Sony and Apple Also Challenge... Why Are Tech Companies Entering the Car Industry? [Im Juhyung's Tech Talk]

Apple to Unveil Electric Vehicle in 2024
Sony, LG and Other Tech Companies Recently Establish EV Divisions
New Opportunities in Sensors, Semiconductors, and Software for Tech Firms
High Production Costs Remain a Challenge

American tech company Apple is reported to have recently explored discussions on automobile production cooperation with Hyundai Motor Company. / Photo by Yonhap News

[Asia Economy Reporter Lim Juhyung] Apple, a leading American tech company famous for the iPhone, is drawing attention as it is expected to launch the so-called 'Apple Car' in collaboration with Hyundai Motor Company in 2024.

In fact, Apple has shown interest in the automotive industry over time. However, the global popularity of the iPhone had temporarily pushed the car business plans to the back burner.

Steve Jobs, who had various nicknames such as 'eccentric' and 'mutant,' was originally known as a car enthusiast. From a young age, he was exposed to machines by taking apart and handling cars with his father, Paul Jobs, which was the first object that led Jobs into the world of engineering.

Jobs, who owned a variety of cars ranging from small 1980s Fiat models to the latest Bentley, began incorporating them into his business lines. Tony Fadell, former vice president responsible for the iPod project at Apple, mentioned in a 2015 interview with Bloomberg, "Cars have mechanical structures like batteries, computers, and motors. If you look at the iPhone, everything is the same as a car," referring to Apple's automotive business.

Then, in October 2011, after Steve Jobs passed away from pancreatic cancer and Tim Cook took over as CEO, Cook launched the 'Titan Project' in 2014 to realize Jobs' vision, who had shown great interest in the automotive industry during his lifetime. This was not just a simple project but the establishment of an autonomous vehicle division. This is why industry observers say that Apple's entry into the automotive business in cooperation with Hyundai Motor Company is not a sudden move.

However, Apple is not the only tech company pursuing the electric vehicle business. Various tech companies such as Sony, LG Electronics, and Dyson are preparing electric vehicle businesses as part of their efforts to discover next-generation growth engines.

So why have tech companies chosen electric vehicles as their new growth engine?

According to reports from various domestic and international media, Apple is developing an electric vehicle aiming for its first release in 2024. This vehicle, nicknamed the 'Apple Car,' is expected to be equipped with a specially designed battery by Apple, essential functions such as autonomous driving and driver assistance with 'LiDAR sensors,' and proprietary software.

Apple has long focused on research and development (R&D) to develop autonomous vehicles. Following the 'Titan Project,' Apple received a permit from the California Department of Motor Vehicles in 2017 to test autonomous driving technology. However, this is the first time there has been a concrete report about releasing a car designed entirely by Apple.

Electric SUV concept 'Vision-S' unveiled by Japanese game console manufacturer Sony / Photo by Sony

In fact, this is not the first time a tech company has ventured into the electric vehicle business. Previously, Dyson, a British home appliance and tech company, succeeded in developing an electric vehicle prototype but abandoned production. LG Electronics recently decided to establish a joint electric vehicle venture with Canadian auto parts manufacturer Magna International.

Japanese company Sony, famous for the gaming console 'PlayStation,' also surprised the public by unveiling the electric vehicle prototype 'Vision-S' at the world's largest electronics show, CES 2020, in January last year.

Why did tech companies, which were previously unrelated to the automotive industry, suddenly jump into electric vehicle development?

The reason is that electric vehicles are not limited to simple automobile manufacturing. Unlike traditional diesel and gasoline engine vehicles, electric vehicles place a high importance on electronic equipment and software. Tesla, a representative electric vehicle brand, supports and updates various functions through its own integrated operating system (OS) called 'Tesla Software.'

Also, displays installed inside electric vehicle interiors, various sensors essential for future autonomous driving functions, communication capabilities, and vehicle CPUs and GPUs for information processing are areas where tech companies' expertise is crucial.

According to the 'Electric Vehicle Market Outlook' report by global consulting firm Deloitte, global electric vehicle sales are expected to increase to 31.1 million units by 2030. In the same year, electric vehicles are predicted to account for about 34% of total new car sales.

In the era of traditional diesel and gasoline vehicles, companies responsible for the supply chain were mostly specialized in precision machinery, but in the electric vehicle era, the leadership is likely to shift to tech companies. As a result, tech companies are establishing electric vehicle divisions early to secure future supply chains.

Image of the electric SUV prototype Dyson unveiled in October last year. / Photo by Dyson

However, the possibility of tech companies producing electric vehicles immediately seems slim. Dyson, which succeeded in developing an electric SUV prototype, abandoned the electric vehicle project due to the high costs of mass production.

James Dyson, chairman, confessed in a 2019 letter to employees, "We put tremendous effort into developing electric vehicles, but it does not seem commercially viable." The costs of factories and skilled labor required for mass production of electric vehicles are so enormous that competing with existing automakers is difficult.

Other tech companies are also focusing more on electric vehicle parts businesses rather than complete vehicle production due to these production cost issues. LG's electric vehicle joint venture is concentrating on powertrain production.

Sony also plans to develop image sensors necessary for autonomous vehicles rather than actual vehicle production. Image sensors, components that convert information captured by camera lenses into digital signals, are Sony's main products.

Meanwhile, unlike other tech companies, Apple plans to launch its own complete vehicle brand in the market. However, Apple is also unlikely to 'directly' manufacture electric vehicles.

Apple is currently reported to be in cooperation talks with Hyundai Motor Company. If the cooperation is finalized, it is likely to be an OEM (Original Equipment Manufacturer) model where Hyundai manufactures the cars embedded with various sensors and software developed by Apple and sells them.