Tesla — The Amazon and Apple of the Self Driving Future
Tesla has to date accumulated over 1.2B miles its on Autopilot.
I have been closely following Tesla and Elon Musk and I have made some observations which make me believe that Tesla will be the Amazon as well as the Apple of Self Driving Cars. I have done a fair bit of research on self driving, autonomous cars and AI in the past year and I am pretty excited about this space.
Tesla has Elon Musk at the helm who I feel is the Edison of our generation. Over the years he has been building an arsenal of artificial intelligence and self driving technology coupled with strategic execution which will propel the company to become a monopoly for self driving cars of the future.
Self Driving Cars is a game of long tail execution. Getting to doing parts of Self driving isn’t enough and Elon has proved time and again that he is in the long game. All Tesla cars help gather data for self driving which is one of the most crucial areas which other self driving companies struggle with.
Self Driving Cars require tremendous computational power to execute AI algorithms. For the long term it is economically more feasible for the vehicle to be electric than to be operated by gasoline. This is one of the reasons why GMs cruise automation uses GMs electric cars for development. This is the first distinction where Tesla has already started with electric vehicles to begin with. Even though, this sounds trivial it can be the game changer for Tesla.
The Apple Model
Apple sells user centric software on top of differentiated hardware products. It owns the entire process from procuring the best and building the best product. It sells the product via its own designed stores. It owns the relationship with the customer end to end. Tesla follows a similar model. It has the best electric cars running the best software on top of it. Its OTA which improved the braking in its cars was the first of its kind in consumer car world. Tesla also acquired some of the best automation companies to manufacture their cars. Moreover Tesla has no dealerships. It sells its cars directly to the customer no middle man involved. This helps Tesla to own the relationship with the customer. Tesla’s car design, attention to detail and safety is considered the best in the consumer car world. With Tesla, once you drive a Tesla you will know there is nothing like it. Tesla autopilot is shown on this youtube video which is pretty amazing. All these points tend to Tesla becoming more and more like Apple where it sells the best self driving/artificial intelligence software on differentiated electric cars.
The Amazon Model
When Amazon bought the company Kiva Robots for its warehouses, the first thing they did was to stop selling those robots to other customers. Amazon knew that those were the best warehouse robots and they wanted to keep those exclusively for their own warehouses. Similarly when Tesla bought the German automaker as part of their ‘Machine that builds the machine strategy’; it did something similar so that the best automation company exclusively builds only for Tesla. Since, Tesla has also acquired more companies for this strategy.
Amazon fuses the horizontal and vertical business models. Horizontally, Amazon aims to fulfill all the product needs for consumers. For an electric car the most important need is the battery. Tesla has open sourced it technology and aims to scale its battery producing technology for the masses. This is the start to Tesla’s horizontal strategy. Vertically, it means providing the best experience out there. Tesla Cars are a customer of the Tesla Gigafactory in the same way Amazon is a customer for its own AWS infrastructure.
This puts Tesla on a path where it will be head to head with Google with its successful self driving car program so far. Google like it has always done will outsource hardware and will fit its software on top like it has done for Android. This would still leave Tesla completely differentiated in many aspects. Only time will tell if Tesla will become the Amazon and Apple for Self Driving.
Needless to say, the next few years will be something to watch out for. The self-driving car space and the competition between Google and Tesla will be exciting.