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Tesla Motors Inc (NASDAQ:TSLA) “Over The Air Updates” Uncover Detroit’s Self-Harming Strictures

Tesla Motors Inc Model X success

Tesla Motors Inc is on the edge of a great moment. In a short few hours CEO Elon Musk, fresh from a jam-packed tour of Europe, will unveil the Model X. It’s the third car that the EV firm has ever made, and the hype leading up to the launch is a sign that the firm has made it. Meanwhile traditional ICE car makers are trying to catch up, though not where you might think.

Tesla Motors Inc Model X storage

In a report this morning, Tuesday September 29, Reuters highlighted attempts by older car makers to bring a key Tesla Motors feature to their products. Over-the-air updates are one of the many features that Tesla Model S owners love, and it’s one that shows the strictures that Detroit has bound itself in.

Tesla Motors is lord of OTA

There aren’t major technical obstacles to putting OTA updates in an ICE car, even though the workings of a petrol car don’t lend themselves to software maintenance in the same way that Tesla Motors  EVs do. There is, however, a major problem for sales people. Strategy Analytics consultant Roger Lanctot told Reuters that it was dealerships that were getting in the way of OTA rollout.

He said “It’s not in carmakers’ interest to annoy the dealer.” Those dealerships are in charge of software updates, and they get paid every time they hold onto a car for a few hours in order to make sure that the patch is installed correctly. In most cases that’s not a major problem, but when a major software issue emerges it’s a huge expense for car-makers who pay out of pocket for recalls.

Volkswagen, which is in the midst of a scandal related to some very special software it put on its cars, doesn’t have over the air updates. If it did the firm may not have had to recall more than 10 million cars in order to remove software designed to cheat the EPA.

It could just send out a software update that would lower emissions, though the resulting performance would likely result in more than one lawsuit. Volkswagen may have to do just that anyway, but it will have to pay mechanics to upgrade the software on every Beetle and Golf affected.

A recent piece of research from IHS on the subject found that savings from OTA updates would be worth as much as $35 billion in 2022. Those savings projections are finally turning many bigger car brands around on the idea of over-the-air updates, but Tesla Motors is far far ahead of the pack.

Tesla Motors makes cars better

OTA updates aren’t just for huge problems. Tesla Motors has added a whole host of features to the Model S with a simple overnight download. Better navigation, including handy tools to get rid of range anxiety, was one of the major updates in 2015, but there’s even more coming.

Autopilot, something Tesla Motors has been promising to Model S owners for a long time, will arrive in the same way. Elon Musk says in the next few weeks the update will roll out over the air. One morning a Tesla Motors Model S owner is going to wake up and the car will be able to park itself and keep a lane on the freeway.

Other car makers unable to bring bug fixes to their software over the air, and it’s clear why. Dealers don’t want to lose the lucrative service of bringing updates to cars. Tesla Motors is racing ahead as a result.

Tesla Motors is winning because it’s free

Tesla Motors doesn’t really have any technology that’s way ahead of the world’s car makers, and it is well behind on resources. Among those who know about the brand it is associated with strong positive feeling, but most of the US still doesn’t really know what Tesla Motors and Elon Musk do, despite that informative episode of South Park.

The Reuter’s piece on over-the-air updates, and how older car makers are having such a hard time getting the feature, which would save time and money and make drivers happier, into cars gives a lot of insight into why Tesla Motors is changing the market despite its major disadvantages.

At just twelve years old Tesla Motors doesn’t have a major network of interests that care about it. The firm has outright rejected the concept of a dealer in favor of vertical integration. Its service teams and salespeople are all employed directly and have little say in how Elon Musk decides to deal with repairs or sales.

The incentives also line up for Tesla Motors. While Volkswagen could have upped the price of the Golf in order to recoup the cost of a cleaner diesel engine and sold the e-Golf at a similar price, the firm chose instead to cheat the system. EVs at traditional car makers compete with the firm’s own core business.

Those selling them simply don’t have the right incentives to make them a success. A Volkswagen sales person can’t rip into a Golf in order to sell the e-Golf. They have to be even handed. Those selling the Tesla Motors Model X and Model S are able to really point out the flaws in an ICE car.

Tesla Motors doesn’t have a network of powerful businesses that rely on it for income. It doesn’t have another product that would be destroyed by trying to sell the Model S.

Tesla Motors is not bound by the kind of rules and incentives that keep normal auto-makers from building a better car. It only has two key decision making units, executives, lead by Musk, who say that revolution is more important than profit in the short term, and owners who have gone along with that idea in the hope of reaping huge rewards down the line.

At some point those decision-making units may turn against each other, or another powerful voice might distract Tesla Motors  from its vision. For the time being, however, the firm is free and clear of that kind of complex bind.

Volkswagen, and the other firms that refuse to bring over-the-air updates to their cars, have not been able to find a way to escape them. Until they do, Tesla Motors will continue to surge ahead for as long as it can convince people that EVs are the answer to the world’s ills.

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Adam Green is an experienced writer and fintech enthusiast. He he worked with LearnBonds.com since 2019 and covers a range of areas including: personal finance, savings, bonds and taxes.

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