Tesla: Leading Digital Transformation in the Automotive Industry

Tesla was founded in 2003 to prove that electric vehicles can be better, quicker and more fun to drive than gasoline cars. Over the past sixteen years, the company has grown to a market cap of $40 billion and expects to deliver 400,000 cars in 2019. The company’s growth has been fueled by a number […]

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Tesla was founded in 2003 to prove that electric vehicles can be better, quicker and more fun to drive than gasoline cars. Over the past sixteen years, the company has grown to a market cap of $40 billion and expects to deliver 400,000 cars in 2019. The company’s growth has been fueled by a number of bold digital strategies that have begun to revolutionize the automotive industry in ways beyond the transition from gasoline to electric engines. 

Tesla’s most prominent example of digital transformation is in their connected cars. Tesla currently sells five models of electric vehicles that are connected to the internet and equipped with gear such as cameras, radar and ultrasonic sensors. This connectivity enables Tesla to monitor and update their cars over-the-air. Tesla is currently the only car manufacturer that provides automatic remote firmware updates that improve safety, performance, and entertainment capabilities of their vehicles. Tesla’s digital connectivity has allowed the company to deliver more value to consumers and will empower the company to continue to disrupt the automotive industry.

Testa’s connected vehicles have led to the creation of an intelligent data platform and a connected ecosystem. Data enables Tesla to learn from customers and will give the company an enormous advantage in developing autonomous driving. The company has been collecting driving data from all of their first and second generation vehicles. So far, the company has collected driving data on 8 billion miles. For comparison, Google’s autonomous car project, Waymo, has only collected 10 million miles. As Tesla’s CEO Elon Musk said in an earnings call with analysts, “Every time the customers drive the car, they’re training the systems to be better. I’m just not sure how anyone competes with that.” By enhancing their products with digital capabilities, Tesla will continue to be able to deliver more value to customers. Tesla has also unlocked value by digitizing aspects of their business processes. 

Tesla has implemented smart processes throughout the organization that allow the company to connect with their customers. Automotive companies have traditionally sold through a dealership model, inserting a middle-man between the car company and the customer. Tesla sells its cars direct-to-consumer through their website and company-owned stores. Tesla’s website and in-store experience has enabled personalization through customization. Customers can choose the base model, color, wheels, interior, and autopilot configuration. Furthermore, once the car is purchased, Tesla continues to add value through personalization such as saving their customer’s individual preferences (induding seat position, mirror position, temperature, etc.) in the cloud for easy restoration. Tesla’s smart-processes have enabled the company to personalize, customize, and connect with customers like no other automotive company.

In all, Tesla’s digital products and processes have allowed the company to unlock value for customers and connect with their drivers in new ways. The company has not yet completed its mission of disrupting the automotive industry, yet their collection of data has positioned Tesla to lead the autonomous vehicle revolution.

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