Partnerships are Transforming the Auto Industry

Partnerships are Transforming the Auto Industry

Jay McBain 3 min

Dealerships will soon disappear

Car dealers have had special favors bestowed on them over the years. In many cases, they run the local chamber of commerce and hold a lot of sway in their local communities.

But the power of the dealer is beginning to erode. Last year, Ford said it would begin focusing more on online sales of electric cars. 

More and more, cars – especially electric ones – will be built to order. The first trillion-dollar car company, Tesla, sells cars from small retail locations offering

direct orders.

Platforms will take over

When I sold PCs, there were 11 components that never changed. From one PC to the next, they were pretty much the same.

The difference was the plastic those components were wrapped in, and the customer service and support you received.

As long as the combustion engine is still around, cars will be differentiated by the engine type within the car. But when electric cars take over, they’ll all start to look a lot like PCs. 

Cars will resemble the platform of a PC.

It may be that the car manufacturer doesn’t even own the platform. There will likely be an underlying platform that many companies will license out and use.

Consumers demand CarPlay and Android Auto

Last summer, Apple said that 79% of people wouldn’t buy a new car unless it has Apple CarPlay.

We’ve done research since then, asking people around the world, and shockingly enough, the numbers are actually higher than that.

We found that nearly 90% of people want Apple CarPlay or Android Auto when they buy a new car. Millennials want to be able to access their text messages, calendar, and music whenever they’re out and about.

Shockingly, General Motors announced last week that they’d be getting rid of CarPlay and Android Auto and building their own smartphone integration system.

This will be a going-out-of-business strategy if GM doesn’t change its course. There is no way they can compete with the best developers at Google and Apple.

Self-driving cars (transportation as a service)

As self-driving cars become ubiquitous, the opportunity to sell transportation as a service increases.

It’s strange to think that we are still living in a world where you buy a car for $40-50k (the average price of a car today), it depreciates immediately, and it spends most of its time in your driveway.

This is an industry ripe for massive disruption in the way we travel. It’s not the car that we want; it’s the service it provides.

For a monthly fee, consumers will be able to subscribe to a transportation service. They won’t have to worry about what type of car to buy.

If we’re on our way to Home Depot to buy lumber, we’ll get a self-driving pickup truck. A sedan will fit the bill if we’re headed to the airport.

Just as SaaS brought the initial cost of software down for business, transportation as a service (TaaS) will lower the cost of transportation for the consumer.

Today, you’re stuck with the car you chose to buy. Soon you’ll be able to pick a car that is tailored to your needs and desires at any particular moment.

Who takes the value?

Will Ford, Mercedes, or Toyota be the first to implement a TaaS model?

I think it’s more likely that Apple, Google, Microsoft, or even TikTok will play a huge role. Big tech already owns the pixels on your car’s display, and consumers demand that manufacturers integrate with them.

My point is, as platforms take over, cars become commoditized. The future of cars will belong to software companies that provide the best TaaS service to the customer.

Watch my full video here:

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Jay McBain 3 min

Partnerships are Transforming the Auto Industry

More and more, cars – especially electric ones – will be built to order. The first trillion-dollar car company, Tesla, sells cars from small retail locations offering direct orders.

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