Automotive World Online - What will Spark Interest in the Electric Vehicle Ma...
Tesla motors innovation (1)
1. What’s Tesla Motors about?
Tesla Motors, Inc is an American automotive and energy storage company that designs,
manufactures, and sells luxurious electric cars, electric powertrain components, and battery
products. Founded in 2003 by engineers in the Silicon Valley who wanted to prove that electric
cars are better than gasoline-powered cars. Demonstrating instant torque, intensive power, and
zero emissions. Each new generation would be increasingly affordable, staying true to its
mission, “to accelerate the world’s transition to sustainable transport”.
Tesla has been producing several products that are geared towards creating a
sustainable future in energy. Products ranging from the most powerful batteries on the market to
now readily available semi-autonomous self-driving vehicles. These products are revolutionizing
the way we look at sustainability both in regards to affordability and accessibility. Many of the
products that tesla offers is cutting edge in terms of technology.
Tesla has been primarily dedicating their funding into research and development. The
products are relatively expensive due to the cost of the new technology. Furthermore, the
company has taken on a significant amount of debt and little to show for in terms of profits,
however offers a line of products that are promising due to the level of satisfaction and
achievement attributed to them by many organizations according to businessinsider. Even
though their products are very high margin and expensive they continue to gain popularity and
market share due to the high level of innovation in the automotive industry and increasing
consumer support or awareness for clean transportation. According to Vice News the North
American market for electric cars is projected to increase from 1% in 2014 to 5% in 2024,
however those numbers are now projected to be higher with the announcement of the consumer
level product—Model 3 which has a starting price of $35,000. Therefore the potential for growth
is continually increasing and the growing need for sustainable energy will also increase—
therefore a very lucrative market definitely exists.
Description Of The industry
Tesla operates primarily in the automotive industry where it has been selling its high-
end, high-tech, luxurious electric cars. The automotive industry these last few years has been
doing relatively well. Consumer confidence has grown in North America and so people are
buying cars with ease which has resulted in a boom for automakers which it has not
experienced since more than a decade ago. In addition, gas prices are currently low and this
has lessened pressure on consumers to save money in regards to vehicle maintenance and
travel. Therefore American automakers are more easily able to create cars that are not great on
fuel economy because consumers don’t mind paying with current gas prices. Furthermore, this
only serves to motivate American car makers to keep producing the same inefficient engines as
opposed to increase fuel economy and efficiency as their European counter parts.
This is not exactly good for Tesla as it lessens the incentive and pressure for consumers
to buy a vehicle that makes a positive impact on the environment. The electric vehicles on the
road right now only make up about 2% of the cars on the road (Bloomberg Professional
Service). In addition, many automakers have announced an entire lineup of electric vehicles that
they intend on releasing. According to Chevrolet, Nissan, BMW, and Toyota’s business
objectives that I’ve extracted from Bloomberg terminals, each on these companies have made
2. significant steps in increasing their funding and research to create better electric cars on a
greater scale to accommodate for the increase in demand going to occur in the near and far
future. The will to increase efficiency seems to lie in the cost of acquiring the will.
Key issues in that industry
Most of the issues in the automotive industry revolve around safety and fuel economy.
Most of the companies and their product lines compete on the grounds of safety for every class
of car, ranging from small coups to large SUVs. As many car makers experiment with new
materials that improve certain aspects of performance or aesthetics they risk having several
problems that make the vehicle potentially break down. This may potentially lead to the vehicle
putting the driver’s life at risk. Therefore this is an element many manufacturers take into
consideration when building newer and better models. An example would include GM with the
recent recalls regarding the keys falling out of the socket and shutting down the vehicle in the
middle of driving.
In addition, the other issue that’s very much prevalent in the automotive industry is fuel
economy. Many of the European car makers compete on that basis and just recently the
Americans have attempted to draw their own wager with the European car makers but haven’t
received the same level of success with their own models. Obama has personally wished
automakers to develop their vehicles to have an average of approximately 54.5 MPG by 2025.
However these standards don’t seem realistic, according to United States Department of
Transportation the average for American cars in terms of fuel economy has hovered around the
high 20’s low 30’s for the last decade or so. Therefore American automakers haven’t made
much progress in that respect.
Ultimately the elements mentioned above fall under the same main issue—Technology.
The demand for newer and better results in developing new technology that is often expensive
and sometimes untested. All of this done in a short time results in a lower quality final product.
Perhaps American automakers haven’t held a culture of creating efficiency in fuel economy and
so they lag in that respect. But to be fair that is only a result of the preference from consumer
demand and the infrastructure built to support these vehicles. Perhaps the systems they have
developed over decades does not incorporate itself well with higher standards. Whatever the
answer may be, the evidence seems to point towards a deficiency in technological standards
and advancements in that area; relative to other foreign automakers.
Challenges Facing Tesla
The challenges that Tesla will have to overcome is that it is its own producer of
technology therefore the costs are very high. For the past 13 years they’ve been relying on
themselves to pay for the excruciating amount that they have to, to incorporate the top of the
line batteries into their luxurious cars. The competitive advantage that they have in that respect
is that they are the only ones that offer such a unique and powerful product.
The other challenge that they must overcome in terms of new technology is the laws that
are to regulate them. Currently Tesla’s prized asset and research project is the semi-
autonomous driving vehicle. The questions that arise with a self-driving car is who is at fault in
3. an accident? Who is the better driver? How is the decision of life and death made? These are all
questions that a company must overcome to convince consumers that their product is the way
to go.
According to Teslamotors.com and Fortune, Elon Musk and his company are working
with several law makers to devise regulations for vehicles that absolve the driving responsibility
of the consumer. This is a very rigorous task however, as this technology hit the market before
regulators anticipated. Furthermore this is a technology that most of the larger automakers
didn’t expect to be competing towards building for another decade.
How does the technological innovation work?
Consumers are constantly looking for the latest, quickest, and most efficient way to
complete tasks with minimal effort. Well, Tesla has done just that. They’ve taken the one the
most important and effective technologies we use today, the automobile, and they’ve put a
program that enables all of the systems of the vehicle to work in coordination to drive itself.
Finally enabling humans to tend to more important matters.
Tesla has accomplished all of this through heavy investment in research and
development. These last few years Tesla has released technological feats for cars never seen
before, such as retractable door handles, larger fully integrated screens that illustrates all of the
information surrounding each system in the vehicle, auto parking feature, and most importantly
powerful batteries that make long range electric vehicles a reality and a better option than
gasoline power engines.
Now they have released a semi-autonomous vehicle, meaning that they can drive
themselves. The self-driving feature is possible through the integration and coordination of
radars, ultrasonics, GPS navigation, and Cameras. All of these systems are connected through
an ever learning machine that applies algorithms and evolves as it learns to suit the
circumstances. All of these systems work together to gather a massive database of patterns and
scenarios and learns to adapt itself to these scenarios by applying its current knowledge to
overcome them. Elon Musk spoke on the progress of creating a fully autonomous vehicle in an
interview with TechTimes:
"I think we have all the pieces, and it's just about refining those pieces, putting them in place,
and making sure they work across a huge number of environments-and then we're
done," said Musk. "It's a much easier problem than people think it is. But it's not like George
Hotz, a one-guy-and-three-months problem. You know, it's more like, thousands of people for
two years."
Since the system is only semi-autonomous and moving towards fully autonomous the driver
must keep one hand on the wheel to ensure slight attentiveness to ensure that the driver is
aware of his vehicle. If the driver removes his/her hand then a notification will pop up, if the
driver refuses to acknowledge the notification the vehicle will pull over and potentially ask for
assistance if it senses that it may need it.
Ultimately it enables the driver to shift more of its attention to other more important
matters. These matters enable the driver to communicate more effectively and increase
productivity in regards to planning and communication. This also creates potential for an
4. exponential increase in logistics as it eliminates human error and by passes several laws in
regards to the limit that a person can drive for continuously.
How the innovation discussed can potentially transform the industry?
The ability for vehicles to drive themselves has broken the relationship that consumers
used to have with cars in regards to transportation. Traditionally the driver had complete control
of the vehicle and had to make sure that he was operating it in its most effective and safest
manner. Therefore, consumers are viewing the car as more than simply a transportation device
but instead as a symbiotic relationship between man and machine due to the full integration of
its available systems. Now with all of the newer cars adding several technological features along
with our obsession for information we have taken preference to the entertainment aspect of
technology and automated anything that is redundant. Therefore, more and more the consumer
is disassociating itself with its redundant tools (driving) and directing its attention to
entertainment or any sort of activity that increases productivity.
The former statements are important to consider because many companies must cater
to what the masses demand in order to be successful in generating interest and revenue. The
consumer’s mentality is now moving away from having a relationship with the vehicle to treating
it as another tool and so automakers are now attempting to match the demand by providing
vehicles that drive themselves. Therefore this technology has the potential to create vehicles
where ownership of may become obsolete or less preferred. A scenario of such would be that of
individuals relinquishing ownership of vehicles completely to privatised companies such as Uber
because owning a vehicle in a large city [where a large majority of people today, and more so in
the future, live] is too costly and inconvenient. The result would be that this service would be
outsourced for a small price in order to eliminate the inconvenience. And the costs for the
companies conducting the transportation would be minimal due to the elimination of the driver.
That’s one likely scenario, as it would prove more pragmatic. Regardless, these are the
challenges that a company must overcome in order to position their product and shape the
market to their will.
Whichever direction this technology decides to take us, the pros outweigh the cons and
the anticipation for it is even more exciting.
