The business model of car companies has so far been complex, but simple: you invest a few decades in building a brand that customers can use to make their neighbors jealous. Then another billions of euros in the development of new vehicle models and the corresponding production facilities. Once that was done, the profit flowed with every car sold – faster than a business economist can say “scale effect”.
But with the expansion of tech companies like Google, Amazon or Qualcomm into the cockpits and central computers of cars, the signs are changing. In the future, Mercedes-Benz will have to share every euro it sells software components for autonomous driving with the IT group Nvidia, five insiders confirmed to the Handelsblatt.
From 2024, both companies will jointly offer more software packages for automated driving functions. Nvidia will then receive a comprehensive revenue contribution from the revenue, which should be more than 40 percent. The companies did not want to comment on contract details “for reasons of competition”. One investment banker says, “There’s never been revenue sharing like this in the auto industry.”
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But it could soon become the norm. Audi, Volvo and Jaguar Land Rover also cooperate with Nvidia. The car industry’s old practice of being able to foist suppliers off with fixed prices is eroding with digital key technology.
New alliances are emerging between car companies and the digital industry everywhere. Stellantis is cooperating with Foxconn and Amazon on the digital cockpit. Competitors such as Renault, Volvo, GM and Ford, on the other hand, swear by Google’s Android Automotive infotainment system.
(Photo: Mercedes-Benz)
Prognosis: It will never be as easy as it used to be in the automotive industry. And let a representative of the media industry tell you – that business used to be easy, you only realize when it isn’t anymore. My colleague Martin Buchenau puts it a little more bluntly in our editorial: “The control over a central point of value creation is slipping away from the German car industry.”
Incidentally, business is going well for Nvidia, even if revenue sharing with Mercedes hasn’t even started yet. The need for chips for artificial intelligence and graphics cards is driving the business of the Californian semiconductor specialist to record highs. Sales rose in the fourth business quarter, which ended in January, by 53 percent to a good 7.6 billion dollars (6.7 billion euros). The bottom line is that the profit of three billion dollars was even more than twice as high as in the same quarter of the previous year, as Nvidia announced after the US stock market closed on Wednesday.
For the current quarter, Nvidia announced a further increase in sales to $8.1 billion – while the analysts had expected around $7.3 billion. However, after the failed takeover of the chip designer Arm, the quarterly result was burdened by a payment of 1.36 billion dollars. That’s the advance that Arm’s owner, Japanese technology group Softbank, is allowed to keep.
The business of German chicken farmers has definitely become more complicated. The killing of male chicks for animal welfare reasons has been prohibited by law in Germany since January. Now male embryos are sorted out after a sex determination in the egg. Or the brother chicks are raised at high cost.
In a large report, Handelsblatt editor Katrin Terpitz shows that the principle of “put it down and let it live” sounds better than it really is. Because the ban on killing chicks has a big, pun intended, loophole: it only applies to animals that hatch in Germany. German laying hen farmers circumvent the ban by buying chicks cheaper abroad, for example in the Netherlands. Only in France is chick killing also on the brink of extinction – but only from 2023. In Italy it is to be introduced by the end of 2026.
There were also no legal requirements for the rearing and slaughtering of brother cocks. The German Animal Welfare Association sees the danger that male chicks will be exported from Germany to be killed on long transports. In Poland, for example, fattening and slaughtering is cheaper. The lean meat of the brother roosters then often ends up frozen in Africa, according to the industry. Sustainable agriculture certainly looks different.
Egg farmer Peter Huber from Gut Aue in Hubbelrath made his decision. For him, brother chick rearing is “nothing but show to appease the conscience of consumers.”
High tech could be the solution. With the method called Cheggy, the egg is X-rayed from the 13th day of incubation, male embryos can be identified and sorted out. However, such procedures may no longer be used in Germany from 2024. Then sorting out the embryos is forbidden by law from the seventh day of incubation, since embryos are likely to feel pain from this point on.
The animals that suffer en masse in transport trucks and slaughterhouses in Germany would presumably be happy to take that kind of care.
Did you notice? We’re halfway through this morning briefing and haven’t even mentioned Ukraine. This is all the more remarkable given that objectively nothing has changed in the region in the past few days.
The Kremlin has announced a partial withdrawal of the Russian troops deployed at the border, but according to NATO this is a long time coming. NATO Secretary General Jens Stoltenberg said at a meeting of defense ministers in Brussels: “So far, however, we have not been able to identify any de-escalation. On the contrary, it seems that Russia is continuing its military build-up.”
Olaf Scholz and US President Joe Biden spoke on the phone on Wednesday evening about the Ukraine crisis. According to the German government spokesman, they too see little progress in the border area. Both politicians agreed that the risk of further military aggression by Russia against Ukraine persisted.
Conclusion: The public perception of the Ukraine crisis is now where Corona was after the first wave. We trembled, we hoped, and now the subject should be closed, please. But reality rarely follows the plotlines we’re used to from Netflix and Disney Plus.
And then there is the doyen of the Left Party, Gregor Gysiwho made an original proposal for resolving the Ukraine crisis in an online talk show by “Spiegel”: The two former heads of government Gerhard Schröder and Angela Merkel should negotiate with Russia as a mediator duo on behalf of the federal government.
Anyone who remembers the tense encounter between the two after the 2005 federal election (Schröder: “We have to leave the church in the village for a while”) immediately recognizes the charm of the idea. The two ex-chancellors in a top-level meeting with Vladimir Putin – and the Russian president suddenly saw himself in the arduous role of mediator who had to prevent escalation. After that, Putin would probably long for a quiet retirement at the dacha. And alone.
I wish you a day when all churches stay where they belong.
Best regards
Her
Christian Rickens