“Big One” brought about significant changes in the industrial landscape, and companies had to rethink their strategies accordingly.
Enple originally planned to release the Nphone Z at the end of September, but it was delayed by nearly three months and finally launched just before Christmas last year. Similarly, CarOS also postponed its new car launch by several months, releasing it now that the new year has begun.
It is true that CarOS possesses the most advanced autonomous driving technology. However, there were numerous hurdles to overcome before commercializing this technology.
How many companies with good technology have disappeared?
If it weren’t for OTK Company’s investment, CarOS would have likely been sold to another company or remained a software provider. (Surprisingly often, the company that initially develops the technology fails, while another company succeeds in commercializing it and hits the jackpot.)
However, we poured in tens of trillions of won to overcome the obstacles to commercialization.
Through continuous research and development, we raised the level of our technology. We acquired Chrysler and built new factories. And through our partnership with Seosung Electronics, we solved the supply issue for autonomous driving hardware.
CarOS’ value has skyrocketed since our acquisition, but regardless, it was reporting huge losses every quarter.
Money was constantly being poured into research and development, driving tests, and factory construction, while vehicle sales continued to decline, reducing revenue.
As with all industries, economies of scale are particularly important in the automotive sector.
Even when cars aren’t selling, you can’t cut employee salaries, and the maintenance costs for the sales network and service centers still need to be paid.
After a long period of investment, the launch of the new car is finally just around the corner.
Although development was completed a while ago, one crucial task remained: deciding on the name.
There are two main ways to name cars.
One is to attach words that suit each model, or the other is to combine letters and numbers according to size and type.
For example, Volkswagen, within the same group, uses Golf, Tiguan, and Passat, while Audi uses A4, A6, and Q5.
Whichever method is chosen, it’s most important that consumers can clearly recognize what kind of car it is just by hearing the name.
After discussions between management and public relations experts, they decided to take the initials from “Autonomous Driving Car” to create the name AD, and then add numbers based on the order of release.
The sedan model was named AD1, and the SUV model was named AD2. As AD also means “Anno Domini,” it also implied ushering in a new era for automobiles.
This approach is also a current trend, and its biggest advantage is that it saves on naming costs in the future.
The price of the AD1 is $39,900, and the AD2 is $44,900. Options can add around $5,000 to the price.
This is quite expensive for a mid-size car.
The engine is a highly modified version of the existing model, but the design is completely new.
The most distinctive feature is the interior. The cabin is equipped with a dual display, allowing all systems to be operated by voice and touch.
Both the AD1 and AD2 use gasoline.
“Isn’t diesel more popular these days?”
“They don’t use diesel much for passenger cars in the US.”
In Korea, diesel is mainly used even for SUVs, while in the US, even large pickup trucks all run on gasoline.
Diesel has better fuel efficiency with the same amount of fuel. This also leads to higher industrial demand, and international oil prices for diesel are higher than gasoline.
Taekgyu tilted his head.
“Gasoline is more expensive in Korea, isn’t it?”
“That’s because of taxes.”
The high taxes on gasoline have created a price reversal phenomenon where diesel is relatively cheaper.
This is why Korea is a somewhat unique market where diesel cars sell well, unlike other countries.
“Either way, this car is the last internal combustion engine vehicle that CarOS will sell.”
With the launch of the new car, all previously produced Chrysler vehicles have been discontinued.
And CarOS is now developing new electric vehicles. The success of this car is crucial for the smooth progress of future release plans.
“I wonder how many we’ll sell?”
There are many reasons why it might not sell well: low brand recognition, high price, and plenty of cars with better performance in the same price range.
On the other hand, there’s one key reason why it might sell well: it’s equipped with the most advanced autonomous driving technology of any car currently available.
Taekgyu pointed at me and said,
“There’s another reason: your recognition.”
I chuckled.
“I doubt it.”
There was a time when my popularity swept across the United States.
But that was already four months ago. During the rescue efforts, there were many sacrifices, and numerous heroes emerged.
The media mentions about me have significantly decreased. Still, it will likely be a big help in sales, right?
Ten days before the launch, they decided to start taking reservations online for 50,000 units of each model. The reservation fee is $100, and it’s fully refundable before delivery.
“Isn’t 100,000 units a bit much?”
It’s certainly a significant number.
“I talked to Daryl yesterday, and he’s confident they can sell out before the official launch.”
Nikola received 450,000 reservations for the Model TH. But that was an electric vehicle, and it was something only Nikola could achieve.
And while Nikola gathered reservations from all over the world, CarOS is only taking reservations in the US.
Will they really be able to fill 100,000 reservations before the official launch?
Reservations were scheduled to begin at midnight local time. The time difference between Detroit, where CarOS’ headquarters are located, and Seoul is 13 hours.
We all had lunch together at a nearby Korean restaurant, waiting for the reservations to begin.
I put down my chopsticks after a few bites.
Hyun-joo Noona asked,
“Are you nervous?”
I was about to shake my head, but then I said honestly,
“I’m feeling a different kind of nervousness than when I’m investing. Even if it’s not a huge hit, it needs to at least do okay.”
With our financial resources, we won’t go bankrupt even if the new car fails. But strategic adjustments will be unavoidable.
Ellie said affectionately,
“It’ll be fine, don’t worry too much.”
Taekgyu added,
“That’s right. When I talked to Chairman Im Jin-yong just now, he said it would be a success too.”
“…….”
Well, even if he didn’t think it would sell well, would he say that before sales even started?
Chairman Im Jin-yong is probably hoping it will sell well too. Seosung Electronics is CarOS’ top-priority partner.
They’ve invested a significant amount of money, and the group’s fate is also tied to it. Since we’re all in the same boat, it’s natural for them to want it to succeed.
Ellie looked at her watch.
“It should have started by now.”
I took out my phone and accessed the website. Seeing the two cars on the first screen brought a fresh wave of emotions.
My chest felt full, and I even felt like I might cry.
Seeing my expression, Ellie asked,
“Are you moved?”
“Yes, a little.”
Taekgyu nodded.
“Considering how much money was spent to bring these cars into the world, it’s understandable that you might tear up.”
“…….”
We did spend a lot.
That’s why I might actually cry if it fails.
The number of reservations is displayed in real-time, and once it’s full, it moves to a waiting list.
Taekgyu said,
“Should we each make a reservation first?”
“Huh?”
“Think about it. Even a beggar starts by putting a few coins in their can when they’re begging.”
“Of all the analogies you could have used…….”
But what he’s saying makes sense. Showing that buyers are flocking to it in the initial stage could stimulate purchasing desire.
“That’s a great idea.”
We all put down our spoons and quickly took out our phones to click the reservation button.
“It’s not going to the next page.”
“Me neither.”
“Same here.”
Then the connection completely dropped, and nothing was displayed.
Taekgyu said urgently,
“Aren’t we going to be able to get even one reservation at this rate?”
“Huh?”
“Payment needs to go through when people are motivated to buy. If you miss the timing, people might not buy what they intended to.”
“Is, is that so?”
The start is the most important part of pre-orders. You need to maximize sales when people’s interest is high.
Are we really going to fail like this?
Just as I was thinking that, CarOS called.
As soon as I answered, Daryl shouted,
[The website crashed because of the surge in reservations! Reservation calls are pouring into the company right now!]
***
Ronald posted on Twitter.
[A new car made by American workers in an American factory has been launched. Congratulations to CarOS and CEO Kang Jin-woo.]
He not only posted on social media but also called me directly.
[Long time no see. How are you doing?]
“Yes. Hope you’re in good health too, Mr. President.”
Ronald, who had spearheaded the rescue efforts at the shelter, returned to the White House at the end of the year to carry out his presidential duties.
I had talked to him occasionally since returning to Korea, but it had been a while this time. Ronald chatted casually, like he was talking to a friend.
[Domestic and international issues and those Democratic Party folks are driving me crazy. By the way, I tried to buy one, but the reservations are already full.]
“It’s all thanks to your promotion on Twitter, Mr. President.”
Though, the reservations had filled up before that.
Ronald laughed, seemingly pleased with my words.
[Hahaha, that’s right! We should meet up soon, shouldn’t we?]
“I’d like to see you too. Just let me know, and I’ll go to the US anytime.”
[Alright. Give my regards to that friend of yours.]
He was referring to Taekgyu.
“I will.”
It wasn’t just lip service; I really felt like seeing him since it had been a while. Maybe it was because we went through the crisis of the earthquake together, but he felt like an old colleague.
I then talked to Daryl.
He said with an excited voice,
[We’ve received an additional 230,000 reservations. So this is what production hell is like. I understand how Nikola CEO Allen Eberhardt must feel.]
Even though he said that, he seemed thrilled that the factories that had been idle were now running at full capacity. The union was also reportedly ecstatic due to the increased overtime.
Since the launch schedule was delayed, I thought we had manufactured enough units after converting the production lines to the new car beforehand, but that supply was instantly depleted.
[The new factories are partially operational, but they’re nowhere near enough to meet the demand.]
Once all the new factories are completed, the capacity will increase to 5 million units per year. Since the new factories are primarily for electric vehicle production lines, the production capacity for the AD1 and AD2 was limited to 1.5 million units per year, no matter how much we increased it.
As expected, the AD2 accounted for nearly 70 percent of sales, proving the popularity of SUVs.
Orders were flooding in not only through the website but also to dealerships. Online sales were handled directly by CarOS, while offline sales were entrusted only to existing dealerships.
Dealerships that had severed ties due to incentive issues flocked back, demanding to sign contracts again, but they were all rejected.
We would keep our loyalty to the dealerships that stuck with us during the difficult times when cars weren’t selling, but there was no need to do business again with those who had turned their backs and left.
Currently, there were no major issues with sales even without those dealerships.
***
The AD1 and AD2 were shipped in order of reservation.
As expected, they immediately became the focus of critiques and reviews by automotive experts.
Gerard Clark, the host of the world’s most famous automotive program, Top Motor, personally came to the United States, drove the AD1 around a track, and delivered a mercilessly critical review.
“Acceleration, cornering, braking power, fuel efficiency – it lacks distinction in every aspect. It performs adequately, but you shouldn’t expect anything more. Driving this car is an ordeal. I wouldn’t want to drive this car even if it was given to me for free. But as everyone knows, this car’s true strength lies elsewhere.”
Gerard Clark turned on classical music and took out a newspaper to read. Meanwhile, the car continued to drive around the track as before.
“I previously drove Gooble’s autonomous vehicle, but this is on another level. It’s on par with experimental vehicles cluttered with various electronic devices. Compared to Nikola’s Autopilot, it’s several steps ahead. I can confidently say that it boasts the highest level of autonomous driving among currently mass-produced cars.”
The AD1 then exited the track and entered the road.
“It recognizes signals and surrounding conditions, starting and stopping on its own. Once you set the destination and route, there’s almost no need to touch anything. While the driving performance is infuriating, this technology is truly amazing.”
Even with the release of a perfect product, various problems are bound to occur in real-world driving situations. For example, if sensors or cameras are damaged, or the software crashes, autonomous driving immediately ends, and it switches to manual driving. (According to current law, the driver is responsible even during autonomous driving.)
Autonomous driving worked almost flawlessly in normal situations.
People who actually drove it were amazed, and the media showered it with praise.
[CarOS New Cars AD1 and AD2 Launched!]
[Pre-Orders Sold Out!]
[The Most Perfect Autonomous Driving System Available]
[The Most Innovative Car of the 21st Century!]
[CarOS Takes Its First Step into the Era of Driverless Cars]
[Is CarOS Becoming the Enple of the Automotive Industry?]
Despite the high vehicle prices, CarOS’ profit margin is at best around 10 percent.
This is only the case when the factories are running at full capacity; otherwise, there would be almost no profit.
The reason is the high manufacturing cost of the vehicles.
The largest portion of the cost is the autonomous driving components: vehicle APs, semiconductors, communication equipment, 3D cameras, LiDAR, sensors, and more.
Most of these components were supplied by Seosung Electronics, and over 30 percent of the vehicle sales revenue flowed to Seosung Electronics.
However, Seosung Electronics wasn’t making much profit either. Considering the development costs that had been poured in so far, it was practically a loss.
Nevertheless, Seosung Electronics cheered, and its stock price soared.
Stock prices reflect future value.
Seosung Electronics hadn’t found a future growth engine after semiconductors and smartphones, but now it had become a leading company in the automotive electronics sector.
Costs can be lowered through mass production and technological development.
Other companies won’t just sit idly by, but if CarOS establishes economies of scale by seizing the market first, the technological gap can widen even further.
Until now, the autonomous driving sector had been a battleground for automakers, IT companies, electronics companies, and ride-sharing companies. With CarOS being the first to release an autonomous vehicle, each of these companies began scrambling to find countermeasures as if their feet were on fire.
