Tesla is transforming every aspect of the modern automobile. And it’s going to change our lives. Imagine sitting in a movie theater while your car becomes a self-driving taxi. Instead of paying $10 for parking, your car collects $100 in taxi fares by the time the credits roll.
Much has been made of that fact that Tesla is an inherently disruptive company. Not only are they bringing rapid innovation to the auto industry — they’re poised to disrupt energy storage with their new “gigafactory” battery plant. Tesla CEO Elon Musk has already proven the electric-only, long-range, zero-emission automobile to be a viable mainstream technology. Now Tesla is adding the P85D, an electric sedan that can accelerate as fast as the legendary McLaren F1, to their impressive list of innovations.
Referring to the then-rumored iPhone, Palm CEO Ed Colligan said, “We’ve learned and struggled for a few years here figuring out how to make a decent phone. PC guys are not going to just figure this out. They’re not going to just walk in.” But that’s exactly what
That’s exactly what Tesla is doing in the automotive industry. While other luxury car companies were focusing on comparatively trivial features like semi-automatic transmissions, Tesla’s designers and engineers were quietly rethinking every aspect of the modern automobile.
Tesla’s design and engineering is inarguably forward thinking. But while their innovations in batteries, speed and fuel are incredible, they’re still tied to hardware, which by its nature is limited to incremental performance improvements from one generation to the next. As rapid as those improvements might be, they’re not exponential like improvements to computers or iPhones. The luxury car market doesn’t follow Moore’s law. BMWs don’t get twice as fast every 18 months and you can’t buy next year’s Cadillac for half the price of this year’s model. If that were the case, by now we would all be driving cars that cost pennies and traveled at the speed of light.
But some elements of automotive innovation can be migrated to software, where technology accelerates much more rapidly as computing costs fall. This is exactly where Elon Musk is heading.
Toward a Transportation Operating System
Last week Tesla surprised everyone by announcing that all cars currently coming off their line are already equipped with built-in autopilot (an AI-based technology). It’s the first major step toward realizing Musk’s goal: a car company that innovates at the rate of a software company.
Software-based platforms, of which AI-based technologies are part, tend to invert traditional economics through network effects. The more people on the Internet, the more valuable it becomes for everyone. The more people who use Apple’s Siri, the more Siri learns and the better it works for everyone, and because Tesla’s self-driving AI platform is software, autopilot will work as efficiently in future inexpensive cars as it does now in expensive luxury sedans.
The AI powering Tesla’s autopilot will continue to improve and increase in value in a fashion similar to other networked software, rapidly moving down-market from luxury cars into more mainstream vehicles. Completely driverless mainstream vehicles are closer than we think. With only inexpensive cameras and radar hardware as a fixed cost, the expense of implementing the system in any vehicle becomes trivial over time. That can’t be said for other premium features like leather seats or powerful engines, but for software the rule holds true.
Autopilot will go from something drivers use to take an occasional break, to something drivers use frequently. And then, seemingly overnight, the car’s software, rather than its owner, will become the default driver.
The disruptive implications of a ubiquitous automotive software platform cannot be overstated. Zero-emission cars that can communicate through peer-to-peer mesh networks, calculating safety tolerances and optimizing travel routes on congested roads in real-time will revolutionize traffic flow in cities. Fleets of self-driving taxis will determine optimal times to recharge between peaks in usage. Automatic ride sharing and group route optimizations could potentially bridge the gap between mass transit and personal transit.
All of these things will be enabled, not by refining the traditional materials of the automotive industry (rubber, glass, and steel) but by networked applications built on an extensible transportation software platform.
Tesla stands poised to disrupt not only personal automobiles, but everything from urban taxis and car services to interstate shipping with fully electric, driverless vehicles. And while aerodynamic designs and beautiful interiors are eye-catching, it will be through software that Tesla truly revolutionizes the automobile industry.
What are your thoughts on the disruption of transportation? Let me know @MichaKaufman
