Tesla is a data company, masquerading as a car company

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In a time when car companies are selling software to add value to their cars, Tesla is selling a car to add value to its data. In fact, since its initial public offering in 2010, Tesla has been a data company masquerading as a car company.

Data is the differentiator

The car industry has not changed much in the last 100 years. Yes, there have been incremental improvements in safety and comfort, but from a manufacturing perspective, cars are still largely hand-built by humans, using tools and processes that haven’t changed much since Henry Ford. While Tesla has been producing cars since 2012, it has been producing and managing data at scale since 2010, when it first produced the Model S sedan. Tesla was the first car company in history to be networked from the ground up. Every aspect of the car — everything from the door handles to the tilt wheel, to the charge port, to the audio system, to the sunroof, to the seats, to the suspension, to the GPS, to the Autopilot system — was connected via a single network. The car had a single IP address, and all of these systems could be updated wirelessly. This single network allowed Tesla to collect data from every car, every day. While Tesla was not the first car company to build a connected car, it was the first to produce a volume-built connected car. And while other car companies were busy building cars, Tesla was busy building a data architecture that could support millions of cars.

Charging Stations and Dealerships

Data is just one way for Tesla to differentiate itself from traditional car companies. Tesla owns all Tesla dealerships, meaning that the company does not have to share profits with outside partners and has complete control over the sales process.

Tesla’s charging network is currently growing at a rate of about 10% per year. This means that by the end of the decade, Tesla will have a charging network that rivals that of gasoline. These are entirely in Tesla’s control. Furthermore, Tesla owners don’t need to visit a gas station; they can charge their cars at home or at work. As a result, Tesla has almost complete control over customer retention.

Conclusion

Cars are still largely hand-built by humans, using tools and processes that haven’t changed much since Henry Ford. Tesla was the first car company in history to be networked from the ground up. And while Tesla may be a data company, it’s just one way Tesla differentiates itself from traditional car companies.