Believing in things that aren't real

When you read the headline, and if you’ve been keeping up with the news this week, you might have expected this blog to be about the Rivian stock market listing in New York last week.  Here is a company that has sold only 150 cars so far (so-called ‘pre-revenue’ in investor speak, or ‘totally unproven’ in mine), that burnt through $1 billion in operating expenses in the first six months of the year, yet following the IPO (listing) on Wednesday is now worth over $100 billion, substantially more than either Ford or General Motors.  Both Ford and Amazon are significant shareholders, so they could take their profit and run, but a load of new investors have jumped in on the basis of promises, rather than substance. 

However, I’ve made my views clear in previous blogs regarding how investors value new businesses without a track record or a credible business plan, so I’m not going to carry on ranting about that.  I am also not a great user of Facebook, but a bit over two weeks ago, we saw their announcement that they were now renaming the parent business as ‘Meta’, and that this reflected a desire to “bring the metaverse to life and help people connect, find communities and grow businesses.”  I’ll admit that my initial reaction to that was also pretty negative, but Facebook is definitely a real business, albeit often controversial, so it’s worth digging a bit deeper. 

In the car business, we know that engineering, including signing off designs, is increasingly done in the virtual world, rather than through traditional (and very expensive) clay models.  Decades ago, I was building visual simulation models of new manufacturing facilities, and fifteen years ago ‘flying through’ motor show stands that did not yet exist.  More recently we have seen virtual reality applied to car service and repair where a technician can be coached through a task using augmented reality to illustrate each step.  What all these applications of technology and visualisation have in common is that you are interacting with a small group of stakeholders who will make the effort to understand and adapt to the technology. 

When you move to the distribution end of the business, we know that over 90% of new car buyers go online prior to dealer visits, but we also know that the physical dealer visit remains important to them.  This presents two challenges – how do we make the online research more engaging and informative, and how do we take cost out of the physical dealer network, including by reducing space, when manufacturers typically have more products than dealers have space to display.  Some have suggested that the answer is in virtual reality or augmented reality, where a prospective buyer can ‘see’ features demonstrated or walk round products that don’t actually exist in their living room or the dealership.  I’ve tried some of these products, and whilst the technology is very clever, I’ve found the traditional VR headsets awkward, and felt self-conscious wearing them. 

I do not claim to be an instant expert on the metaverse, but my understanding is that the developments we will see over the next five to ten years could be very relevant to how we choose and buy cars.  Focusing on the business and commerce opportunities (as opposed to the entertainment, gaming and social applications that may well lead the actual development), it will be possible for lifelike avatars to be represented in lifelike spaces and interact in real time with virtual representations of products.  The facial expressions and gestures of the avatars – family members, colleagues, customers, salespeople – will mirror those of the real individual.  You will be able to judge reactions, understanding and emotions, even whilst sitting physically in very different places.  The virtual products you are interacting with could be in a virtual showroom or test track, or presented using augmented reality on your own driveway, outside your house.  In order to this, you will not need to wear the heavy and awkward VR googles that we are familiar with, but glasses and other wearable devices packed with technology. 

Whilst much of this technology is still in the development phase, the challenges seem to be about packing more processing power and sensor technology into ever-smaller packages.    People will not buy this technology because they want to buy cars in a different way, but as they adopt it for social interactions and entertainment, it will also become available for e-commerce including car-buying, and other related experiences.  We can easily envisage metaverse-enabled handovers where the customer has the device and the physical car, but also an enhanced online buying experience where the customer and other family members (potentially located in different locations) ‘meet’ in the metaverse with a salesperson who demonstrates a product created from a digital image.  They can directly interact with it to operate different vehicle functions, position the car in different settings including outside their house.  This is not something that we will see in the next five years, but it will likely be something we need to include in our planning before the end of the decade.  Personally, I would put my speculative money into the metaverse, rather than Rivian…