Tesla Motors and Equivalence

Last week I took part in a scenario planning workshop for one of our clients on the subject of the future of transportation.  I was talking about equivalence with one of our invited experts, Lee Schipper, and he said that he thought cars are becoming more like computers.  Not literally perhaps, but what he had in mind primarily was the new generation of electric car entrepreneurs like Tesla Motors.

Elon Musk, Tesla’s CEO, co-founder and investor, is not a typical automotive guy.  He is a serial entrepreneur best known so far for co-founding PayPal, although in the future he will most likely be better known for his accomplishments at Tesla, SpaceX and SolarCity.   Nor is Tesla a typically car company, describing itself first and foremost as a technology company that “has brought the best of the automotive and technology worlds together”. And as a technology company it anticipates performance improvements and accompanying cost reductions as a normal part of its business model.

The product itself is also a different kind of a beast.  The heart of an electric vehicle (EV) is not the engine but rather the battery, in Tesla’s case the same type of lithium-ion battery that powers your laptop.  As battery technology evolves, the heart of your car will become a modular “off-the-shelf” component that can be swapped in and out as necessary.

The number of parts in an EV that require specialist knowledge to maintain is considerably smaller than in a traditional internal combustion engine (ICE), and those parts are increasingly digitized, (including digital, rather than analog, motor control, as described in a Tesla blog post “from waves to bits”) meaning that the good folk at Tesla can act more like a Geeksquad, connecting locally or remotely to customers’ cars and troubleshooting them in the same way they would your computer or home network.  

In some respects, then, the car really is becoming more like the computer; increasingly digital, increasingly connected, and increasingly modularized.  In an earlier post I proposed three laws of equivalence, and I would suggest that Tesla specifically, and EVs in general, may be indicators of the third law at play in the automotive world:

“Any product or service that cannot be made equivalent will most likely be made redundant by another that is, through the forces of scientific and technologic advance and/or modularization”.

The ICE will eventually be made redundant by the battery, and as it does, the businesses and industries that were founded on their unique ability to produce, support and/or distribute it (e.g. gas stations, auto repair shops etc.) will see the value of that ability begin to disappear.  Smart businesses will get ahead of this shift while others will go under, tied to conditions that no longer apply and to solutions that no longer matter.