What Apple did to Nokia, Tesla is now doing to the motor industry

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An intriguing news item dropped into my inbox this week. It said that in the first quarter of this year, an electric vehicle (EV) had become the biggest-selling car in the world, outselling the Toyota Corolla. I know, I know, dear reader: you think this is non-news of the “Small earthquake in Chile, not many dead” variety. But to those of us condemned to follow the tech industry, three things are significant about it: the vanquished car was a Corolla, the EV was a Tesla (the Model Y hatchback), and the runner-up is made by Toyota.

The poor Corolla gets a lot of disdainful looks from petrolheads, who tell rude jokes about it and view the vehicle as bland, unimaginative and boring. Normal people, however, have consistently regarded it as one of the best compact cars available, with good fuel economy, impressive reliability and excellent luggage capacity. And they have backed that judgment with their wallets for many years. So on the sales front, the Corolla was no pushover.

Despite that, it was overtaken by, of all things, a Tesla. When Elon Musk and his co-founders embarked on making cars in 2004-5, their first product was the Roadster – an expensive premium sports car (based on a Lotus Elite chassis) that was aimed at wealthy early adopters (AKA Silicon Valley geeks) with more money than sense. From the beginning, though, Musk – with characteristic bravado – insisted that the company’s long-term strategic goal was to create affordable mass-market electric vehicles – mainstream cars, including saloons and affordable compacts.

At the time, many of us (including this columnist) found that pretty hubristic. So did the automobile industry as a whole, reacting with incredulity or scepticism, or both. After all, this was a huge global industry dominated by the likes of Toyota, VW, Hyundai/Kia, Ford, General Motors, Porsche, Mercedes and BMW – corporations that had mastered the difficult art of making these complex products on a huge scale, and had been doing it for half a century or more. Sure, Tesla might have a future making exotic, expensive, specialised cars – like Jaguar in the old days, maybe. But as a mass-manufacturer of cars that ordinary people would buy? Give us a break.

And yet here we are.

Funnily enough, news of the Corolla being eclipsed triggered memories of another news item – one that emerged in the summer of 2007. It was that Apple, then a small but plucky computer manufacturer, had developed a phone! The response of the global mobile phone industry (comprising manufacturers and telecoms networks) was amused incredulity. Sure (the reaction went), Steve Jobs’s iPhone seemed smart and innovative – a handheld computer with an internet connection that could also make voice calls. But the device didn’t have a proper keyboard and you couldn’t even replace the battery! Besides, the idea that a computer company with no experience of mobiles could break into a huge industry dominated by companies such as Nokia – which built great kit and knew what it was doing – was fanciful.

Well, we know how that story played out. Most of the 5bn or so mobile phones in use around the world now are smartphones based on the iPhone model: handheld computers with an internet connection that can also make voice calls.

Of course, it didn’t happen overnight. Among other things, the smartphone revolution wouldn’t have been possible without ubiquitous mobile broadband and the construction of the global infrastructure of colossal datacentres that make cloud computing possible. But, for good or ill, it happened.

Hindsight is famously the only exact science, so it’s easy to mock incumbent industries for fudging the future. And history never repeats itself exactly. But there are some interesting similarities emerging between the tech and automobile industries in this area. Nokia, for example, was a great company, but it was founded on the idea that it was the hardware of a phone that mattered most, with software coming a poor second. The iPhone/smartphone model had it the other way round.

Toyota, in its turn, was (and still is) a great company. After all, it invented “the Lean Machine” – the way all internal combustion engine (ICE) cars are manufactured today. And modern ICE cars are governed by software to some extent. But you can’t make an EV just by taking out the engine and replacing it with an electric motor and a battery in place of the fuel tank: you have to rethink the entire concept, much as Apple re-envisioned the mobile phone. In crude terms, an EV is essentially a giant skateboard: the battery is the board, with motors and wheels on the four corners, and the whole machine is orchestrated by networked computers. Think of it as software with wheels.

Which of course then raises the question: is Toyota the new Nokia? The answer is up to Toyota. I just popped in to a dealer to see its first real EV: the bZ4X. It’s an SUV and ugly in the way all SUVs are. But at least it’s a skateboard. And cheaper than a Tesla.

What I’ve been reading

Stagnating empire
“Britain is a developing country.” Brusquely realistic diagnosis by Sam Bowman on Substack.

Machine learning
“An ‘Oppenheimer Moment’ for the Progenitors of AI” is an interesting essay in Noema by Nathan Gardels on the film in relation to current worries about AI.

Land of the not so free
“The Rise and Fall of Neoliberalism” is a wide-ranging review-essay by Louis Menand in the New Yorker.

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