If there's an example of a company about to disruptively innovate an entire industry, it's Tesla.

Partly, this is because of raw technology--Tesla's is clearly superior to that of its competitors. 

Partly, it's because Tesla has a more efficient business model. As Slate recently pointed out, Tesla bypasses value-subtracting dealer franchises and universally disliked car salespeople.

More important, though, Tesla will kill traditional car companies because companies like GM, Ford, and Honda simply do not understand digital technology and are unlikely to understand it any time soon.

Tesla is a high-tech company that happens to be making automobiles. They understand technology because without technology a Tesla is just a huge, expensive paperweight.

By contrast, the traditional automobile firms are heavy equipment manufacturers who are cramming high tech into their products without really understanding it or mastering its complexities.

Most people probably assume that today's (non-Tesla) autos are more reliable than in the past, because they have all those nifty built-in computers that monitor performance, warn of problems in advance, and so forth.

In fact, it appears that the opposite is the case.  According to the recent J.D. Power's Vehicle Dependability Study, late-model used cars are getting less dependable over time.

While that study cited "engine and transmission issues" as the cause of the decline, these are the very systems that the built-in microprocessors are supposed to monitor and improve.  

When these built-in microprocessor fail, or are poorly programmed, problems inevitably result, problems that will manifest themselves not as computer glitches but as mechanical failures.

Anybody who has been buying cars for any amount of time knows that, when it comes to microprocessors and computer technology, traditional car companies simply don't know what they're doing.  

For example, I still have a 2000 Honda CRV that runs perfectly except for the digital clock. Now, even back in 2000, a digital clock was a very simple circuit; literally child's play. Nevertheless, the clock failed after about three years. 

To make matters worse, when I went to the dealership to get it replaced, I discovered that the only way to replace it was to remove the entire dashboard, for which they were going to charge me $250.

Since I wear a watch, I passed on the expense.  Anyway, the failure of the digital clock in my 2000 CRV didn't keep me from buying a 2009 CRV.  Bad move. That car has an LCD screen that now permanently says "DVD failure; see dealer."

Honda keeps sending me letters offering to update the built-in GPS for $150, which is more than the cost of a new GPS, even if my phone didn't do GPS, which it does.  I shudder to think what they'd charge to fix the rest of the car's useless gadgetry.

Again, to make matters worse, the microprocessors in my 2009 CRV are connected so that they constantly draw power from the battery, so you can run down the battery in a few days, even if all the lights are off and keys removed.

Traditional car companies simply don't understand technology. For example, the website for the Chevy Malibu touts "built-in USB ports and an available Wireless Charging† station," which is not only redundant but also a feature you can add to any car for exactly $.01 (one cent).

The Malibu also has a screen that's running apps, and I can only imagine what a nightmare that's going to be in three years. Think of this way: Even Apple screws up its software updates. How likely is it that GM's or Honda's programmers will do better?

What's really scary, though, is that today's cars are connected to the internet, and some of them are programmed so poorly that it's possible to hack into them and turn off systems--including the engine--while you're driving the car:


There's no question in my mind that Tesla will dominate the market for electronic cars and that competitive products from traditional car manufacturers will be ugly failures. They don't know what they're doing; Tesla does. It's as simple as that.

Published on: Apr 13, 2016
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