Tesla is a tech company, not just a car company. Although, some still seem to believe otherwise. Joel Feder sparked a debate on Twitter by voicing his thoughts about Tesla. In his tweet, he says, “Reminder: Tesla is a car company. Tesla is not a tech company. It builds cars.”
This way of thinking is primarily the reason why Tesla short sellers have lost billions by shorting Tesla. Ignoring the achievements of Tesla and the core of Tesla while betting against the company has proven to be a sure way to ruin your finances.
“Tesla, however, has the most important issue fully right: Self-driving cars—which are key to new levels of safety, efficiency, and convenience—are the future of the industry. And they require massive amounts of computing performance.” —NVIDIA
Many in the Tesla community got upset due to Feder’s statement, since it seemed to ignorantly bash Tesla. Others tried to educate Feder on what he was missing or ignoring.
First, let us define a tech company and a car company. According to Wikipedia, a tech company is a type of business entity that focuses mainly on the development and manufacturing of technology products or providing technology as a service. The Free Dictionary points out that a car company is a company that makes and sells automobiles (in case that wasn’t clear).
Tesla is clearly an automaker, but it is also clearly a tech company.
What Makes Tesla A Tech Company?
Tesla is creating software, a lot of software. Software is at the essence of Tesla’s unique infotainment system, user experience, and autonomous-driving features. Tesla has implemented over-the-air updates for years, while other automakers are just about to try this. Tesla vehicles have operating systems designed and constantly improved by Tesla staff.
No one is saying the are a tech company because they make EVs, its because they make:
1.) Self driving software
2.) They build their own charging stations
3.) They develop/sell both traditional solar panels and solar glass tiles
4.) They develop/sell battery storage units.
— J1mmy Harris (@jimmywvu) February 6, 2020
Tesla also makes other kinds of technology — solar panels, rooftop solar tiles, different types of batteries, charging stations, computers and major components of computers (for Tesla cars).
LVC points out below that both Nokia and Blackberry had software, yet the iPhone was a balanced integration of both and this is why it overtook the mobile phone industry and changed how we use our phones today. Tesla is doing this for the auto industry. Yes, Teslas are cars (and SUVs and soon pickup trucks, semi trucks, and ATVs). However, these vehicles integrate software for our day-to-day use that was developed in-house at Tesla or integrated into Tesla’s system.
Nokia did software. Blackberry too. What happened when the iPhone was released? Where are they now? It’s all about the hardware and software integration and @tesla does that much better than every other player. That’s the tech company side the others don’t have
— LVC (Lourenzo) (@lourencovc) February 6, 2020
Tesla has added entertainment options such as TRAX, Caraoke, and various games for use while you are parked (and maybe someday while in transit). Sentry Mode is a security system that integrates Tesla hardware and software, and has helped police solve crimes such as vandalism.
Joel, does @_General_Motors make solar tile roofs? Does @Ford have Giant Batteries? Does @FiatChrysler_NA FiatChrysler have a division for autonomous vehicles? Does @Toyota have OTA updates to their car's software and the ability to unlock more performance, features and apps?
— Tesla Owners East Bay (@TeslaOwnersEBay) February 6, 2020
The key for your Tesla is your phone. You can summon your Tesla to you with your phone. And with Tesla’s exclusive Sentry Mode feature, the car will alert your phone if there’s a major incident.
They won’t be tech companies untill they get serious about software. Tesla has 3 main prices of tech they develope: battery tech, onboard software, and autopilot. Tesla insurance is also an extension of their technology play through leveraging of their data on driver behavior.
— Eli Burton (@EliBurton_) February 6, 2020
As Eli points out, Tesla’s insurance will also be an extension of the tech side, since Tesla will be leveraging the data it has collected on the actual behavior of Tesla drivers (data collection is a big part of tech, particularly when it’s direct like this, not done through market research surveys). As Eli sums up, Tesla has three main areas of tech it is developing:
- Battery tech
- Onboard software
- Autopilot, which will later be “Full Self Driving”
“People who are really serious about software should make their own hardware” – Tesla is doing both for their most important software product (autopilot). This is a pure tech play revenue stream that legacy auto has yet to develop. Those who survive will.
— Eli Burton (@EliBurton_) February 6, 2020
NVIDIA, a tech company with a $155 billion market cap, used to make computer chips for Tesla vehicles (and does so for other vehicles). The company wrote on its blog that Tesla is raising the bar for all other carmakers in this regard. It noted that Tesla’s AI chips “each have a CPU, GPU, and deep-learning accelerators. The computer delivers 144 trillion operations per second, enabling it to collect data from a range of surround cameras, radars, and ultrasonics and power deep neural network algorithms.”
Tesla may be a carmaker, but it’s also a battery developer, a solar tech company, and a software developer. If one label was to define Tesla, then that label should be “technology.” This is why Tesla is indeed a tech company. Whether or not you like the company, Tesla is developing computer chips, tech hardware no other automakers develop, and advanced software of various sorts — and it’s not stopping there.