Why Are Honda and Toyota Trying to Compete With SpaceX?

Core Viewpoint - Carmakers like Honda, Toyota, and Geely are investing over $300 million in rocket design and satellite manufacturing, which raises questions about the strategic sense of such diversification in their core automotive business [2][3][4]. Investment in Space - Honda has been developing a proprietary reusable rocket since 2019, while Toyota invested$44 million in Interstellar Technologies, and Geely is investing $326 million in satellite manufacturing [3]. - The potential market for "connected vehicles" could reach$742 billion annually by 2030, although this estimate may be overly optimistic [5]. Concerns about Diversification - The investments in space may represent "diworsification," where companies spread themselves too thin by venturing into areas outside their expertise [4][6]. - The efficiency and profitability of established space companies like SpaceX and Rocket Lab, which have been in the industry for years, suggest that Honda and Toyota may struggle to compete effectively [8][9]. Recommendations for Carmakers - It is suggested that car manufacturers should focus on their core competencies in automobile production rather than pursuing space ventures [10]. - Outsourcing satellite design and rocket launches to specialized companies could be a more effective strategy for Honda and Toyota [10]. Current Financial Impact - Honda and Toyota's space ventures currently represent a negligible portion of their overall business, with Toyota's space business being part of a $9 billion "all other" category and Honda's likely under$3 billion [12][13]. - The involvement in space is more of a curiosity than a serious business initiative at this stage [14].