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The Automotive Revolution — Disrupting Mobility

 

Guillem Martin

 

Mar 5, 2020 · 4 min read

 

 

 

 

 

 

 

 

 

 

Tesla’s “Gigafactory “ production line.

Automotive companies have been in the spotlight in recent years, but not for good reasons — scandals, frauds, you name it. In a context where they are facing necessary yet imposed changes, new challenges are on the rise, but so are new opportunities.

Roughly three out of five people on the planet will live in cities by 2030. Today, 80% of car rides are less than 5 kilometers in metropolitan areas, and, with the progress of new technologies, young city dwellers are becoming more practical. In fact, their intention of obtaining a driver’s license has greatly decreased in the most recent years, and the average age for car owners in cities grew from 33 to 38. This is a perfectly rational way of thinking: why purchase a car when it’s possible to use public transport and ride-hailing apps?

Deep pocketed companies, such as Volkswagen, Toyota and Renault, are pouring billions into developing the future of the sector, more or less successfully, but let’s focus on a more recent and disruptive company, Tesla. Its answer is pretty simple: build a fully integrated, easy-to-use modular ecosystem for their clients.

But what is the secret to success when even juggernauts like Dyson decided to pull out after investing £2.5 billion in their car project?

Tesla put its money where its mouth is, and, with a vertically integrated company, they can oversee and tweak every details of their operations. Their strategy has resulted in fun, efficient, safe cars that supported by an ecosystem of charging stations always expanding and relying more and more on their own solar panels and battery storage.

Tesla already benefits from its highly scalable production, which is soon to be a threefold improvement over existing car assembly lines, and their flagship Model 3’s cost is forecast to decrease to $35,000 in May 2020. Throw in a very low electric vehicle maintenance cost, a low cost per mile compared to fossil fuel vehicles, and more durable and efficient batteries, and you have the first car able to be a profitable investment for the average person.

Speaking of disruptive ideas, Tesla’s Cybertruck is estimated to generate 500k in preorders.

How? By mid-2020, their fleet of cars will receive a software update achieving fully autonomous driving. Combine this with a soon-to-be implemented ride-sharing platform, enabling customers to use other owners’ cars to transit in a fully autonomous way, and you obtain a safer, more efficient, and greener method of navigating around cities that lowers traffic in the meantime. Considering that cars are parked 95% of the time, one car could benefit way more people than ever before, which is a reasonable mission enabled by new technologies.

Ridesharing, one of automakers’ many potential solutions to changing market demand.

Tesla is building a “Tesla culture” supported by an active and loyal community that they rely on heavily for feedback, and, with the help of vertical integration, they are and will continue providing a growing number of services inside a closed-circuit ecosystem promoting ecological and social responsibility. They are the one elaborating the next “people’s car.”

Tesla is an example of success, but failure is a possibility and, most of the time a reality, especially in an industry this competitive.

Even with decreasing barriers to entry, especially when it comes to electric vehicles, newcomers struggle. For a long time, cars fulfilled the market demand for flexible mobility. Nowadays, clients want more choices and higher quality packaged into an economically accessible product. Even if initial funding is not an issue, such as with Dyson, the R&D division must produce quick results and gain momentum to build their client base even faster.

In general, a company’s vision needs to be widely shared with its employees to create the appropriate working structure and run as a well-oiled machine towards a common goal. This especially holds true in the automotive industry. Companies must run cooperatively with their workforce, their clients, and the evolving environment to satisfy all stakeholders equally.

Today, market dynamics are drastically changing as users’ needs evolve. Even so, the automotive industry is actively addressing these challenges, and, whether it be Tesla or other more conventional automakers, we can observe a trending shift from providing goods to providing services, a change that is reshaping our mobility in a new and lasting way.

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