In the previous week, Automotive News Europe reported that BMW automobile purchasers are discovering that their pricey new vehicles are unable to connect to the two dominant smartphone standards, CarPlay and Android Auto.
FREMONT, CA: Apple and Alphabet have developed software called CarPlay and Android Auto that allows drivers to connect cellphones to their vehicles and use apps like Google Maps, Waze, Pandora, Spotify and Apple Music. Traditional automakers excelled at traditionally building cars and trucks. Massive supply networks were developed by General Motors, Ford (F), Stellantis (STLA), Volkswagen (VWAGY), Toyota (TM), and others. They outsourced part production and made many of their suppliers interchangeable. It was a guaranteed approach for mass-producing autos while keeping competition at bay.
In anticipation of slow sales, executives at legacy automakers trimmed orders for semiconductors used for navigation, enhanced safety, and entertainment. Suppliers of chips complied and then moved on to orders from consumers in the consumer electronics industry. Automobile manufacturers have lost their spot in line. The majority of automakers are still ignoring the importance of integrating software engineering talent. Almost two years after the scarcity began, the sector continues to rely on third-party software companies for answers. Because car executives assume outsourcing is an industrial-strength, it's a problem with no clear resolution.
The Austin, Texas-based corporation has become a vertically integrated vampire in the automobile world. Elon Musk kept chip orders in 2020 and has since increased them. According to records filed with the Securities and Exchange Commission, when supplies ran out in 2021, Musk had company engineers update the car coding to function with microcontrollers. At Tesla, independence is a major theme. CarPlay and Android Auto have never been directly supported in their electric vehicles. The Tesla infotainment platform is proprietary, unlike Google Maps, which is licenced. Smartphones communicate with one another via Bluetooth, an open technology that is independent of Apple, Alphabet, and chipmakers. In the previous week, BMW mentioned how businesses were compelled to switch to a different semiconductor to keep their production schedule. Silicon does not presently support CarPlay or Android Auto, according to Automotive News. Since 2020, most new BMWs have included the platforms as standard equipment. CarPlay and Android Auto serve as a bridge between the physical and the virtual. The stock market for automobile companies has been dismal in 2022, but the worst may be yet to come. The industry is completely engulfed in debt. Interest rates are on the rise. The economy is expected to shrink. The leading legacy automakers will almost certainly follow suit.
GM stock, which is down 32.4 per cent year to date, should be avoided by investors. Ironically, executives have urged the corporation to go all-in on electric vehicles at a time when internal combustion engine car sales are needed to service the company's mounting debt. GM stated in 2021 that by 2035, it would only make electric vehicles. In addition, the Detroit, Mich.-based company plans to build 30 new electric vehicles by 2025, for USD 27 billion. Even though GM's stock is down 32.5 per cent in 2022. To protect cash, existing GM investors might consider selling into strength.