Tesla and its Disruption of Traditional Giants

Having recently experienced the phenomenon that is Tesla firsthand - everything from the (Tesla-owned) showroom/distributing channel to the personalised customer experience, to the cars state-of-the-art look and feel, to it's eerie silence which is only disturbed by the squealing of it's tires while cornering like a train on rails, to its mind blowing performance (a family car that will eat a Ferrari for breakfast), and finally the fact that the car is a technological masterpiece which can effortlessly update it's software and self-driving capabilities "over the air" just as you would your iPhone for a new security update.

After considering all of these key differentiators, I genuinely fear for traditional motor manufacturers. 

However, it's not so much the fact that they are playing catch-up in nearly every area of the 'motorcar version 2.0' sector that I fear most for them - I fear for these traditional giants/dinosaurs in that their biggest threat going forward (and as exposed by Tesla) is, in fact, an area which has been their biggest asset over decades have gone by - it's their vast and vertically integrated production lines - much like Kodak, this asset is surely about to become a liability.

Let me give a crude and high-level example of the Kodak scenario: Kodak owned the entire production line for photography, from the taking of the physical photo to the raw materials and the final step of printing a photo at a Kodak store - when digital photography came along, they were well aware of the threat and in their defence even attempted to react - However, this new age of digital photos made vertical integration irreverent - now photos were taken on a Canon/Sony digital camera, they were edited on Adobe/Microsoft/Apple software, they were uploaded to Facebook/Twitter and if need be, they were printed on an HP/Lexmark printer in the users home office. As a result, the vast majority of Kodak's physical assets were rendered obsolete and irrelevant (nearly) overnight - the rest they say is history.

To quote Tesla CEO Elon Musk, "any fool can build a car by moulding a steel/alloy car chassis" - however, it's tech giants such as Google / Apple / Tesla who will own the core software, an AI-powered company such as Nvidia who will own the self-driving intelligence and companies which probably don't exist yet who will own the features which traditional manufacturers haven't even dreamed up as yet.

Folks, we are living in the start of the fourth industrial (digital) revolution, the motor industry just so happens to be at the forefront of it with three major disruptive trends coming to life at the same time:

1. Ride Sharing
2. Electric Cars
3. Autonomous Cars

Hold on tight, and think carefully before buying that GM, Ford, BMW or Daimler (Mercedes) stock.