[Car Talk Forest] IT Industry Challenging Electric Vehicles... Catfish or Loach?

Apple Followed by Xiaomi, Foxconn, and Others Joining In

[Asia Economy Reporter Yu Je-hoon] As global automakers continue to announce electrification plans one after another, recent news of global IT companies entering the mobility market has been pouring in. Apple, the absolute powerhouse in the IT industry, and Xiaomi, known for its cost-effectiveness (price-performance ratio), are representative examples. Attention is focused on whether these companies will become the 'catfish' of the finished car market following Tesla, which pioneered the electric vehicle market, or whether they will fall into the role of 'mudfish.'

The case that first caught public attention is Apple's autonomous electric vehicle, the 'Apple Car.' Apple has continuously contacted Hyundai Motor, Kia, Volkswagen, Nissan, and others for Apple Car production, shaking up the securities market. Swiss investment bank UBS recently forecasted that Apple will capture 8% of the global electric vehicle market within 10 years. This prediction was based on Apple's status as a pioneer in the smartphone market, its high consumer satisfaction and loyalty, and autonomous driving technologies such as the LiDAR system.

Xiaomi's public moves are also notable. On the 31st of last month, Xiaomi declared its entry into the smart electric vehicle market, announcing plans to invest 10 billion yuan (approximately 1.7 trillion won) to establish a subsidiary. The company envisions investing 10 billion dollars (11.3 trillion won) over the next 10 years. Foxconn, the world's largest original equipment manufacturer (OEM), is even opening its dedicated electric vehicle platform, MIB, for free and is pushing forward with building a factory in the United States. For IT and design companies without experience in finished car development, this offers the advantage of rapid market entry.

The explosive growth of electric vehicles is cited as the background for IT companies challenging the automobile market. Bloomberg New Energy Finance predicted in its 'Electric Vehicle Outlook 2020' report last year that the global electric vehicle market will rapidly grow from 8.5 million units in 2025 to 54 million units in 2040.

Another important point is that the automotive paradigm is shifting to electric and autonomous vehicles. Unlike internal combustion engine vehicles, which typically consist of about 20,000 to 30,000 parts, electric vehicles require fewer than 10,000 parts, making the entry barrier relatively low. Moreover, as autonomous driving technologies expand, software technology has become more important than hardware. Companies strong in advanced IT technologies such as artificial intelligence (AI) and the Internet of Things (IoT) find this very appealing.

The future these IT companies dream of is at least to become like Tesla. Tesla, which was initially overlooked, has now become the 'catfish,' leading the market as the global number one in electric vehicle sales. However, the entry of IT companies into the market is not all rosy. There are many predictions that they could end up as a flash in the pan. Herbert Diess, CEO of Volkswagen, once downplayed Apple in an interview, saying, "The automotive industry is not an area you can enter all at once."

British home appliance company Dyson invested 2 billion pounds (approximately 3 trillion won) in 2016 and had grand plans to mass-produce electric vehicles starting in 2021, but stopped its challenge in 2019. The reason was that it "could not find a commercially viable way to succeed." It was difficult to overcome the barriers posed by companies with economies of scale such as Tesla, Volkswagen, Hyundai Motor, and Kia.

This content was produced with the assistance of AI translation services.