Kang Zhilong looks at a Mercedes-Benz SLK 200 at a dealership in Beijing in July. (Reuters/Kim Kyung-Hoon/Files)
If the last decade of car manufacturing was all about who could build the biggest, baddest SUV on the market, the next 10 years will be about who can build the smartest, most connected vehicle around.
Competition is heating up in the industry as automakers race to fill their new cars with advanced technology. Porsche announced Monday that it's working on an electric sports car that can recharge in 15 minutes and read your emotions. Lane assist and other safety features are increasingly trickling down from luxury vehicles into the mass market. And then, of course, there's Google's driverless car, which allows you to sit back and let the computer take the wheel.
Who's going to win the coming auto wars? The answer is twofold: whoever can crack the Chinese market wide open, and whichever company can avoid getting distracted by the lure of entertainment technologies and can stay focused on advances to ease the actual task of driving.
Those are a couple of key takeaways from a new, globe-trotting study from McKinsey. The fact that China represents an untapped market for next-gen vehicles shouldn't be a surprise to anyone; rising incomes and increasingly sophisticated consumer tastes have made that nation an attractive investment for all kinds of businesses. But what is surprising is the extent of the support for automated and connected cars. It just totally blows the other countries in the study out of the water.
For a nation that's leading the charge on autonomous driving, the United States is oddly reticent about the technology. Sixty-seven percent of Americans say they'd buy a car that could switch over from manual mode into driverless mode and back. Only 50 percent say cars with autonomous functions — such as autopilot, self-parking or automatic crash prevention — should be legal in the United States. Just 29 percent of Americans say they'd pay a premium for these types of services. And these are the services that, according to the study, are in highest demand! By and large, survey respondents pooh-poohed entertainment technologies like social media, games, streaming video or music as merely "nice to have" in-car features while crash prevention and autopilot ranked higher.
The picture is even more striking in another highly developed country, Germany. Germans are even less willing than Americans to pay extra for autonomous features. They're slightly more likely to say autonomous features should never be made legal, although 76 percent say they'd buy a driverless car if it meant they could still take control.
Sixty-seven percent of Americans and 76 percent of Germans would sign up for a driverless car with a manual option? That's hardly a poor showing! you say. In a way, that's true. Solid majorities in either country appear to back automation. But then you look at China, where a whopping 93 percent of Chinese said the same thing.
Chinese consumers are overwhelmingly in favor of automation. Even when the survey eliminated the hypothetical possibility of setting the driverless car to manual mode, 76 percent of Chinese still said they'd buy one, compared with 40 percent of Americans and 33 percent of Germans.
In a country of 1.5 billion eager potential customers, and several hundred million who could still be convinced, China represents a massive opportunity. It's why companies like Tesla have pursued that market so aggressively. The company that can bring advanced car technology to China will be one of the most dominant car makers of the future.
This also highlights, in a strange way, how much Google (or rather, Alphabet) stands lose out in the coming years if it can't assemble a China strategy quickly. Alphabet's self-driving car project is easily one of the most recognized. But it's been years since the company has had any real presence in China, raising significant questions about its ability to penetrate the auto market there. Google largely pulled out of China in 2010 over censorship concerns, leaving behind a gap in the search and mobile app markets that were quickly filled by indigenous competitors.
Meanwhile, the world's other automakers are moving quickly ahead to adopt smart features in their own vehicles. It's going to be a long, drawn-out battle as the industry experiments with combinations of options. But in the end, McKinsey's survey suggests, the fight may come down to who can offer the best driving assistance — to the Chinese.
