In the past few years, we have spent a lot of time thinking about cars, software, autonomous vehicles as well as the future of asset ownership. Who is at the center of this? Tesla. They are the birth of the first HaaS company at scale. Let me explain what that means. It stands for hardware as a service – through efficient assembly, modern technology and massive amounts of software, the economics will make it much more obvious for a consumer to subscribe to a car, rather than own a car as well as any other asset.
Autopilot was the culmination of the Haas line of thinking. They have hundreds of thousands of cars collecting millions of data points every hour so their software will become substantially better over time. Right now, it is up to TSLA to decide that instead of selling a consumer a car, they can allow that consumer to subscribe to a car – or a fleet of cars.
Imagine those fleets of Teslas roaming the streets autonomously, just waiting for you to use your app to hail the closest car. While Tesla still makes the cars, the real value is in managing the subscription, having the best software and the predictability of their service such as having the same car models, same smell, same music, etc.
Tesla won’t be the only one driving the future of autonomy. BMW, Toyota, Mercedes-Benz and any other car company who wants to survive will have to become a software company. It is just like Apple building the new case for iOS. The physical cases will change, but the value is in the iOS. No matter how much money is spent on marketing, you are convinced that you are buying the next great improvement to their screen or camera.
In a few years, GOOG, AAPL and TSLA will each have massive autonomous fleets on the road and you will be able to pay with your Apple Pay account, authenticate with Gmail, etc. It will only take one ambitious city manage who wants to run for mayor to realize that these are the solution to a non-trivial percentage of transportation of their citizens. Cities around the world will soon catch on and follow suite.
I know that I would sign up for Tesla’s subscription service in a heartbeat. Would you? Can you see your city adapting to something like this?
Advisor Abbate 