Column: Electric vehicles spur startups

Brian Derrick

Most of us are conditioned to think of the auto industry as an elite set of long established brands with the recent addition of headline-grabbing Tesla. The Big Three in the U.S., Germany and Japan are easily the most recognized brands, with KIA from Korea entering the big leagues. Most consumers could not name the next 10 auto OEMs on list.

Largely driven by electrification, the global auto industry in the last decade has seen a massive increase in new entrants. Today there are nearly 300 companies pursuing the development of an electric vehicle.

Mentor is a leader in supplying automotive companies innovative solutions for the design and manufacture of automotive electronics systems. There are 274 companies designing and producing vehicles. Many other companies are working on all-electric passenger vehicles, including cars and light trucks.

So frantic is the pace of new company creation that the best historical analogue almost certainly is to early 20th century Detroit, where well over 100 new automotive companies were formed in a few years, often over drinks at the bar at Hotel Pontchartrain. Back then the auto industry consolidated as the leaders in manufacturing scale and efficiency gained market share. Now the industry is moving from manufacturing to the high tech sector, which expands and contracts regularly as innovations are introduced.

There is undeniably a technology-driven expansion of activity. Tesla, with its visionary CEO, brought electric cars to the mainstream, at least in familiarity as a viable automobile. Innovation in tech brings in new entrants and then economies of scale and market forces pick a few big winners. Think cell phones, now smart phones.

There’s a number of once-prominent manufacturers/brands (Benefon, Blackberry, Casio, Ericsson, Hitachi, Helio, KDDI Penck, Motorola, Nokia, O2, Panasonic, Sidekick, Sanyo, Sony, Toshiba) whose fortunes have at best been mixed in more recent years.

Samsung and Apple are the current winners and nothing in the near future — not even the Google Pixel with great reviews — seem likely to disrupt the market’s choice of leaders.

That’s one inevitable outcome of the big consolidation and contraction that happened as the industry transitioned to powerful smartphones and broadband mobile data.

One thing most seem to be sure of — tech’s accelerated boom/bust pattern is likely to start impacting the auto industry, which has long lived with a steadier business cycle, one that mostly tracks macroeconomic conditions with barriers of entry preventing any real serious new contenders.

No one knows what 2017 holds for electric vehicles. But I’d say it’s a near certainty that in a decade you’ll be able to name a handful of EV OEMs no one has heard of today.

Brian Derrick is vice president of marketing at Mentor Graphics in Portland, Ore.