Technology

Digital technology will reshape the auto industry


When cars run on electric motors, use AI and voice control, the hundred years of traditional car manufacturers will no longer prevail.

When cars run on electric motors, use AI and voice control, the hundred years of traditional car manufacturers will no longer prevail. Victory belongs to those who are committed and have technology in their hands.

Traditional car manufacturers “abandon” their hundred-year heritage

An Audi electric vehicle factory

South of Brussels (Belgium), on the outskirts of the city, Volkswagen’s new future is taking shape in a special car factory. There are no exhaust pipes, fuel tanks, gearboxes… but battery packs stacked on top of each other. Each module contains dozens of Lithium-ion battery cells, packaged and mounted under the floor of the sports utility vehicles in production.

During the 82 years since its founding, Germany’s most successful car manufacturer, relying almost exclusively on internal combustion engines, now produces electric vehicles. If successful, Volkswagen will surpass fledgling rivals like Tesla. But if it fails, this could be the “end”. Volkswagen has about 665,000 employees with annual sales of $265 billion.

Volkswagen is one of the best examples when automakers with a hundred-year tradition are forced to move in a new direction.

The internal combustion engine, the powertrain that is the technical quintessence and pride of Germans, will no longer be dominant in the age of electric-powered, voice-controlled cars.

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The increasing level of consumer spending on electric vehicles shows that the future of electric vehicles is bright (Source: IEA)

Electric vehicles will be the future of car manufacturing. The penetration of electric vehicles is faster than expected, causing car companies to change direction faster and invest more heavily to shift focus to electric cars and digital technology; while improving the business model to adapt. This shift forces them to invest more money and change existing value chains. It also foreshadows challenges for the traditional car industry, in which excess labor is a headache for many automakers.

While new car companies like Tesla, BYD, NIO or VinFast … are not “burdened”. This is understood as factories producing internal combustion engine vehicles, dealer networks or old operating models.

Digital technology reshaping the auto industry

The indifference to electric vehicles by traditional automakers paved the way for Tesla, under Elon Musk.

In 2018, Tesla sold more than 220,000 electric cars. By 2020, this car company will sell nearly 500,000 vehicles worldwide, a record number in the context of the decline in internal combustion engine vehicles. Tesla’s stock price skyrocketed, the capitalization rate of the young car company is equal to all 9 traditional car companies combined. But Tesla’s position is also threatened when American and Chinese Big Tech and hundreds of startups jump into the picture. So, why is the electric car market so attractive to tech companies?

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Global registration of electric vehicles by country and region (Source: IEA)

According to research firm Canalys, in 2020, global electric vehicle sales will increase by 39%, reaching 3.1 million units. In 2021, the electric vehicle market is forecasted to explode with sales expected to grow by 66% and exceed 5 million vehicles. But this figure only accounts for 7% of new car sales globally. Thus, the market’s room is still very large for companies looking for growth, while smart phones and handheld devices are saturated and no longer breakthrough.

With smart electric vehicles, the traditional engine and chassis will no longer be the top value factor. “In the future of automotive competition, in-vehicle software will account for 90% of future automotive innovation,” said the Volkswagen CEO. When the technology content in cars is larger, the advantage belongs to Big Tech.

The threshold of automobile manufacturing is getting lower and lower, electric cars have simpler mechanical structure, automated production and require less manpower than internal combustion engines. Therefore, new manufacturers, who do not have technical or mechanical advantages, can produce.

Not to mention, today’s manufacturers don’t just make money from selling cars. When cars can drive themselves, users have virtual assistants and control cars by voice, car manufacturers can make money from the system of finding directions and ordering in the same way Apple and Google are making money from the app store. .

Therefore, despite the lack of experience of tens of hundreds of years in the car industry, young manufacturers still believe that the map of the auto industry can be reshaped in the near future by new brands, and they will succeed.

Digital technology “brings wings” for new brands

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VinFast will have many challenges with its ambition to bring Vietnamese electric cars to the world

While traditional car manufacturers are “slowly” moving out of the old value chain, new car manufacturers have the opportunity to develop strongly. Hundreds of electric vehicle startups were established with the ambition of breaking into a fertile new market.

New electric car manufacturers from China such as Evergrande NEV, NIO, BYD, Xpeng Motors… have taken advantage of technology, open policies, and raised billions of dollars from investors with the ambition to beat the competition. Old car manufacturer. Many young car companies have attacked the US and European markets – the headquarters of the world auto industry.

Vietnam has also entered the electric car race with the VinFast brand. The company sells smart electric cars in Vietnam this year, but targets both the US and European markets in 2022 with a bold IPO plan in the US and puts all its efforts into this “war”.

VinFast’s boss told his shareholders that VinFast’s electric cars are no less than Tesla’s, targeting customers who switch from petrol cars and see this as a great opportunity. “The whole market is worried because electric vehicles are not an easy problem. But electric cars are an opportunity for Vingroup and Vietnam to change their stature,” Vuong said. Of course, the way that VinFast goes will be very long, and not easy because there are too many challenges, but this will be a test.

As Minister of Information and Communications Nguyen Manh Hung once said, “VinGroup’s investment in the auto industry is really a big, huge challenge, stemming from a great aspiration, showing a sense of responsibility to the country of the country. a businessman, a business. But only great challenges make great entrepreneurs and businesses. The Vietnamese market is the cradle for Vietnamese technology businesses, but to grow up and compete, they must go global. Global competition is the best test for technology and industrial enterprises.”

Duy Vu

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