Emerging trends in the auto and mobility space are transforming the way vehicles are designed and how people interact with them. We take a look at how Google, Apple, Amazon, Microsoft, and Facebook are capitalizing on these changes.
Monumental shifts are taking place in the automotive sector. Autonomy, connectivity, electrification, and sharing (ACES) require a set of capabilities that traditional auto has never encountered before.
Big tech is stepping up to leverage their strength in software, processing hardware, battery technology, and other capabilities, to drive innovation in the auto and mobility space.
Facebook, Amazon, Microsoft, Google, and Apple’s (FAMGA) investments across auto and mobility encompass startups working on mobility services, autonomous driving, vehicle connectivity, electric vehicle technology, and auto commerce.
The graphic below shows private market deals only. Green lines represent investments. Orange lines represent acquisitions. Please click to enlarge.
Note: This Business Social Graph does not include the February 2018 stock settlement between Uber and Waymo/Alphabet following the lidar tech lawsuit.
Aside from Google’s independent investment arm GV, Apple, Microsoft, Google, and Amazon have made relatively few direct investments in auto and mobility startups over the past five years, as much of their efforts have been carried out internally through R&D projects and strategic partnerships.
Facebook, meanwhile, has been notably absent from innovation in the auto and mobility space.
In this brief, we take a look at how each company is tackling the challenges that plague the auto industry today, in order from most active to least active in the space.
TABLE OF CONTENTS
- Setting the pace for autonomous driving
- Capitalizing on the opportunity in shared mobility
- Sustaining platform stickiness with Android Auto
- Pivoting from full vehicle design to self-driving software
- Tackling vehicle electrification through battery and energy management technology
- Sustaining platform stickiness with CarPlay
- Deploying autonomous logistics and delivery
- Pursuing the opportunity in aftermarket auto parts retail
- Doubling down on in-vehicle voice technology
- Enabling a connectivity ecosystem with cloud infrastructure
- Deploying AR/VR in manufacturing and vehicle design
- Enabling simulation for autonomous vehicle training
Google prioritizes autonomy and shared mobility
Google has made a name for itself in the auto space. Its self-driving project Waymo is the first autonomous vehicle developer to deploy a commercial fleet of AVs.
Google is also integrating into the growing shared mobility as the company and its investment arms, GV and capitalG, are making numerous investments in mobility services startups.
SETTING THE PACE FOR autonomous DRIVING
Waymo is widely recognized as the industry leader in autonomous driving technology.
Despite recent reports questioning the company’s progress, Waymo is well ahead of its FAMGA peers in terms of miles driven and fleet development.
In October, the company reported its vehicles had logged 10M miles — an unprecedented number — driven on public roads in the US. Driver data helps develop and enhance self-driving software, especially when it’s collected on public roads instead of test sites.
Waymo’s vehicles have amassed over 10M miles on public roads (Source: Waymo)
Waymo has also been able to leverage key technologies from a number of Alphabet’s subsidiaries. Most notably, it trains its neural networks using Google’s open source software platform TensorFlow and its tensor processing units (TPUs).
The company has limited dependency on outside suppliers by building out its own software and sensors. It claims this in-house approach allows for more efficiency and tighter integration.
Waymo is relying on partnerships with automakers such as Fiat Chrysler and Jaguar Land Rover to deploy its technology into full vehicles.
Waymo is also looking to leverage its strength in self-driving technology for a number of services outside of ride-hailing. Alphabet CFO Ruth Porat stated on the company’s Q1’17 earnings call:
“We view Waymo as a great example of a graduate from X that’s addressing a sizable problem… We’re exploring many options enabling ridesharing, personal-use vehicles, logistics, and deliveries, and we also see opportunities to work with cities to address public transportation.”
In March, Waymo said that it will start deploying semi-autonomous trucks to deliver freight to its data centers in Atlanta.
Source: The Verge
Waymo’s entrance into logistics could serve as a direct threat to logistics giant Amazon, as well as other freight companies such as FedEx and UPS.
Capitalizing on the opportunity in shared mobility
Google has also stepped up its investments in mobility services startups in recent months, with both GV and Alphabet contributing to scooter-sharing unicorn Lime’s $335M Series C in July.
Google also participated in a $1.5B Series C follow-on round for Indonesian ride-hailing company GO-JEK in January — the largest deal it has participated in to date in 2018 (11/27/18).
These investments in shared mobility giants could position the company favorably in the future, especially as it plans to scale its commercial robo-taxi service.
Sustaining platform stickiness with Android Auto
With advancements in vehicle connectivity, software is becoming an increasingly important component of the car.
Software developed by automakers — most notably for the vehicle’s infotainment system — has historically been clunky and difficult for drivers and passengers to navigate.
In response, tech companies such as Google are taking on the challenge of in-vehicle infotainment software.
Google has integrated its Android mobile platform into the vehicle with Android Auto. This allows Android users to view their mobile OS in their car’s infotainment center, making it easier to access contacts and stream music, among other functionalities.
In more recent months, the company has integrated the Google Assistant into Android Auto, enabling users to access the Google Assistant while driving.
Integrating Android into the car is helping Google maintain platform stickiness across connected devices, in an effort to combat rising competition from Apple and Amazon, as we’ve discussed previously.
Android Auto is now available in more than 400 car models from brands such as GM, Hyundai, and Volvo.
Apple pivots from full vehicle design to self-driving software and battery tech
Apple’s main play in the mobility space has been its auto project known as Project Titan, which initially intended to build a fully autonomous, electric vehicle from the ground up.
After some leadership changes, the team’s focus has shifted away from full vehicles to self-driving software — an area where it can add more value and more feasibly reach commercial scale within the next several years.
The company will likely also play a role in the development of electric vehicle batteries, given its established presence in the lithium-ion supply chain.
Pivoting from full vehicle design to self-driving software
Though Apple has never formally publicized its self-driving ambitions, a number of recent partnerships and patent activity suggest the company is still working on the technology.
Apple currently has a fleet of roughly 70 self-driving test vehicles in California, and it recently partnered with Volkswagen to turn some VW vans into self-driving shuttles for Apple employees. Apple is supplying the software and batteries.
Vehicle from Amazon’s self-driving test fleet (Source: The Verge)
While it’s still behind Waymo, Apple appears to be ramping its efforts in the auto space. It’s poached a number of high-profile auto executives to lead its team, including Jaime Waydo, a former senior engineer at Waymo, and Tesla executive Doug Field, who also had nine years of experience at personal EV manufacturer Segway.
Additionally, a number of recent patents suggest that the company continues to pursue R&D for self-driving technology.
In August, Apple was granted a patent for a system that serves as an external “countdown timer,” notifying other drivers on the road of the vehicle’s intended next move.
The company is also developing other systems that support autonomous vehicles. For example, it’s looking to incorporate voice- and gesture-based instructions into its self-driving software, which would enable passengers to direct the car to specific parking spots or entrances upon reaching the destination.
Tackling vehicle electrification through battery and energy management tech
Apple is also working on energy management in the electric vehicle.
The company recently filed a patent that takes truck platooning — which utilizes autonomous driving technology to link multiple trucks in convoy to follow a lead truck — one step further. The described system integrates a “connector arm” that manages the energy across the vehicles and balances out driving range.
The diagram below illustrates two vehicles (400 and 450) connected by a device that extends from one vehicle’s power management system, allowing electric current to flow between them.
Apple is also working on the battery itself, given that the technology is the same that’s found in the company’s smartphones, tablets, and laptops. An analysis of keywords in Apple’s patents reflects the growing presence of battery technology in its R&D efforts.
Note: The patent filing process involves a significant time lag before the publishing of patent applications. This delay can range from several months to over two years, meaning that records prior to 2013 are likely complete at the time of analysis, but there may be applications from 2014 on that have yet to be published.
Sustaining platform stickiness with CarPlay
Apple has also developed in-vehicle integration technology for the iPhone. CarPlay is similar to Google’s Android Auto, enabling drivers and passengers to access messages, maps, and music, in addition to third-party apps such as Spotify.
Apple reports that all major auto manufacturers have partnered with CarPlay, and the technology can also be supported on several aftermarket head units and dongles.
Amazon focuses on autonomous logistics, aftermarket parts retail
Amazon stands to benefit substantially from getting involved in the automotive sector, with potential cost savings in autonomous logistics and opportunity in auto parts retail.
DEPLOYING AUTONOMOUS logistics and delivery
Amazon’s emphasis on price and convenience has enabled its rapid domination of online retail. But this comes at a cost, as the company’s retail business is its least profitable segment.
Self-driving vehicles would cut out the cost of the human driver, reducing the company’s long-haul shipping expenses by as much as 50%, according to recent estimates. They could also substantially lower the cost of last-mile delivery, which can account for almost a third of a good’s transportation cost.
A growing number of retailers are testing out autonomous last-mile delivery, and Google has the option to deploy its Waymo business for Google Shopping. To maintain its moat in the ecommerce space, Amazon is also getting involved in autonomous last-mile delivery through internal R&D and partnerships.
A patent granted to the company in March outlines technology that would enable driverless delivery trucks to autonomously distribute packages to last-mile delivery vehicles, such as drones and bike messengers.
Amazon is also involved in the release of Toyota’s mobility concept called “e-palette,” which revolves around a self-driving modular van that can serve a number of functions, from logistics and ride-hailing to mobile office spaces and medical clinics.
A logistics use case for Toyota’s ‘e-palette’ vehicle (Source: Toyota)
Toyota is aiming to debut the project at the 2020 Olympics in Tokyo.
The opportunity in aftermarket auto parts retail
Amazon announced its entrance in aftermarket auto parts, or replacement parts for the car that consumers can buy from third parties, in January 2017. The opportunity is substantial, as cars are lasting longer and requiring more replacement parts.
Since the announcement, Amazon has built out a number of partnerships with major parts retailers, such as repair services company Pep Boys and auto parts company Munro Muffler Brake.
The company is also developing augmented reality technology to address a common pain point in shopping for auto parts online: inconsistency in quality and design from third-party parts manufacturers.
A patent granted to Amazon in April describes a system that uses AR to let users preview an auto part as if it’s connected to the car to make sure it fits and that it suits the user’s aesthetic preferences.
A drawing from Amazon’s patent shows how AR will help consumers see if parts fit their vehicle
Bringing VOICE into the car
Amazon is looking to create more surface area for its digital assistant Alexa. The company has partnered with automakers such as Audi, BMW, Ford, and Toyota to enable Alexa in the vehicle.
Historically, in-vehicle voice assistants have had to be built into cars at point of manufacture. In September, Amazon released the Echo Auto, an aftermarket device for voice control that’s compatible with any phone, unlike Google’s Android Auto or Apple’s CarPlay.
SVP of Amazon Devices Dave Limp introduced the Echo Auto at an Amazon event in September (Source: Stephen Brashear/Getty Images)
Microsoft leverages strength in cloud computing for the connected car
Microsoft’s involvement in the auto space has largely centered around in-vehicle connectivity and augmented reality to use across the automotive value chain.
The company has relied on a number of partnerships to deploy its technology, capitalizing on the auto industry’s lack of expertise in frontier technology such as cloud computing and AR.
Microsoft has made its biggest impact in the space by deploying its Azure platform, though its VR software and hardware are being used in vehicle design as well as in distribution and sales.
Enabling a connectivity ecosystem with cloud infrastructure
Microsoft launched its Azure-based Connected Vehicle Platform in January 2017 to enable predictive maintenance, in-car productivity, advanced navigation, customer data collection, and driver assistance capabilities.
A number of automakers including Volvo, Nissan, and Toyota have partnered with Microsoft to utilize its connected car platform.
Microsoft has also partnered with automakers including Nissan and BMW to enable its digital voice assistant Cortana in certain vehicles.
In more recent months, Microsoft announced a strategic partnership with Volkswagen to create the Volkswagen Automotive Cloud, which will utilize Azure and the IoT Edge platform. The technology is slated to connect over 5M new Volkswagen vehicles per year beginning in 2020.
The company contributed to Southeast Asian ride-hailing giant Grab’s $750M Series H follow-on round in October, and announced a strategic partnership through which Grab will adopt the Azure cloud platform.
Microsoft has joined Baidu’s Apollo partnership alliance of over 130 companies to deploy its cloud infrastructure services to markets outside of China that are looking to adopt Apollo’s self-driving software.
The company also recently announced a data partnership with the American Center for Mobility, a program testing self-driving cars at a facility in Michigan.
Deploying AR/VR in manufacturing and vehicle design
A number of automakers are utilizing AR and VR to facilitate vehicle design. Visualizing the design process without having to build a product helps speed up the development of new models, components, and in-car features.
Ford, Volvo, Toyota, and heavy duty truck maker Paccar are using Microsoft’s HoloLens VR set to allow engineers to take an existing physical asset and overlay new concepts on top of it.
Ford is using Microsoft’s HoloLens technology to facilitate vehicle design decisions across departments (Source: Ford)
The companies have noted that the HoloLens has made it possible to visualize and maneuver certain components in or on the vehicle, and to visualize how individual parts are constructed.
Automakers are also using HoloLens in dealerships and for aftermarket services. In dealerships, the HoloLens can give customers a 3D experience with the end products. Aftermarket service shops can use the technology to help train mechanics.
Facebook takes a backseat
Facebook has been notably inactive in the auto space.
When speaking at the Frankfurt motor show in September 2017, COO Sheryl Sandberg noted, “We’re the only company in Silicon Valley that’s not building a car.”
The company has been taking advantage of a number of smaller opportunities on the auto retail front, such as integrating vehicle sales into Facebook Marketplace.
The company’s work in virtual reality — specifically the Oculus — could also have potential use cases in the auto sector. A number of automakers are using VR at the dealership to allow buyers to test and customize different car features at the lot.
VR is also relevant in the design and manufacturing process, as auto OEMs can visualize a vehicle rather than creating a new physical mockup every time they want to make changes to a prototype.
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