Why Tech Companies Keep Trying (and FAILING) To Build Cars?

It seems like every three months, some tech company, who's never built a car before, announces they're going to build a car. Years go by and we never hear about it again. Why is that? Is it ego? Overconfidence? As cars become more tech heavy, it makes sense that a tech company could make a great car, right? The answer is more complicated than you might think. In this blog, I'm going to give you a timeline of tech companies getting into cars. The various reasons why they've done it. How some of them have missed the mark. And how others have prevailed. 

So a few weeks ago you probably heard about vacuum manufacturer, Dyson, and their failed electric car. And if you didn't, here's a short rundown. Back in October of last year, Dyson announced that they were cancelling their electric car program. Apparently the Dyson SUV made 538 horsepower, had room for seven people and frankly look pretty good. And this wasn't just a vaporware project. They had a running prototype with a range of 600 miles. That's amazing, but it came at a price. James Dyson had put in 500 million of his own British pounds for one car. The project just wasn't sustainable, so they pulled the plug. Surprisingly though, Dyson wasn't the first appliance company to attempt their own car, which is where our story begins, over 100 years ago.

Chapter one: the early days.

Westinghouse Marquette

The earliest example I could find of a tech company attempting to build a car, was Westinghouse in 1905. The highest of the high tech was the Steam Turbine Generators that Westinghouse was building to produce electricity in the early 1900s. But in 1905 Westinghouse unveiled their Model 40 gasoline powered car. The Model 40 made a very appropriate 40 horsepower, twice that of the Model T, but also costs $7,500. Or about 194 grand today. You can buy something like nine Model T's the price of a Model 40. Obviously selling a car that expensive, even in the early days of the automobile, was unsustainable. And Westinghouse stopped building the Model 40 just two years later in 1907. But this wouldn't be Westinghouse's last brush with building cars.

In 1967, Westinghouse debuted the Marquette. It used 12 six volt batteries for a range of 50 miles. Top speed, 25 miles per hour. With arrow like that I'm not surprised at all. Westinghouse built the Marquette in response to legislation that promoted EV development, cut down pollution and congestion in big cities. But enough about Westinghouse.

Let's fast forward a few decades and talk about a company you might've heard of. Today Samsung is known for their high tech products, like laptops, tablets, and phones. Back in the early 90s though, Samsung was much like Westinghouse. Specializing in home appliances and electronics, until they saw an opportunity. Samsung chairman, Kun-Hee Lee, was the son of Samsung's founder. After taking the reigns of the company, I think Kun-Hee he wanted to do his pops proud and lead Samsung’s ascent over there arch nemesis, Hyundai. How would he do that exactly? Cars(of course). There is just a one problem. They didn't know how to build cars. So Kun-Hee did some business and got Nissan on board to help them produce a car.

Samsung Renault XM3

In 1995, Samsung announced the formation of SMI, or Samsung Motors, which would produce re badged Nissan's under license. The first Samsung mobiles rolled off the assembly line in 1998, directly into the chomping mouth of the Asian financial crisis, which was causing trouble all over the region. Not good timing. In the first half of that year, SMI lost $192 million alongside the 45,000 cars they sold. Most of which were bought by Samsung employees. Timing for the Samsung car was really awful and they lost a bunch of money. And ended up selling their automotive assets to Renault, in 2000, who renamed the company Renault Samsung Motors. Through the 2010s, they sold electric cars in Korea and the company was actually slated to have a big revival this year at the Manila Auto Show, which had to be postponed due to the current pandemic. Frankly, I'd like to see Renault Samsung finally get a win on home turf. But it's not going to be easy. Hyundai was able to buy Kia during that financial crisis, which only made their foothold on the automotive market even stronger in Korea.

Chapter two: Google this.

Google has been involved with automobiles for a while now. You might recall how back in 2012, Google celebrated 300,000 self-driven miles in their Autonomous Prius’, which they acquired when they purchased a small startup, called 510 Systems a year prior. And it was the company behind the cameras that eventually powered Google Street View. 510 Systems made the cameras for a company called Topcon, who sold them to Google. 

But wait, why Google would develop a self-driving car anyway, For the heck of it? Not exactly. The company estimated that a million lives a year could be spared by driverless cars. Those sound like pretty good reasons, but there's gotta be another reason a search engine would spend a ton of money developing self-driving tech, right? Perhaps something so shocking it'll blow the story wide open. But the truth is they just want to make more money. Google has bought over 170 companies to do just that. Companies like 510 Systems.

In 2014, Google introduced the Firefly, which showed off Google's vision for the future of transportation. Which had no steering wheel and looked like a character from a cartoon series. Right off the bat I should tell you that this car was never meant for production. It was meant to be a platform for figuring things out, like where to put sensors. Giving passengers what they need in the cabin, and where to put the dang computers that drove the car in the first place. With all these important tweaks, the Firefly racked up over a million self-driven miles. It might've looked funny, but the cutesy little car was a big stepping stone for the next step.

Google Self Driving Car Program has since evolved into its own company called Waymo, which is both a ride-hailing app called Waymo1, active right now in East Phoenix, as well as an autonomous trucking service, called Waymo Via. Now, instead of manufacturing their own cars, like Westinghouse or Samsung. Waymo has opted to adapt existing cars with Google self-driving tech. Now, obviously it's a little early to make a judgment call on whether or not this whole thing is going to work out. But so far, this is the best example of a tech company making their own lane in the automotive world.

Chapter three: Apple the app.


In 2015, “The Guardian” reported that Apple was looking into a test site ideal for autonomous cars. Now, why they would be interested in something like that, I wonder. Well, at that point it was an open secret that Apple had been working on a car of their own for some time, under the code name, Project Titan. Apple had supposedly recruited people from all over the automotive industry to work on the car, including Mercedes Benz's own Silicon Valley research head. I mean, Tim cook even met up with the late Sergio Marchionne, then the head of Fiat Chrysler. And even took a tour of the BMW plant where they built the i3. It sounds like Apple was pretty freaking serious. Now this is the part of the blog where anyone who worked on the project will probably start laughing at me because there's pretty limited info on Project Titan.

Back in 2016, macrumors.com reported that Project Titan had changed direction in favor of developing self-driving tech, much like Google. Supposedly there is a lot of internal strife within Titan, over which way to take the project. And a lot of people were either laid off or reassigned. While there are still a ton of rumors circulating that Apple is still considering getting into the car game, I'm not so sure. It makes a lot more sense to me that they would just develop their own self-driving tech, and license it out to manufacturers, almost like Apple Car Play. Apple was awarded a licensed by the California DMV to test autonomous vehicles on the road in 2017. And followed through with Lexus SUVs, supplied by Hertz. Outfitted with all sorts of sensors to keep the things on the road. In 2019, it was reported that Apple laid off another 200 employees from Project Titan, probably another sign of Apple's once again, pivoting what Titan actually does. Now I know autonomous cars probably aren't what you wanted to hear about, but that seems to be the direction most tech companies are going when it comes to cars.

Rivian car

It should be no surprise that Amazon is on the autonomous train as well. With a huge investment in autonomous outfit, Aurora. Amazon said, “Autonomous technology has the potential to help make the jobs of our employees and partners safer and more productive. Whether it's in a fulfillment center or on the road. And we're excited about the possibilities”. Couple that with their investment in electric car maker, Rivian, and you can see what their goals most likely are. Driverless electric vans with robots, delivering packages to your doorstep.

Chapter four: Sony.

Sony's Vision S prototype

All the way back on January 8th of this year, which feels like seven years ago(Sarcasm). Anyway, it was January 8th at The Consumer Electronics Show, and Sony dropped the bomb on everyone in attendance, with their Vision S electric car concept. Yes, they designed something more expensive than the PS5. I didn't think it was possible either. The Vision S had all the features you'd expect from a current gen electric car, and then some. The interior is focused around the four touchscreen displays that make up the dashboard. The rear passenger seats have their own speakers in the headrests. And Sony says that it's possible for all the passengers to watch different things at the same time. And it looks really comfortable. I haven't even mentioned the exterior, which also looks really good, especially when you put it next to other Sony products. I'm just kidding, this thing looks great.

Unfortunately, you won't be able to pre-order a Vision S anytime soon. Sony created this fascinating electric car as a concept/prototype in between thing. They wanted to see how they could best fit their current tech into a car. And the best way to do that was to build their own. I almost forgot to mention, this thing actually drives too. It can hit 0 to 60 in four and a half seconds, with a top speed of 149 miles per hour. Couldn't quite hit 150. Of all the tech company cars, the Sony Vision S is easily my favorite. I think it looks great. And they're clearly trying to make the passenger experience better, while still giving driver control.

So that just leaves one question. Why won't Sony follow through and let me buy this dang thing. Well, like we saw with Dyson, at the beginning of this blog, manufacturing cars is really, really, really expensive.

Conclusion:-

Take Tesla, of example. According to auto industry analysts at Morgan Stanley, Tesla will have to spend $180 billion to reach their goal of 10 million cars a year, 180 billion. Morgan Stanley also predicts that the company will spend around $66 billion by 2030. That's 10 years. Those are astronomical figures, figures that would scare anybody away. And it doesn't get any less scary, the cheaper your car gets. On the other side of the spectrum is Tata motors. The Indian manufacturer that produces the Nano, the cheapest car in the world, at $3,700 US. Just one of Tata’s factories, the Sanand Plant, which actually produced the Nano, cost $262 million to build. And that's just one factory. Tata has 26 factories all over the world. It might be costing Tesla and arm and all of their legs, but the investment is paying off. No matter what you think of them, they're easily the most hyped car maker in the game right now. Even if I hate all the tech company stuff they do, like putting all the controls on a touch screen or whatever.

We used to think that tech companies failing to build cars was a sign of their hubris. There are companies that already do that. But we never considered that maybe the people working on these projects like cars too.  Tech companies try these things because they're made up of people who genuinely enjoy solving problems, and want to try things differently. And as we've seen, they did a lot of things differently. They just didn't have the enormous budgets necessary to put those dreams into production, in an already crowded industry. Some might not want a self-driving car, but there are plenty of people that probably do. And that's their prerogative. Do let me know your thoughts in the comments below.

 


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