Automotive is changing before our eyes. This is something many people feel, but few realize to what extent this happens.
Obviously, the transition to Electric Vehicles is huge. If this really starts to hit mainstream figures that models believe will be within a few years as they reach parity with ICE, then we will see a radical change taking place.
But that's not even the biggest difference.
Of course, self-driving autonomous vehicles are mentioned. This is also a possibility and will completely change the rules of the game. Yet as I write these words, this is still a dream. Some progress has been made, but there are currently no fully driverless cars.
Therefore, we probably have a few more years before the technology becomes available.
Something is in place today. In fact, one of the biggest innovations Tesla has to offer to the auto industry is something that is most overlooked.
Most of us have smartphones and computers. It is not uncommon to receive updates periodically. Hell, if you are using Windows on your laptop or PC, you get updates once a week and they usually ruin something.
While we underestimate this in the computer world, it was unheard of in the auto industry. Think about that for a second. A $ 50 smartphone could get updates, but a $ 75,000 car had to be brought to a service center.
As mentioned, until Tesla introduced this to the world. They were the first to offer over-the-air updates. In fact, they were the only ones until recently.
Thus, it was possible in some ways for Tesla cars to get better as time went on. Things just got worse for everyone else.
It seems the industry is finally catching up with Tesla on this.
Porsche unveiled its EVs Taycon and is now viewed by the company as a 5,000 pound computer. This is exactly how Tesla saw his vehicles before Musk's second master plan.
Essentially, these companies are beginning to see how cars will become Software as a Service platforms. Software products will be delivered instead of just selling the car. Most will be free, some will not. This is where automakers can hope to make a little more profit from the deal.
For Tesla, the autonomous driving package is the best example. People can buy this for $ 8,000. While the hardware comes with the tool, the software costs extra. Of course, fully autonomous driving is not yet available so buy it and wait. Some features are provided that help train the system.
There is also an entertainment platform that people can subscribe to. Since every car is connected, this can be accessed for a monthly fee. With a company like Tesla having relatively few cars on the road, imagine what a Volkswagon could do if this feature was available in every car on the road.
Software as a Service is the model Apple uses to excellence. Yes, he made a lot of money selling iPhone. However, service revenues have exploded in the last few years. Their per-phone revenue increased as they gave people more choices.
When you sell over 1 billion, you don't have to raise extra money per phone.
Automakers hope to do the same. As people spend more time in advanced vehicles or when fully autonomous driving is available, there will be a great opportunity to serve their customers.
This is nothing new as we live in the subscription world. In fact, people will probably switch very easily.
Developing this capability will mean a lot, especially for auto companies like Volkswagon, GM and Toyota. These companies deliver the most cars per year, so with these new features, their installation bases can easily surpass Tesla's. Currently, they are spreading slowly, but if they can have the full range in a few years, there will be millions of cars with it. This can be a huge income.
The advantage of the software is that the profit margins are insane. It's one of the ways Tesla believes it can push the industry-leading gross margin. However, this will not be the case if others do the same.
So, at the end of the road, we can expect everyone to offer our favorite shows on Netflix. There will be different packages for entertainment. However, real money is in what they design themselves. Wireless update is great for what is needed to improve performance. However, it goes to a new level when something new is introduced and sold as an option.
For example, on one model Tesla offered a software update for several thousand dollars that really accelerated the vehicle. It was something they designed, and most of the income was profit. Regardless of the number sold, it was simply announced, the user selected from the control panel and payment received from the credit card. This software has been updated with new feature in them.
When a company sees its product as a wheeled computer, a completely different world opens up.
It seems that I think most of the companies are working on something right now.
Every day technology is become more stronger