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Apple, Google compete with BMW

March 3, 2015

Norbert Reithofer, Chief Executive of German premium carmaker BMW, sees Silicon Valley firms like Google and Apple as likely to become serious competitive threats to traditional auto makers.

Google self-driving car
Image: Getty Images

During a panel discussion on Tuesday, held on the sidelines of the 85th annual Geneva International Motor Show, leading automobile industry officials discussed whether Silicon Valley firms might challenge traditional carmakers for a slice of the market. The consensus: Yes.

"We have to take these competitors very seriously," said BMW CEO Norbert Reithofer. "We have to expect that some competitors will emerge on the market that didn't build cars in the past."

He mentioned Tesla Motors, a company founded by many-sided serial entrepreneur Elon Musk, as an example. Analysts see Tesla's success in building powerful, long-range all-electric luxury sedans as the key factor that has forced traditional carmakers to grapple seriously with electric mobility.

Search engine giant Google has invested in a broad range of futuristic technologies in recent years, including robotics and driverless cars. Apple has not gone public with any carmaking plans, but several hundred of the company's engineers are reportedly pursuing the development of an electric vehicle under a project code-named 'Titan'.

Reithofer called Apple a "very, very strong brand" that would be capable of turning the auto industry upside down if it entered the market. He compared the automotive industry with the typewriter industry just before the invention of the PC. Traditional typewriter makers didn't react to the emerging competitve threat in time, and as a result, a different set of companies are now making the tools that replaced traditional typewriters.

Automotive industry analyst Jürgen Pieper of Metzler Bank said that any new entrant into the car-making business would have a number of hurdles to overcome, such as building factories. But Apple could buy the necessary infrastructure, he said, noting the company's enormous wealth.

Competitive threats can sneak up, then unfold rapidly

"Early on [the development of a competitive threat by new entrants using new technologies] develops very slowly, and one underestimates the threat, and then suddenly the S-curve for the new technologies goes steeply upward," BMW chief Reithofer said, referring to an acceleration in the pace of the new technology's development and deployment.

That said, automobiles are very complex machines that cannot be built easily by new market entrants, according to Reithofer, requiring the infrastructures for production, distribution, and repair.

He said BMW was reacting to the emerging competitive threat by developing networking tools for vehicles and technologies for driverless cars.

"We're tops at automobile production," he added.

nz/uhe (Reuters, Focus.de)