We all will remember January 2021 for the start of Joe Biden’s presidency plus COVID-19, but longer term the biggest event was that the internal combustion engine, after dominating road transport for over a century, has finally received its long-term death warrant.Whereas the internal combustion engine was anointed in the US, the death warrant is being signed in China via a series of high technology deals consummated over Christmas/New Year that lock in electric vehicles as its replacement.History is important. In the 19th century horses and carts were the dominant road transport mechanism. In 1908 Henry Ford generated scale for motor vehicle production and anointed the internal combustion engine over steam.READ NEXTI can well recall horses and carts sharing the roads with cars and trucks and visiting local blacksmith shops in the 1940s and 1950s which later became petrol stations.Similarly the decline of the combustion engine will occur over an extended period and the roads will be shared.Given that for a decade China has been world’s largest market for all vehicles, and the enormous resources China is now pouring into electric cars, the Middle Kingdom looks set to define the future of global mobility.What is giving the electric car enormous momentum is that China’s car makers are developing Henry Ford-style scale. At the same time electric vehicle development is now being driven by the high-technology giants, which means that cars with far less driver direction are going to be a reality sooner than many expected.
When China announced a year or so back that by 2024 – just three years away---one in four new cars would be electric vehicles, the idea was downplayed.But the latest corporate momentum makes that aim not only realisable but it may be exceeded. And although China has taken the lead, the US under Joe Biden will not be far behind.Unless there is new battery technology, we are going to see a big rise in demand for lithium and this is being reflected in lithium miner shares more than in the price of the metal.
Here are some of the deals that have emerged.
* One of China’s top internet companies Baidu, a leader in self-driving technology, announced that it would produce electric vehicles with a large automotive company in China, Zhejiang Geely.
* Geely has also formed a joint venture with Taiwanese Apple supplier Foxconn Technology Group to build cars for world markets.
* The giant technology group Ali Baba acquired an 18 per cent stake in a joint venture between China’s largest car maker SAIC Motors to develop electric vehicles through a company IM or Intelligence in Motion.
* China’s leading 5G technology group Huawei has formed an alliance with Changan Auto and Amperex (China’s biggest electric vehicle battery maker and a shareholder in Australian lithium producer Pilbara Minerals) to launch a new up-market electric car.
* Apple plans to sign a partnership with Hyundai for autonomous electric cars by March and start production around 2024.
* Chinese electric vehicle start-up NIO is planning to make an electric car with a price tag of $US 9,000 with a range of 600km and two others with ranges of 700km and 1000km which are more expensive.
* And of course, Tesla is the US market darling and is still in a position to be a world leader in electric cars.
We are starting to see a pattern emerging in the electric car industry which is totally different to the way the internal combustion car industry developed.Ford, General Motors, Mercedes and most others designed and produced their own cars.Apple and the other high technology companies entering the car business see their role as designing cars and developing the technology. They outsource the manufacturing duplicating their mobile phone industry pattern.This division of activity will greatly accelerate the development of the electric car and make it very difficult for the giants of the internal combustion engine cars to retain their current dominance in the new era. Using artificial intelligence and the telecommunication and computer systems that have built their enterprises, the high technology companies will step by step develop driverless cars (starting with parking). Some technologies will enhance navigation and link up with other cars or mobile phones while others will improve entertainment for drivers and passengers.According to reports from the technology giants their role will extend beyond building on community knowledge of digital connectivity to making electric cars more environmentally friendly and improving driving safetyThere are some parallels between what is happening in cars to what took place in mobile phones. The conventional phone makers simply didn’t have the technology to match the internet / computer giants when they applied their technology and design to the business of phones.
ROBERT GOTTLIEBSENBUSINESS COLUMNIST
CXO Price at posting:
27.0¢ Sentiment: Hold Disclosure: Held
(20min delay)