Tesla concepts of mobility outgrew legacy brands from the day the first Tesla rolled onto the market. The new company did not fit into any existing auto-manufacturer slot. Tesla jumped away from the crowd conceptually, and as we can see by now, landed on its feet.
Full Stack Disruption
Matt Pressman, cofounder of EVANNEX, has noted how Tesla’s “full stack” approach has disrupted the auto industry. Quoting Silicon Valley venture capitalist Chris Dixon, “The old approach startups took was to sell or license their new technology to incumbents. The new, ‘full stack’ approach is to build a complete, end-to-end product or service that bypasses incumbents and other competitors.”
Thus, in a similar business fashion as Apple, but beyond that, Tesla is distinctly more involved with all of the things related to Tesla vehicles — battery factories, vehicle factories, stores, charging infrastructure, and much more.
The full stack disruption may have come from sheer need originally, not simply priming for more profits, but the latter has tagged along with the innovation.
The Spring also notes Tesla’s atypical automaker business model by emphasizing the potential of Tesla Services. As Tesla starts rolling out more and more infotainment features and complementary products, this potential is beginning to take shape.
Let’s look at some of the components of Tesla’s “full stack” approach.
Starting with the most obvious, Tesla produces much of the hardware in its vehicles — body panels, battery packs, seats, electric motors, computers for Full Self Driving capability, infotainment systems, and even the air conditioning vent system.
Creating so much of the hardware itself, Tesla can make sure it all works together and plays well as a combined unit. Tesla can also quickly iterate and change components if needed. Tesla is known to be constantly improving its vehicles.
Rather than farm it out to Apple or Google, Tesla is fully in charge of the software going into its infotainment systems, Autopilot, its app, and even how the windshield wipers work. Tesla is also constantly building a neural net system that is expected to help Tesla vehicles drive themselves better and better over time. Hopefully a Tesla will soon more safely drive you from door to door than an average human.
One of the latest services Tesla has gotten into is insurance. Since insurance companies don’t typically account for the greater safety of a Tesla, and may not understand the costs well, Tesla started offering insurance to owners in California. The option seems to be going well, but many hypothesize that Tesla will eventually be able to offer totally unmatched insurance packages due to the data it collects. For more on this topic, see our Tesla Insurance archives.
Tesla Repair Service
Tesla’s business model embodies service in a fresh way, just as it looks at the entire vehicle ownership experience in a new light.
Tesla service is a no-profit enterprise. CEO Elon Musk has said adamantly a handful of times that he doesn’t want service to be a profit-motivated part of the business, since that incentivizes fixing problems that don’t exist of creating problems to fix.
As with all things, Tesla strives to leave the customer happier when they leave than when they came in. This Tesla owner below — owner of two Teslas — still seems content despite his inconvenience. He is still smiling about his Teslas.
For more on this topic, below is a Tesla service video from Tesla itself.
In the past, you bought cars from auto manufactures and completely separate businesses handled refueling, allowing big oil companies to make absurd profits. How wonderful to put an end to all of that. With a Tesla, you can take practically any road trip in the United States, Europe, and some other markets using only Tesla Superchargers.
Tesla builds the fuel station infrastructure for its buyers, providing lightning fast Tesla Superchargers for practically any road trip you can imagine. Of course, EVgo, Electrify America, Clipper Creek, ChargePoint, and a slew more companies are out there to help as well. Yet, for Tesla drivers, the Tesla Supercharging network is tops.
Tesla’s mission is to accelerate the world’s transition to sustainable energy.
— Tesla (@Tesla) May 9, 2019
Charles Morris explains that Tesla’s vertical integration was not initially such a strong focus or idea. It came out of necessity. Yet, it is here to stay. The ecosystems of Tesla have become something quite opposite of the ecosystems of the fossil vehicle manufacturers and fossil vehicle life. Tesla’s new concepts of electric mobility combined with ever expanding software glide Tesla in another direction from traditional automakers.
Had Tesla been merely a great battery company or a software company within the auto industry, disruption would have been in bits and pieces — not terrifically market changing and planet changing. Tesla’s full stack integration creates a very different reality.
For more on the charts above, check out: