The car companies (like Toyota, GM, Ford, Honda, BMW, etc.) have a tough business.
First: it is SUPER competitive. It is one of the most competitive businesses around. No one car company is even close to dominant. The competitive nature means it is very hard to make money (and even harder, though not impossible, to really invest for the future).
Second: auxiliary revenue streams are going away. For a while, car companies were able to sell a suite of additional services like OnStar (subsidiary of General Motors), SiriusXM, navigation, financing, and more. Fewer of these services are value-add today (than just 5 years ago). The smart phone has taken over these services and is generally 10x better.
Third: Car companies are not capturing good data. Presumably car companies could capture maps of cities (from the cameras), traffic, breaking, driving habits, tire pressure, and more. Presumably they could use the data to give the drivers better experiences. They could even have additional revenue streams selling the data (like TV manufacturers do).
But very few car companies take advantage of this data. It is not clear WHY they don’t collect it. Collecting the data is easy. Sending the data to a central system is easy. This is not hard stuff.
Yes, Tesla does this. But Tesla does a lot of things incredibly well. It is unfathomable why ALL the car companies do not collect this data. And they are not ceding their position to Tesla. It is not Tesla they should be worried about. They are ceding their position to the smart phone OS (like Apple and Google) and to some of the great apps on the smart phone. And while the driving data collected on the smart-phone is massively inferior to what could be collected by the car, it is much better than tiny data. And tiny data is what most car companies are collecting today. It makes no sense, but a lot of things in business make no sense.
Fourth: Car ownership is declining due to the abundance of new transportation options. Uber and Lyft are amazing. So are the new scooters. And electronic bikes are becoming bigger for the suburbs. Forget self-driving cars (that may not be a reality for 50+ years). Declining car ownership is happening now. It is like cord cutting … it starts off very slowly but then picks up steam rapidly.
Summation: the car companies are in a tough spot. Some great ones will innovate but many are going to be in more and more trouble in the years to come.
(thank you to Evangelos Simoudis for helping me think through this topic)