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Is Elon Musk from the Future?

Is Elon Musk from the Future?
by Roger C. Lanctot on 04-17-2016 at 10:00 pm

One of the more annoying (ie. delightful) things about Tesla Motors is the way the company casually disrupts long established auto industry business models. Whether it is vehicle sales and service or overcoming EV range anxiety or using your car to as an extension of the power grid or letting your car drive itself.

The latest twist from Tesla, revealed in Tesla owner posts on Facebook, is a one-month free trial of Autopilot mode. The function is enabled within 30 seconds if you choose to take it.

Tesla began making cars in 2014 with the Autopilot capability built in. The feature was available as part of a convenience package with emergency braking and side collision avoidance. For $2,500 at the time of purchase, the Model S owner could add active cruise control and automatic highway steering.

Tesla buyers not choosing the option at the time of purchase can activate it later for $3,000. But Tesla has gone one step further with the free trial. The simplicity of the offer disguises its mind-blowing possibilities and the tragic implications for traditional auto makers.

Mind-blowing possibilities

With the Autopilot free trial Tesla is demonstrating what advanced driver assist technology analysts have been pointing out for quite some time.

Camera-based sensors on cars can be used for multiple purposes including everything from detecting driver inattention to enabling collision avoidance, lane keeping, blind spot detection, self-parking, all-around views of the vehicle, emergency braking and adaptive cruise control.

Once the sensors, including radar and sonar, have been added to the car at the factory the process of turning on features may not even require a software “download.” It may only require an update to deliver the latest algorithms along with a “switch” to activate the software which is already on-board in the car.

The power of the free trial strategy for safety features lies in the ability to tease and delight customers with safety features that might not normally be selected at the original vehicle purchase. Many of these features require demonstration, something the average car buyer these days simply doesn’t make time for. But as a free trial, Tesla has opened the door to pushing and promoting safety enhancements long after the original sale of the car.

The insurance-related opportunities are endless here. Sponsored safety anyone? “Download or turn on this safety feature and we’ll give you a discount on your insurance.” “Collision avoidance brought to you by State Farm and Mobileye.” “Ten percent off your premium as long as you keep the feature turned on.”

But why stop at safety, what about adding performance features and different suspension setups for days spent at a local race track? What about temporarily turning features on for long trips – yes, that’s right, on-demand safety or safety as a subscription service?

It’s enough to make one wonder: Is Elon Musk from the future?

Tragic implications
For the incumbent car maker community, Tesla’s free trial proposition along with his huge head start on over-the-air (or, really, over Wi-Fi mainly) software updates and now remote function unlock is tragically embarrassing. The highly silo-ed structure of the typical auto maker with its hide-bound engineering practices (ie. “You can’t do that.”) are virtually incapable of responding to the Tesla value proposition and disruption.

For the typical auto maker, safety systems, infotainment systems and communications gateways are managed by different and sometimes competing departments. Even worse, sometimes these departments compete with, resent or otherwise struggle between themselves riven as they are by conflicting technology life-cycles, business models, and marketing priorities.

Like an alien saucering into the automotive market, Tesla’s CEO Elon Musk continually brings news of the future. An Autopilot free trial is only the latest case of aftersales delight from Tesla. But the implications for a car that gets safer and sexier over time is devastating.
What’s next from Tesla? Greater driving range on demand? New cloud services on the fly? Aftermarket hovercraft mode? Next time you run into Elon, don’t forget to say: “Klaatu barada nikto.”

Roger C. Lanctot is Associate Director in the Global Automotive Practice at Strategy Analytics. More details about Strategy Analytics can be found here: https://www.strategyanalytics.com/access-services/automotive#.VuGdXfkrKUk

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