Software Is King, Tesla Makes Cars More And More Like Smartphones | Smart Globies

Software Is King, Tesla Makes Cars More And More Like Smartphones

Software is king, Tesla makes cars more and more like smartphones

News on the evening of May 31st, Beijing time, according to reports, nowadays cars are slowly becoming less dependent on hardware, and more dependent on software. The impact of this shift on the automotive industry is no less than any other trend, including vehicle electrification and autonomous driving. For this reason, investors in the automotive field should begin to pay more attention to software.
If this "software-defined car" trend is difficult to understand, just look at your mobile phone. In the past, mobile phones have always been about hardware until the birth of the iPhone. New applications (App) and operating systems make mobile phones better and better.

At present, the car is still in the "flip phone" stage, but this situation is changing. Tesla pioneered the "over-the-air update", and now more automakers are doing the same, connecting their cars to the Internet.

Last week, Ford Motor Week announced a plan to improve the effective running time and efficiency of commercial fleets and reduce the cost of vehicles by fully utilizing the intelligent network technology from vehicles to the cloud. Investors are very optimistic about the news. Ford's stock price has risen 9% in the past week, while the Standard & Poor's 500 Index and the Dow Jones Industrial Average both rose about 1%.

Essentially, Tesla is removing sensors from cars and relying more on software. In contrast, traditional car manufacturers are also adding software, but they are not inclined to remove sensors and hardware.

This transformation is also accompanied by "growth troubles." Last week, Tesla's Model 3 electric car lost its Best Choice rating from Consumer Reports. Mainly because of its safety features and Tesla's decision to use only optical cameras when "other carmakers use radars and cameras."

Tesla is unlikely to go back on this decision. In fact, more automakers may adopt a similar approach to Tesla. The transition to "more software-centric cars" will have many impacts on how cars are designed and sold.

Kevin Clark, CEO of Tesla's power electronics component supplier Aptiv, said: “Tesla has not really focused on models for a long time. Tesla can increase power output through software and increase the range of electric vehicles. This can be achieved through software, as is the enhancement of in-car entertainment functions.

Obviously, this approach has produced tangible benefits. Tesla's gross profit margin is higher than that of BMW, although its scale is only 30% of BMW's. Clark said that the "software-defined car" trend is still in its infancy and there is still a long way to go.

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