How Tesla’s Autopilot free trials are disrupting the auto industry

tesla pictureWhether it is vehicle sales or letting your car drive itself, Tesla Motors has a way of casually disrupting long established auto industry business models.

The latest twist from Tesla, revealed in Tesla owner posts on Facebook, is a one-month free trial of Autopilot mode. The function is enabled within 30 seconds if you choose to take it.

Tesla began making cars in 2014 with the Autopilot capability built in. The feature was available as part of a convenience package with emergency braking and side collision avoidance. For $2,500 at the time of purchase, the Model S owner could add active cruise control and automatic highway steering.

Tesla buyers not choosing the option at the time of purchase can activate it later for $3,000. But Tesla has gone one step further with the free trial. The simplicity of the offer disguises its mind-blowing possibilities and the tragic implications for traditional auto makers.

Mind-blowing possibilities

With the Autopilot free trial Tesla is demonstrating what advanced driver assist technology analysts have been pointing out for quite some time. Camera-based sensors on cars can be used for multiple purposes, including everything from detecting driver inattention to enabling collision avoidance, lane keeping, blind spot detection, self-parking, all-around views of the vehicle, emergency braking and adaptive cruise control.

Once the sensors, including radar and sonar, have been added to the car at the factory the process of turning on features may not even require a software “download.”  It may only require an update to deliver the latest algorithms along with a “switch” to activate the software which is already on-board in the car.

The power of the free trial strategy for safety features lies in the ability to tease and delight customers with safety features that might not normally be selected at the original vehicle purchase.  Many of these features require demonstration, something the average car buyer these days simply doesn’t make time for.  But as a free trial, Tesla has opened the door to pushing and promoting safety enhancements long after the original sale of the car.

The insurance-related opportunities are endless here. Sponsored safety anyone?  “Download or turn on this safety feature and we’ll give you a discount on your insurance.”  “Collision avoidance brought to you by State Farm and Mobileye.”  “Ten percent off your premium as long as you keep the feature turned on.”

But why stop at safety, what about adding performance features and different suspension setups for days spent at a local race track?  What about temporarily turning features on for long trips – yes, that’s right, on-demand safety or safety as a subscription service?

Disruption for the industry

For the incumbent car maker community, Tesla’s free trial proposition – along with its huge head start on over-the-air (or, really, over Wi-Fi mainly) software updates and now remote function unlock – is disruptive. The highly silo-ed structure of the typical auto maker may make them incapable of responding to the Tesla value proposition and disruption.

For the typical auto maker, safety systems, infotainment systems and communications gateways are managed by different and sometimes competing departments.  Sometimes these departments compete with, resent or otherwise struggle between themselves –  riven as they are by conflicting technology life-cycles, business models, and marketing priorities.

Tesla’s CEO Elon Musk continually brings news of the future. An Autopilot free trial is only the latest case of aftersales delight from Tesla. Meanwhile, the implications of a car that gets safer and sexier over time are potentially devastating for other car makers who fail to adapt.

The original version of this article appeared on LinkedIn Pulse. Views expressed do not necessarily reflect those of ITU.

Roger LanctotAs Associate Director in the Global Automotive Practice at Strategy Analytics, Roger Lanctot (@rogermud) has a powerful voice in the definition of future trends in automotive safety, powertrain, and infotainment systems. Roger draws on 25 years’ experience in the technology industry as an analyst, journalist and consultant. Roger has conducted and participated in major industry studies, created new research products and services, and advised clients on strategy and competitive issues throughout his career. Some consider Roger the Kevin Bacon of the connected car industry as evidenced by his wide LinkedIn and Twitter following and his frequent speaking and blogging activities on critical industry issues impacting critical topics such as vehicle safety, fuel efficiency and traffic. Roger is a graduate of Dartmouth College.

 

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