2021 BRN Discussion, page-14309

Not directly mentioning BRN, but an interesting read on the vehicle technology business environment.

Chronic Auto Chip Shortage Pinpoints Players Ill Equipped To Survive Electric, Autonomous Turmoil

The chip shortage is not only a short-term problem for traditional auto manufacturers, it signals to investors which companies have been asleep at the technology switch and won’t survive the upcoming shakeout inspired by the move to connected electric cars and autonomous ones.

Only the biggest players like General Motors, Toyota and Volkswagen and emerging electric carmakers like Tesla and those from China will survive, according to Howard Yu, professor of management and innovation at the International Institute for Management Development (IMD) business school in Lausanne, Switzerland.

Consolidation in the industry means weaker players without the financial clout to survive will be consumed by the more powerful ones. High technology outfits with massive cash resources will be on the prowl too. Auto survivors will be the ones who ruthlessly commandeer high technology supplies and embrace the new direction, quickly, and with huge investments.

In an interview, management guru Yu said the chip crisis showed many auto makers, with the exception of perhaps Toyota, failed to understand the need to embrace electronics and nail down supplies.

“The nature of the shortage shows many manufacturers simply hadn’t grasped the crucial role of semiconductors and couldn’t foresee this shortage. They relied on middle-men like (big components suppliers) Bosch and Continental (of Germany) to do this for them. It’s like Apple building the iPhone and assigning the micro processor manufacture to some third party. Unthinkable. This shows how much of the automotive sector has lost touch with reality. They wouldn’t get their hands dirty and said things like ‘we have a contract to keep supplies coming’,” Yu said.

“This highlights the knowledge gap. These big automakers are great at banging the metal, but how to incorporate electronics and software that is the future and requires awareness of the new knowledge and I don’t see enough bringing the two – mechanical and electronics – together,” Yu said.

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