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Tesla Inc “Subscription Service” Could Drive Profits Skyward

Tesla Inc stock moves on not so secret weapon

From automobiles to energy and, heck, why not music as well? Tesla Inc is whispering in the ears of record labels, allegedly looking to make a strong move in the music industry. It’s all about unique music streaming, if rumors are anything to go by. That could be the start of Tesla pushing into the lucrative services segment.

Tesla Inc is approaching major record labels to create and exclusive, branded streaming service. That is according to industry sources who spoke tech news outlets like Recode. The service is likely to be for Tesla owners alone, adding another level of exclusivity to the luxurious car brand.

More modern Teslas come equipped with alluring dashboard screens and internet connectivity. The latter is a well known part of the Tesla experience. The Elon Musk car business often renders software updates via over-the-air services. This means entire car functions and attributes can be modified and improved without the need to take your car in for servicing.

Why not make the most of that feature, and add an proprietary Tesla music streaming service to boot? There is a lack of clarity regarding the full scope of the incoming music service. However, it could also include online radio, podcasts, and audio books, according to some reports on Thursday evening.

Tesla Model 3

Tesla might see a big opportunity to musically cater to its customer base. The company could easily make use of existing music streaming giants like Spotify. In fact, it already partners with the music streamer with vehicles sold beyond American boarders. Perhaps the obvious drawback is that Tesla would lose out on a chance to truly make a unique service on an already exclusive platform.

Tesla Inc music streaming is important too

A spokesperson says that this is particularly “important” for the luxury electric car maker. Tesla Inc seeks to offer an extraordinary in-car driving experience. This would allow customers to take full control of what they listen to, from whatever platform they choose to stream from. “Maximum happiness” is the goal, the spokesperson asserts.

There is little reason for music labels to deny Tesla’s requests though. The company is moving powerfully close a driver base well set in the millions. With more than 400,000 pre-orders already down for the Model 3, that’s even more exposure coming their way.

Tesla Music is a headline-grabber, but the effect on Tesla stock is likely to be negligible. For the time being a music streaming service would be nothing more than a marginal demand booster. In the future it could become much, much more for Tesla stock.

Subscribe to Tesla for more

Like Apple Inc Tesla may be trying to turn its massive hardware advantage into a permanent revenue stream. In the coming years the firm may be able to convince customers to subscribe to Tesla services. The resulting packages could include a range of features from streaming, to supercharging to in-car wifi. In a decade a Tesla subscription could get a fully autonomous car to your house without the need to buy a car.

Tesla stock relies on the firm becoming a high-margin business, and services may help it get there. Therefore, a very high margin services business on the side makes sense for Tesla. Because of the firm’s problems with timelines, however, we may be waiting quite a while to see such a business emerge.

Update 15:03 EST

Jessica Caldwell, director of industry analysis with Edmunds, has weighed in on Tesla’s music streaming service. The Washington Post reports that Calwell is bullish on the effect, but not the execution. Tesla has a certain amount of cache they have built up over time, they have this cool factor that no other car company has,” she said. She reckons that a music service could add to that cool factor.

That said she’s not certain the firm can pull it off. “For someone who is trying to do so many things, this seems like a bit of a stretch,” she says. That streaming market is very difficult to break into and Tesla Inc already has its work cut out for it with so many different projects up in the air.

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