a buggy whip maker. Some of the world’s top carmakers stand the risk of being called just that.
Buggy whip makers were done in by the advent of cars more than a hundred years ago, and became a synonym for outdated and obsolete. Today’s carmakers are being threatened by four companies, of which three do not yet make cars and the fourth makes unusual ones.
Marc Andreessen tweeted on August 8: “It seems likely we are witnessing the birth of four major new American automakers: Google, Apple, Tesla, and Uber. Who would have guessed!” That created a flutter on Twitter, with 1,373 retweets and 1,161 favourites. Not just because Andreessen is a fabled Silicon Valley entrepreneur and investor.
He struck a chord. The echoes could be heard in Frankfurt this week.
The Frankfurt Motor Show has become the world’s biggest fair for launch of new cars. It did not disappoint this year. It had Ferrari 488 Spider, Bentley Bentayga, Alfa Giulia, and an Opel Astra that is 200 kg lighter than its previous iteration. There was also a bunch that would be of especial interest to the readers of this newspaper.
Audi A4 2016 is expected to come to India early next year, Jaguar F-Pace, the company’s first SUV, in the second half, Rolls Royce Dawn, the first drop-top convertible from the company, by the middle of next year, and Volkswagen Tiguan by the end of next year.
Jaguar, owned by the Tata Group, also unveiled a car that James Bond will drive in the franchise’s next edition: Spectre. The car, C-X75, is an electric hybrid. This will be the first time Bond will drive a hybrid. This also brings us to the unofficial theme at Frankfurt, dominated by Tesla and Google.
Electric cars have so far found reluctant adoption. Most of them are costly as hell, especially those from Tesla, and come with limitations. A big hope for them is China, which is not only a large market for cars and SUVs but also one that is spending a lot of money on infrastructure to support electric cars, which translates into a proliferation of charging stations.
Still, a Bloomberg Business­week team took three days to cover the 1,300 km from Shanghai to Beijing in a Tesla Model S 85. “A gas-powered car,” the write-up said, “could probably get you there in a day and a half, but remember, we’re out to save the planet here.”
Despite the limitations, Audi and Porsche, both brands owned by Germany’s Volkswagen group, joined the save-the-planet team at the Frankfurt show. Both presented battery-powered cars.
Neither will be available in the market before 2018, but no one is in any doubt that they needed to be shown to the world now. For Tesla is running away with that market, under its rock star founder and CEO, Elon Musk. Not surprisingly, as this column mentioned on August 29, quoting the Financial Times, Tesla is valued at about half as much as BMW, although BMW sells 35 times as many vehicles (http://goo.gl/HM5Y5N).
The other company that constituted Frankfurt’s unofficial theme did not even unveil a car there. It does not have one. It only has a prototype of its self-driving car, which was revealed in May last year. The car had no steering wheel or pedals.
Other companies like the luxury car giant Mercedes are also experimenting with the concept of a driverless car, but Google’s has been the most intriguing, given the company’s penchant to make brave bets, and also the most discomforting to the established automotive hierarchy, to which Google is an outsider.
Around the time of the Frankfurt show, Google announced that it had hired John Krafcik. As Bloomberg’s views section pointed out, Krafcik is the former CEO of Hyundai Motor America, president of car pricing website TrueCar, and one of the most respected executives in the American automotive industry. His joining Google is the strongest sign yet that the real action in the auto industry is not in its old hubs but in the Silicon Valley.
That brings us to Apple and Uber, about which we are not left with enough space to talk. But do not bring out the old buggy whip — if you have one as family heirloom — to wield on this writer, stay with the future editions of this column.