Car executives are taking seriously the prospect of Apple and Google as direct competitors even as they consider partnering with the two.
"If these two companies intend to solely produce electric vehicles, it could go fast," Volkswagen boss Martin Winterkorn said at the International Geneva Motor Show in Geneva. "We are also very interested in the technologies of Google and Apple, and I think that we, as the Volkswagen company, can bring together the digital and mobile world."
Mr Winterkorn said the entry of these firms – popular with the “iPhone generation” – would be good for the industry as it would introduce these younger consumers to the motor sector and then it was up to each firm to prove itself to have the best products.
Similar sentiment was expressed at Fiat Chrysler. "It's exactly what this industry needed: a disruptive interloper," said Sergio Marchionne, chief executive of Fiat Chrysler.
Asked about the threat from the tech giants to the premium car brands, Mercedes-Benz chief executive Dieter Zetsche said: "There is tremendous opportunity in the convergence of the West Coast tech industry and the auto industry with its huge technological depth. We feel we are well equipped to drive that development and to lead it in many areas. We are open and attentive to all intrusions from all sides."
Apple has been working on an electric vehicle and is pushing to begin production as early as 2020, according to reports. Google said in January it aims to have a self-driving car on the road within five years. The timeframe is regarded as extremely ambitious – automakers typically need at least five years to develop a car.
"We never underestimate any competition," said Ian Robertson, BMW's sales chief. "The entry barriers, which were in the past maybe more substantial, are now slightly lower. But at the same time, the complexities of the car industry are still there as well."
Decade-long process
Automakers typically spends five-to-seven years developing a new vehicle from scratch, with the testing phase needed alone often taking three years. Analysts estimate a company from outside the industry could take a decade to develop a car.
Many engineers at the Geneva show also doubt that the self-driving element of new cars will match expectations. Autonomous driving on the motorway is largely possible using current technology such as lane-keep assist, adaptive cruise control and blind-spot monitoring systems, which feature on many new cars as options already.
Self-driving features
The problem lies in busy urban environments, with pedestrians, cyclists and animals to deal with, alongside disrupted sat-nav signals due to tunnels and tall buildings. The expectation is that self-driving features will arrive in stages on the market.
Of more immediate concern to the car firms is a severe downturn in Russia and the consequent fall of new car sales there. It was meant to be a key growth market in Europe, but analysts IHS Automotive said Russian light-vehicle sales fell 24.4 per cent in January. They estimate sales for the full year are set to decline by 27.4 per cent.
