How autos, tech and luxury merge in the future of transportation

Jen Robinson

“Tech companies and car companies used to be two different things,” said Bloomberg Pursuits car columnist Hannah Elliott, exploring the future of transportation at a gathering of auto, tech and luxury brand marketers this week. The question, she added, is whether they’re now the same thing. Tesla’s Elon Musk, she said, told her years ago that Tesla wasn’t a car company — it was a tech and software company.

On hand to offer expert insight as part of an open dialogue with guests were Bloomberg Businessweek technology writer Max Chafkin and Bloomberg Intelligence Global Director of Automotive Research Kevin Tynan. The wide-ranging discussion tracked an evolving landscape where cars, high-end consumers and the digital revolution are reshaping markets in unexpected ways.

Bloomberg Pursuits car columnist Hannah Elliott, left, leads conversation with Bloomberg Businessweek writer Max Chafkin, center, and Bloomberg Intelligence Global Director of Automotive Research Kevin Tynan, left. Photo: Sotheby’s International Realty

Appropriately, the conversation took place against the backdrop of a landmark building being reimagined for the future: New York City’s Woolworth Building, celebrated as the tallest building in the world at the time it opened in 1913. The 40th floor setting for the event, said Sotheby’s International Realty’s Stan Ponte, was originally “designed by Cass Gilbert to house Frank Woolworth’s offices.” Now, the tower is being transformed into luxury residences.

When it comes to the future of similarly iconic auto brands, Chafkin and Tynan agreed that it can be hard to separate hype from reality.  “On the cutting edge of car tech, some of the most powerful people in the world are making big bets on a revolution happening,” said Chafkin. These deep-pocketed investors and venture capitalists believe we’re already in the midst of a big shift, he added.

Moreover, he said, “all the big technology companies have offices in Detroit,” and a slew of technology companies have been acquired by auto manufacturers and suppliers – GM’s purchase of Lidar-developer Strobe, for example, or Ford’s $1 billion stake in Argo AI, to name a few.

At the same time, though, manufacturers are still companies bending metal into vehicles, Tynan said. “As an analyst you say, ‘this is a great idea!’ But show me the profit and loss statement.” Whether or not a working business model currently exists, he added, “what’s really interesting right now is how manufacturers are being valued – it’s all about the future view.”

The event took place on the 40th floor of Manhattan’s iconic Woolworth Building. The space, once designed to be Frank Woolworth’s offices, is now being reimagined as a luxury home in the Woolworth Tower Residences. Photos: Sotheby’s International Realty

Plenty of challenges lie along the way to that future state – the cost of new technologies, the need for new infrastructure, and appeal to consumers among them. For now, at any rate, “the idea that consumers are pursuing fuel efficiency is upside down,” said Tynan, citing the dominance of light trucks in the American car market. But “when the total cost of ownership is on parity with combustion, consumers may be more interested,” he added.

The range afforded by battery-powered cars also presents a challenge to consumer adoption, Elliott observed. If a car takes hours to fully charge, and the distance that can be traveled on that charge is limited, that’s a very different experience that most consumers – especially those on the high end – would expect.

“Lithium batteries are really good,” said Chafkin, “but getting them to reliability is hard.” It’s as much a question of chemistry as technology. Moore’s Law, he said – the yearly doubling in circuit capacity every year that has allowed technology to rapidly advance – simply doesn’t apply to the science behind energy storage.

Tynan agreed. Barring a breakthrough in battery chemistry, increasing range per charge will depend on building bigger battery packs, he said.

Cultural evolution, though, could be just as significant. “Younger people may not have range anxiety,” Chafkin said. That would effectively solve the problem, Chafkin added – and present a very different market.

Following the discussion, guests enjoyed a sunset reception – with stunning views of Manhattan’s financial district outside, and an up-close view of the newest designs from iconic luxury watchmaker Jaeger LeCoultre inside. Photo: Sotheby’s International Realty

Such changes in attitude and expectation may be equally important for marketers to understand as advances in technology. Especially since, as Tynan noted, all new technologies eventually become simply a feature that every car has.

That’s true across the spectrum of ways people may get from point A to point B in coming years. For example, technology companies imagine new businesses arising within driverless cars, Chafkin said. Picture having your nails done or your hair styled as you travel to a night out, or enjoying a first-run movie on a longer trip.

That has the potential to create new consumption habits – and also new revenue streams. “A lot of that is driven by these cars being expensive to build,” Chafkin said. But there are also plenty of open questions: Who would own driverless ride-hailed cars? How would the data be managed – whether for the riders or the cars themselves, which could get software updates over the air? And what new ways will people find to express status?

Luxury brands are actively planning for that future as electric vehicle adoption develops. “Don’t mistake inactivity for inability,” Tynan said. Elliott noted that the Porsche Mission E, coming next year, could be a game-changer, galvanized by Chinese policies that are driving demand.

A host of wider economic and structural effects may also follow if mobility as a service – the idea that we don’t need to own cars – becomes reality, Chafkin said. For example, self-driving cars avoid left turns that humans make with ease. “You could imagine cities being reconfigured” around what’s better for the technology, he said, adding: “It’s really hard to game it all out.”

Read next:
– “Fully Charged” tech event explores what’s coming next – and why the journey matters
– Bloomberg Media Group shares 2018 global luxury outlook

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