Tesla becoming a mobility service provider. A whole industry’s future?

Average reading time: 5 minutes

Just recently, Tesla’s CEO Elon Musk released his second “Master Plan”, detailing the car manufacturer’s future development goals. And it did not fall short of expectations: Tesla in fact is not anymore just a car manufacturer, but it is about to become a mobility service provider – pursuing a development looking to transform the whole automobile industry.

Let’s remember: 10 years ago, Elon Musk published his first Master Plan. It laid out the grand strategy that we actually still see unfolding today: start by building expensive electric sport cars in low numbers for premium customers, use the margin to advance production and technology and eventually be able to mass-produce affordable electric cars: the upcoming Tesla Model 3. So in conclusion, the first Master Plan was basically a strategy of scaling – how to transform a promising start-up with a lot of ideas but much less abilities into a mass producer to deliver just the kind of product you aim for (this, by the way, is in some way very similar to Musk’s other big company – SpaceX).

 

The Big Picture

But, without idolizing him, what makes Musk special in the league of successful entrepreneurs is: his efforts are means to a bigger picture. With the new Master Plan, Tesla is going full circle and aiming for the goals it was originally created for. The aim was never to just produce electric cars because they’re so popular and generate so much cash – they are not – but the aim is nothing less than to arrive at a sustainable long-term solution for human mobility, dealing with all of its current problems we observe every day. We have to realize that our model of mobility currently in use is not made to last and comes with great draw-backs: Pollution, accidents, inefficiency. To arrive at a sustainable mobility future, we will need to deal with all three of them.

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The cliché of individual motorized mobility: Going where you want, when you want. But it comes at a cost.

Pollution is to be dealt with by electrification of cars, with the energy at best coming from renewable energy sources.

The accidents and resulting 1.25 million yearly deaths are to be dealt by increasing abilities of autonomous vehicles, surpassing the reaction ability of human drivers (A.I.-driven mobility might be the natural solution). Elon Musk wants to “Develop a self-driving capability that is 10X safer than manual via massive fleet learning”. Despite the latest setbacks, not only Musk, but everyone in the car industry expects fully autonomous vehicles to arrive in the next few years. BMW just announced its first fully-autonomous car for 2021.

But what about inefficiency? Now things are about to get really interesting. This might be the core message of Musk’s new Master Plan.

 

Taking the best out of individual and public mobility

Individual mobility is great. It offers the possibility of driving anywhere you want at any time of the day, every day – planned or spontaneous. The world transformation we have experienced in the last 130 years of individual motorized mobility is easily explained by looking at the freedom and utility privately owned vehicles offer to us. Cities today basically are formed by webs of streets – or in other words, cities are made out of pathways of individual mobility. The concept is that popular, we have shaped our world after it.

However the concept also has a huge drawback: It is totally inefficient. When we look at the streets, we mostly see cars with one or two persons in it, while the maximum capacity of five, seven or even more is almost never utilized. The results are not only pollution but also traffic jams, cost of infrastructure and generally decreasing quality of life both for drivers and citizens. Moreover, when we arrive at our target destination, the car just stands around, waiting for us to come back. Most cars are only used 10% of the day, being idle the rest of it and using up precious parking space in our ever-more congested cities.

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Public transport: Efficient but unpractical.

On the other side, we have public transportation such as busses. They are great, because they move a large number of people at the same time, thus getting energy-efficient. At the same time, they offer a lot of mobility for people not owning a car. This is great because it does not fill up the streets even more and also provides some social equality – as in today’s economy, mobility is not luxury anymore, but a requirement. However, public transport naturally restricts the “when” and “where” and also has limits in utlity and comfort.

The core point of Elon Musk’s Master Plan therefore –this is my interpretation – is to combine the best out of individual and public mobility by adding fully-autonomous driving with managed car sharing to the equation. Linking multiple new innovations together leads to a solution that offers both freedom of travel and efficiency.

 

Progressing the Uber approach

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Screenshot of Uber. (c) Uber, PressKit

It hasn’t been that long since Uber started a worldwide revolution of car sharing, allowing just about everyone to become a taxi driver. You press a button in the App and an Uber driver will arrive.

Tesla is taking this one step further. It will allow every Tesla owner to let his car drive around others while it is not needed by the owner. Or if you don’t own a car yourself, you just press a button in the Tesla App and a driverless taxi, owned by someone else or by Tesla itself, will arrive, taking you automatically to your destination. “Once it picks you up, you will be able to sleep, read or do anything else enroute to your destination.”, Musk says. Just like in public transport, you would not need to be attentive.

This concept would be very efficient, because it allows cars to be used all the time, and not just the 60 minutes of commute a day. If there would be an option to share the ride with others (on A.I.-optimized routes) – and I guess there will be – it would get even more efficient. But at the same time it offers a lot of the flexibility of traditional individual mobility.

From an economical point of view, the generated revenue will both incentivize the usage of the feature by the car owners and also create multiple additional streams of income for Tesla itself (via the platform itself, the appeal to users and the customers’ cost considerations) that traditional car manufacturers do not have access to. Car owners can let their car earn money for them while being at work or asleep.

 

The integrated strategy: Becoming mobility infrastructure

In the end, this means, Tesla is about to become a sort of infrastructure for mobility – with infrastructure certainly being the most influential position in an industry sector you can have (recently blogged about Google becoming digital infrastructure).

Beginning with this new Master Plan, and Tesla’s ongoing merge with SolarCity, Tesla is saying farewell to the time of being just an automaker. Instead, the company is aiming to become an integrated mobility service provider, spanning the full circle from energy generation (solar power on home roofs, SolarCity), energy conservation (batteries at home and in cars, produced together with Panasonic), energy consumption (electric-powered cars) to mobility distribution (new autonomous car sharing platform) and even recycling (recycled car batteries become home batteries for storing solar energy, Tesla Energy). The goal is clearly an “everything out of one hand” strategy. Building the actual car is only one part out of it. This is a revolution in an industry that has been focused on selling the best car product again and again for 130 years.

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Cornerstones of Tesla’s long-term strategy. Mobility infrastructure instead of just a car producer.

 

A whole industry is about to transform

When we now look at the industry’s big picture, it becomes clear that the role of traditional automakers is challenged. And indeed, the revolutions of the likes of Uber, Google and Tesla have not gone unnoticed.

Toyota has just recently announced a strategic partnership with Uber. Volkswagen has invested 300 Million Dollar into Uber competitor Gett. General Motors has invested 500 Million Dollar into Uber competitor Lyft. Last year, BMW, Daimler and Audi together bought Google Maps competitor HERE for over 3 billion Dollar to be prepared for “future mobility”. BMW has also started an App-based car sharing service for certain models, including the electric i-series in major cities. Volkswagen is currently deciding on whether to build its own multi-billion $ battery factory, just like Tesla did.

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These will become core sectors for automakers soon. A whole industry will look different.

These disruptions are tough calls for an industry petted in success for decades. It will be interesting to observe, to what extend well established automakers will be able to adapt to the challenges and how new players such as Alphabet’s Google, Apple or Faraday Future will perform.

But then again: Change in the mobility industry is more than welcome. We need to realize, that the current solution for mobility with all its downsides and inefficiencies can only be a temporary one. Even if we just want to maintain the quality of life we currently have, we need to find a durable, a sustainable solution. And by being sustainable, we can actually grow as a society.

 

Interested in more news and blogs about innovation, mobility, artificial intelligence, smart city and the web? Follow on Twitter or via e-mail below.

 

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The mobility of tomorrow will need to answer a lot of questions. But maybe we are just about to find that solution by linking several new innovations together.

 

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4 thoughts on “Tesla becoming a mobility service provider. A whole industry’s future?

  1. I think you want the word “consumption” where you have “consummation” (as in “energy consumption”). Please check dictionary definitions for both words; I think you’ll agree.

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