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Tesla's technological innovations

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The automotive industry is going through an innovation shift where manufacturers are trying to achieve new heights of technological and design innovations every day to lure customers. Tesla Motors, Inc. is an American automotive company which is well renowned in the market for manufacturing luxury electric vehicles. Tesla is swiftly pioneering in the automotive industry leveraging information and technology systems (IT/IS) with a combination of highly intelligent hardware and software system (Newcomb, 2015, para. 3). The technology and IS integrated in the Tesla cars permit Over-the-Air (OTA) software updates and Autopilot features. OTA was first launched in Tesla cars in 2012 with Model S (Newcomb, 2015, para. 3). Since the adoption of “OTA software update” technology in tesla cars, it has created a competitive advantage for the company over other well established automotive manufacturers including BMW, GMC, Ford and others who are still trying to develop and integrate the OTA technology in their cars (Zhang, 2016, para. 2).
This paper analyzes implementation of hands-free and feet-free travel experience also called Autopilot feature in Tesla cars powered by Over-the-Air IS technology. First, this paper describes a brief background of Tesla Motors Inc., current information system trends and their requirements in automotive industry, and Tesla’s competitors. Second, the paper analyzes OTA technology used to push firmware updates, support autopilot, and its influence on automotive industry. Third, the paper presents tesla’s competitive environment in automotive industry, its trading partners, and how tesla is leveraging OTA for sustainable competitive advantage. Next, the paper analyzes economic feasibility to implement autopilot supported by OTA in all models, compares best case, worst case, most likely case and its value towards the success of the company. Lastly, the paper explains organizational implementation of self-driving cars powered by OTA at a large scale.

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Tesla's technological innovations

  1. 1. Tesla’s Self-Driven Electric Cars Powered by Over-the-Air (OTA) Technology Ghanesh Kulkarni ISM 6026 April 18th, 2016 1
  2. 2. 2 $2.7 B $35 B 0 5 10 15 20 25 30 35 40 2015 2022 Recall Cost Sage, A. (2015, September 29). Big Auto look to tech companies to fix cars over the air. Retrieved 03/28/2016 from http://www.reuters.com/article/us-autos-wireless-idUSKCN0RT0BV20150929 Fig. 1: Estimated Car Recalls by 2022
  3. 3. 3Preview The Context The Technology Competitive Environment The Economics Organizational Implementation
  4. 4. 4 The Context 32,000 Road Fatalities US $1.3 Trillion Global $5.6 Trillion Fig. 2: Accidents Cause Damage to the Society Fig. 3: Autonomous cars will contribute to Economy
  5. 5. 5 The Context IT Influence on Automotive Industry Tesla’s Founders Fig. 4: Tesla pioneering automotive innovations Fig. 5: They founded Tesla Motors in 2003
  6. 6. 6 The Technology Fig. 6: Over-the-Air Connectivity Fig. 7: Updates pushed via Network Fig. 8: Car’s Internal System Architecture
  7. 7. 7 The Technology Fig. 9: Auto-pilot Features Fig. 10: Tesla’s Phone App
  8. 8. 8Competitive Environment Fig. 11: Tesla’s Competitors V/S Tech Competitors Traditional Automakers
  9. 9. 9Competitive Environment Strength 1. Environment Friendly Image 2. Integrated IT Platform 3. Brand Positioning as Innovative and Technology Company 4. Direct to Customer Business Model 5. Supercharging Stations 6. Business Partners and Investors Weakness 1. Delays in Production 2. Limited Product Line 3. Lack of Experience in Automotive Industry Opportunities 1. Increased Production from Gigafactory 2. Increased Environmental Awareness 3. First Movers Advantage Threats 1. Experienced Industry Leaders 2. Regulatory Restriction could discourage Auto-Pilot R&D Efforts
  10. 10. 10 The Economics  2015 Gross Revenue: $4.05 Billion  2015 Net Income: $923.50 Million (35% increase from 2014)  30% Profit Margin  Investing $5 Billion on construction of Gigafactory  Actively Increasing Network of Supercharging Stations  Focused on building a pool of Talented Automotive Professionals Major Highlights from Annual Report Submitted to Security and Exchange Commission (SEC), 2016 SEC.gov. (2016, February 2). Form 10-K - Annual report. Retrieved 04/01/2016 from http://www.sec.gov/Archives/edgar/data/1318605/000156459016013195/0001564590-16-013195-index.htm
  11. 11. 11 The Economics Impact on Cost V/S Value Addition  Manufacturing Cost per Vehicle $62,000  Autopilot Activation Charge $3,000  80% Owners paid Activation Fees in 2015 Fig. 13: Best CaseFig. 12: 5 year Projections
  12. 12. 12 The Economics Fig. 15: Most Likely Case Fig. 14: Worst Case (23% less than best case)
  13. 13. 13 Organizational Implementation Fig. 16: Critical Risks
  14. 14. 14 Organizational Implementation Fig. 18: Critical Success Factors 2-3 Years Fig. 17: Estimated Time Line 2 to 3 Years
  15. 15. 15 Owning a Non-Autonomous Car in Fifteen Years from Now Will be Like Still Owning a Horse – Elon Musk
  16. 16. Thank You!! ? 16
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