Technology innovation is not just about smartphones and the internet. I believe self-driving cars and electric vehicles are the growth point for next decade.
Waymo, the self-driving car unit of Google’s parent company, Alphabet, has spent US$4 billion to purchase 62,000 Chrysler Pacifica Hybrid minivans and 20,000 Jaguar i-Pace vehicles to put into test fleets.
Waymo has been engaged in autonomous cars since 2009, and its self-driving fleet has completed 6 million miles of road test. It’s the only company that does not have any human drivers in the car during the tests.
The firm is likely to launch the self-driving cars in US market first, maybe at a relatively high price.
Meanwhile, GM’s self-driving car unit Cruise has received US$2.25 billion investment from Japan’s SoftBank.
Driverless cars could sweep across the world very quickly if regulators give the green light.
Commercial production of autonomous cars will also boost demand for chips used in such driving systems.
Electric car is also an extremely hot sector. The problem facing the industry at the moment is the surging costs, largely due to expensive batteries.
Lithium and cobalt are two main raw materials for manufacturing lithium batteries used in electric vehicles. Their prices have climbed substantially in recent years due to the electric car boom. This is a key reason why leading maker Tesla is not making any money.
Japanese and South Korean manufactures dominate the lithium battery market. Panasonic said it will reduce usage of cobalt due to price rally and supply disruptions. The Japanese company is starting to develop batteries without cobalt.
Panasonic supplies batteries for Tesla’s Model 3. Tesla said the updated version of lithium battery has maintained good function while consuming far less cobalt.
It’s expected that lower battery costs will speed up the development of electric car market.
I believe battery and parts companies might benefit the most from electric car boom.
As for Tesla, as numerous car makers have stepped up efforts to develop electric cars, it’s doubtful if the US firm will be able to maintain its unique appeal going forward.
This article appeared in the Hong Kong Economic Journal on June 8
Translation by Julie Zhu
[Chinese version 中文版]
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