Tesla’s software ages like fine wine. Loup Ventures, a research-driven venture capital firm recently shared an “OTA Report Card” revealing its rankings of software vehicles and rendering Tesla’s as cutting edge over legacy automakers. Read along to decide yourself whether this ranking is well deserved.
Straight A Student; Tesla Vs. Legacy Automakers
By looking into one aspect of the auto software stack, over-the-air (OTA) upgrades, Loup Ventures was able to find that Tesla is several years ahead of traditional automakers.
Tesla was the first company that put the underrated feature to use. Since 2012, legacy automakers have been trying to keep pace, but their OTA update capabilities continue to fall short. Hence, not all over-the-air (OTA) updates are created equal, as Loup Ventures reported.
For most manufacturers, OTA updates are limited to infotainment systems, which deal mainly with maps, Bluetooth, entertainment like Apple CarPlay, and other convenience features that lack actual material value.
Tesla’s OTAs on the other hand updates improve the entire vehicle performance from infotainment systems, range, and autonomy features, to braking and acceleration functions, along with safety systems.
Another game changer is the mechanics of OTA updates. It’s quite the simple process, a no-brainer really. Similar to upgrading applications or OS on our phones, Tesla’s software updates are delivered remotely through a cellular or WiFi connection. saving you the hassle of taking in your car for repairs.
It’s crucial to note that legacy manufacturers rely on EV components manufactured by other companies for their EV vehicles. Encumbered by this relationship, automakers cannot compete with their dealer network on sales or service. Providing new service implies that their dealers receive a cut. Meanwhile, Tesla’s integrated hardware and software approach enables it to have full control on its vehicle and feeds the consumer/brand relationship.
The OTA Report Card
Loup Ventures, a tech research firm, has put together a scorecard of the EV manufacturers that incorporate OTA updates.
OTA report card analysis carried out by tech firm.
The firm noted that the rankings do not show the full extent of legacy auto’s OTA shortcomings. Tesla is in the league and it’s only competition is itself. Automakers will have to build key functions controlled by software in order to compete. To simply offer an infotainment system OTAs is not quite valuable according to the firm.
Loup Venture Predicts Deferred Revenue Balance of $1.73B For Tesla
In a way, Tesla manufactures EV’s but actually sells software and with each software update the company generates loud income.
Loup Ventures estimates that Tesla will see $1.1 billion in deferred software income next year, increasing to $1.5B in 2022, and representing material high-margin revenue. This growth will be a function of FSD adoption.
A deferred pile of profitability according to Loup Ventures.
‘As FSD gets closer to full autonomy and users find it more valuable, we believe the attach rate will increase, as well as the price. Putting it together, we model for a 37.5% attach rate and $10,000 ASP in 2021, moving to 40% and $11,000 in 2022.’ the financial firm wrote.
Tesla’s OTA; A Secret Weapon
Tesla’s OTA categories contain: “Software algorithms control traction, vehicle stability, the acceleration and regenerative braking of the vehicle, climate control and thermal management, and are also used extensively to monitor the charge state of the battery pack and to manage all of its safety systems.”
Tesla built electrification, connectivity, and autonomy capability into its vehicles from the start, and thus can use OTA updates to improve these systems.
The power of OTA was demonstrated over a number of updates, including that instance when Model 3 failed to receive Consumer Reports recommendation due to long braking distances. Within a week, Tesla pushed an OTA software update that was able to recalibrate the ABS system and reduce braking distance by 13%.
The Model 3 was then retested and earned CR’s recommendation. “I’ve been at CR for 19 years and tested more than 1,000 cars,” says Jake Fisher, director of auto testing at Consumer Reports, “and I’ve never seen a car that could improve its track performance with an over-the-air update.”
Recently, Tesla released early access to its Full Self-Driving (FSD) beta via OTA. AIDRIVR on YouTube conducted a test, creating difficult situations for his car, revealing that its autonomous driving has become more human-like.
While features of other vehicles remain stagnant for the life of the vehicle, Tesla’s OTA updates prompt its newness and innovation. Will legacy automakers be able to bridge the gap at hand? If so, what’s your estimation of the time frame it will take them?