Here’s what it takes to catch up to Tesla (spoiler: it’s not easy)

The work to catch up to Tesla is phenomenal. Not many will be prepared to do the work to catch up. ...

To anyone who’s paying attention to the auto industry, it’s fairly well understood that Tesla is leading the world in the race to make fully-autonomous electric vehicles.

For a company that’s only been around 16 years (July 1st, 2003), the electric-only Tesla Motors, has taken a wildly different approach to how cars should be designed, how they should perform and what they should be capable of. While they do miss self-imposed timelines for delivery, they are actually delivering on their bold promises and that’s getting noticed.

Tesla Referral Link
If you do buy a @Tesla Model S, 3, X or Y, please use our referral link to get 1,500km (1,000 miles) of free Supercharging – https://ts.la/jason45054

In terms of investment, Musk responded to a question during the Autonomy Day event, where he confirmed that virtually the entire company cost structure is being dedicated to the massive challenge of creating cars that can drive themselves.

Musk says we should expect autonomous vehicles to be on our roads (select areas depending on legislative approval) in 2020. Almost all other automakers are aiming for years after that, or are taking the easy way out and aiming for a controlled, geofenced region of a city. When compared with a car that can essentially drive anywhere, anytime, Tesla is playing a different game.

In April this year, Tesla held an Autonomy Day event, Musk and key employees detailed the technology stack (read: war chest) that they have built.

If an automaker wanted to catch up to where Tesla, it won’t be easy, fast and certainly won’t be cheap.

Below is a breakdown of what it would take for a competitor to beat Tesla, remembering this is a rapidly moving target.

Design

When Tesla began, electric cars had a bad name when it came to design, conservative at best, but mostly weird. EVs back then were certainly not exciting or sexy. Tesla designers turned that around and have transformed the public perception of what an EV can look like.

Jumping inside, this technology-focused company rethought the interior with the Model S and X. Introducing a massive touchscreen, it replacing the knobs and dials others claimed consumers wanted (they don’t, they just never had another option).

With Model 3, Tesla pushed the design even further. A minimalist’s dream, the car is inviting to customers, but the simplicity also helps dramatically in the globalisation of vehicle production.

Complicated and expensive LHD and RHD market customisations are replaced by a single display mounted in the centre of the dash. Basically switch the wheel, pedals and flip the software and you just built a car for the other half of the world.

Want to compete with Tesla?
You better have a slick looking sports car on the outside that’s incredibly aerodynamically efficient, with an interior that’s high-end, comfortable, modern and definitely digital-first.

Performance

Electric Vehicles were also slow for many years, but Tesla rewrote that with Supercar performance without the million-dollar price tag. This now sets the benchmark for other automakers.

Having great acceleration is fantastic for overtaking, or collision avoidance in the event of an impending accident, but most of the time it’s just fun to have a quick squirt when the lights turn green.

Tesla don’t make slow cars, even their entry-level Model 3 will shoot from 0-100km/h in just 5.6 seconds, while their fastest Model S P100D does that in a stunning 2.6 seconds.

Want to compete with Tesla?
Not every car has to have supercar performance, but with the right engineering from the start, it seems Tesla is able to extract this speed without compromising the range capability.

When we look at the likes of Rimac, it is possible to build incredibly fast EVs without a Tesla logo, but nobody’s come close to offering it at the same price point.

Battery supply – Gigafactories

When you’re planning to build hundreds of thousands of vehicles, you need a lot of batteries. In the early days of the company, Tesla worked out they would need more batteries than the whole world was creating. If you’re building your business on batteries, you need to own the supply chain and Tesla are doing that with multiple Gigafactories.

Tesla has a 3 Gigafactories, with the name based on the plans to produce more than a Gigawatt of energy per year. The first is located near Reno Nevada, the second in Buffalo, New York and the third is nearing completion in Shanghai, China.

Want to compete with Tesla?
If you plan on beating Tesla, chances are you’ll need to make more cars than them, which means you’ll need more batteries. Good luck building your own Gigafactory equivalents, they are some of the largest buildings on the planet.

The building is just the start then there’s working out the supply chain of raw materials like lithium, as well as the robot and human combination to get battery packs produced. If you managed that, there’s the transport and logistics problem of getting them to where your vehicles are made.

Another aspect of EVs is battery efficiency and therefore range. Tesla’s Model 3, S, Y and X are the 4 most efficient in EPA Miles per kWh with the Model 3 achieving 4.0 while the next rival is the Mercedes EQC at around 2.75kWh per mile.

Even in 2019, no other company has a product that can achieve a longer distance than Tesla. The Model S Long Range is rated for 660km (NEDC) or 610km (WLTP). No electric car, in production today, has exceeded the range of the first Model S released back in 2012 which shows just how far ahead Tesla really are.

Over the air updates (Embedded SIM)

Most other vehicles require a trip to the service centre to get an update to their infotainment system and a change to the functionality is basically unheard of outside Tesla.

Inside every Tesla vehicle is a SIM card. In each country, they have an exclusive deal with a telco (Telstra in Australia) to provide unlimited data for the life of the car. Until recently, this meant every Tesla would get free internet radio (like Spotify) and in some markets, access to browser the web through an in-built desktop-class browser.

There’s also live traffic data, as well as map visuals, supercharger availability and mobile app connectivity to your vehicle that are all possible thanks to this SIM.

Connectivity is now limited to 1 year for Model 3 SR+ buyers, but what hasn’t changed is Tesla’s ability to leverage this connectivity to get vehicle telemetry and autonomous driving data (more on this soon).

Want to compete with Tesla?
Getting these deals signed with mobile carriers in each part of the world is logistically taxing, but also less likely given many EVs are targeting the cheaper end of the market that can’t hide the cost of an unlimited SIM.

At the autonomy day, we learnt that Tesla is uploading video frames from the on-board cameras, as well as anonymised vehicle data when they need to train their AI models about edge cases found out in the world.

Taking feedback from the community, responding to new feature requests quickly is now the standard expectation. This also features a mobile app layer that notifies users of an available software update and allows the scheduling of that update over WiFi.

Currently, at V9.0, the software rollout also comes in the form of rings, similar to Microsoft’s Windows 10 insider rings. Limited internal testing occurs first (usually staff vehicles), then public beta testers and finally global rollout.

The next software update in August is slated to include support for Enhanced Summon (FSD required), enabling the car to come to pick you up. Previously it’s added dog mode, dashcam and even reduced the acceleration time.

Having a car that adds features over time, changed the way we think about the value of vehicles.

Production scale

Toyota, Volkswagen, Ford, Honda, Nissan, Hyundai, Chevrolet, Suzuki, Kia, Mercedes, Renault, BMW all sold more than 2 million cars last year. Tesla didn’t even make it onto the list of top 25 automakers by unit sales in 2018, but in a world that’s rapidly banning combustion engines, that leader board is about to change rapidly and Tesla is charging hard.

During the Annual Shareholder’s Meeting on June 12th, Musk outlined that in the US, they were the 4th best selling by unit sales, but is number 1 in terms of revenue.

Want to compete with Tesla?
Tesla has a massive head start in terms of sales of the next generation of vehicles. While the Nissan Leaf has over 420,000 global lifetime sales, they took 9 years to achieve that. Even with those numbers, the range, performance and certainly mindshare can’t compete with Tesla.

After working through the difficulties of scaling up production, the Model 3 now outsells the Mercedes C Class, BMW 3 series, Audi S4 and Lexus combined.

Full self-driving (FSD) hardware

Tesla made step-change recently, by moving away from the Nvidia Drive platform, to their own custom silicon. This provides them with the same power and flexibility of a hardware/software solution they own end to end, very similar to Apple with the iPhone.

Tesla’s system on a chip is 21x faster (144 TOPS) than Nvidia’s chip (21 TOPS) and features a GPU, 2x Neural Processing Units, a CPU and DRAM. This is capable of processing as much as 21x 1080p images at 60 fps, many more than the 8 on-board cameras could produce.

Want to compete with Tesla?
While Musk was complimentary of Nvidia’s efforts, he highlighted that they are a scale producer for a number of clients which means the economics don’t permit custom builds, so heavily investing in a custom, fit for purpose chip was the best option. This means any automaker hoping Nvidia will catch them up, is already in trouble.

The project to develop this chip started more than 3 years ago and the fact they were able to fund and achieve HW3 with the necessary footprint, thermal limits is seriously impressive. There’s no public number for the cost of R&D, but it sounds like many, many millions.

To compete, you’ll need some amazing talent, capable of designing a chip with enough performance to match Tesla’s, while being power efficient as to avoid impacting the range of the vehicle.

Then you need it produced at a chip fab, (Tesla use Samsung) and integrate it into your vehicle for minimal cost to the consumer. Next you’ll need a software stack capable of taking advantage of that performance and a ensure it’s not just safe enough to drive the vehicle, but is safer than a human.

To actually deploy vehicles on the road you’ll need data to prove the system’s safely to authorities around the globe. Tesla has millions of km of data that is already proving Autopilot is far safer than humans.

AI / Computer vision

Musk has been very critical of other approaches to solving self-driving like lidar. The sensors are expensive, hard to hide in the body of a vehicle and can lead you down a path of development that looks fruitful. While you can get a vehicle to the basics of driving using this technique, you don’t have the necessary data about the environment in edge cases, necessary for FSD.

Using a computer vision approach, Tesla is building intelligence into the car that is not too different too how we see the world. The one massive advantage the car has is that the cameras, sensors and radar are all external to the vehicle and can see in all directions at once.

Here’s the cool part. Tesla uses AI to power its self-driving effort. This works on a general principle of the more labelled data you have, the better the system is. Tesla has the most of any automaker as they have the most hardware (cars) on the road. Every week they extend this lead.

The FSD system works like this.

  1. As Tesla drivers with Autopilot take over the steering wheel or pedals, that is signalled as an event to Tesla. They can request footage from events of certain types at any stage when they’re looking at improving that edge case – there are a lot of edge cases.
  2. As the footage from the cameras is fed back to Tesla, the footage is analysed and usually labelled by humans annotating on images. This could be to indicate a curve in the road etc.
  3. With enough labelled data, the model can be retrained and then the result needs to be tested.
  4. Tesla deploys an update first in Shadow mode. While the car operates as normal (on current software build), it’s also running a second version of the code (next version) to validate that the new model is indeed better at making driving decisions. With enough confirmations, the code is then greenlit for release to the public and that edge case should be solved.
  5. The entire fleet of Tesla vehicles gets smarter over time via OTA software updates.

It’s a wild system, but one that gets better with scale and as Tesla do less of this work with humans and more of it with AI, they are accelerating the rate of development in Self-driving. It’s perhaps this acceleration that provides Musk confidence they’ll be feature complete by the end of 2019. That means the cars will stop at stop signs, pause at give way signs, know how to interact with road works, crossings and even obey traffic lights.

Want to compete with Tesla?
You can’t. While technically possible, you’d have to be the likes of Toyota to outsell Tesla to get more hardware on the road. Assuming Toyota was willing to design, engineer, build and market an EV with FSD hardware, they’d also need the backend IT systems. This includes server farms, storage, bandwidth and personnel talented to build a similar cyclic AI learning system.

Its worthwhile remembering Tesla isn’t standing still so catching up won’t be easy.

Product portfolio

Most large vehicle manufacturers offer a wide range of vehicle types to complete their product portfolio. Tesla may not have a vehicle for everyone, but with the Model 3, they have a (semi-affordable) medium sedan, a large sedan with the Model S, an SUV with the Model X.

Tesla also has a smaller SUV with the Model Y going into production in the next couple of years, built largely on the same platform as the Model 3. The company will unveil a Ute later this year and we’ve already seen the Tesla Semi and next-generation Roadster which aims to be combustion sports cars in every way.

Want to compete with Tesla?
For an automaker to matter in 10 years from now, you’re going to have to not just leverage global sales, you’re going to need to re-use a lot of the same platform to make the economics work. We’ve seen a few companies create the electric skateboard design where different bodies could be placed on top, but nobody is doing this at scale (say with 10 different body types).

At the heart of all Tesla vehicles, it’s their battery (range) and electric motor (performance) technology that really stands out. The design of Tesla’s could be beaten by someone who’s willing to take more risks into a futuristic design direction, but appealing to a wide audience is certainly the game. With more interesting design, typically comes with an increased coefficient of drag, meaning you pay a penalty in range, proving again how important your battery-tech is.

Recharging infrastructure

Unlike everyone else, Tesla didn’t wait for Government infrastructure spend on electric recharging infrastructure, they built their own. This also means they snapped up some great real estate.

Fortunately charging standards have settled down and alternatives to the Tesla Supercharger network are now being rolled out. Essentially Tesla owners will still have an advantage as they have access to Tesla + others (like Chargefox in Australia).

Want to compete with Tesla?
It’s really unlikely you’ll see another company build out their own charger network like Tesla, this will be left to 3rd party energy suppliers and that means the price won’t be controlled for the EV owner. While Tesla has moved prices around a lot on vehicles, they have really left the price per kWh on hold at Superchargers.

Tesla also offers a great referral program, which goes a big way them saving on advertising campaigns. Most auto manufacturers pour millions into ads, making the return on vehicle sales a longer curve before they start making money.

It’d be a very good idea for other brands to also create peer-to-peer referral bonuses and lower the spend on ads, but that depends heavily on how people feel about the brand and products (does it offer something new and different or is it an also-ran?).

Tesla is upgrading Superchargers to support the CCS2 connectors and also to increase the charging rate. New Superchargers are V3 which are up to 250kW a little down from the fastest available at 350kW, so yes, it is possible to go better than Tesla regarding charging speeds.

Mobile app vehicle control and management

Thanks to that build-in SIM card, Tesla raised the bar on how much owners can interact with their car via the mobile app. You can monitor and control charging, set climate control, see any open doors, even check the vehicle’s location.

Summon is a feature that allows you to move your car forward and back from the mobile app. Next month Enhanced Summon is rolling out and will allow users to drop a pin on the map and the car will drive to you and pick you up (in a parking lot) without anyone in the car.

Over time, Tesla has added a range of features to the app and options like limiting the speed of the vehicle in Valet mode.

Want to compete with Tesla?
This is only possible with a connected EV.

Charismatic CEO / Founder

Elon Musk is a unique individual, the likes of which we’ve never really seen before. The appetite for risk is unwavering and commitment is relentless in the face of unfavourable odds, investing large sums of his own time effort and money in to keep Tesla, SpaceX and The Boring Company alive.

When on stage, Musk is quirky, he laughs at his own jokes, often with the audience, but sometimes not. In some ways, this adds to the interest in him personally and therefore Tesla.

Musk is often on Twitter (almost daily) and responds to the community of 24.4 Million followers. While he can be controversial, that creates headlines and again that’s free marketing for the company.

Musk also does a number of interviews which helps explain the detail of some of his thoughts and decisions, not possible in other forums. This often humanises him, making him appear as calculated, deliberate, purposeful and intelligent founder, who is acutely invested in the finest detail of the cars, production challenges and finances of the company.

Want to compete with Tesla?
It really is hard to say how much Tesla’s success and future are tied to Musk. We have seen some of the shine come off Apple after Steve Jobs passed away, but in Microsoft’s case, Satya Nadella has accelerated Microsoft to a height much greater than Bill Gates ever could.

Being confident in your ability (and your team’s ability) to deliver great products is definitely something other CEOs could do, but could they create the same love for the brand that Musk does, that’s less likely. The main reason for this is that many carmakers change CEOs fairly regularly and this is a long-term game.

It would also take a very brave CEO to walk into their board meeting and turn their company on its head, even though that’s what’s required. If countries are banning the cars made today in as little as 10 years, they need to start moving to EVs today. If they make to EV and the cars can’t drive themselves, their value will suffer as the benchmark just changed.

Eliminate dealerships

Another large cost saving for Tesla (even though their vehicles are still a premium price) is the lack of dealerships. When you buy from Tesla, you buy through their website and sign unseen, you pay for the vehicle and go collect it.

That model is very scary for your second largest purchase, but we now know, hundreds of thousands of people are comfortable with that. In 2019 it seems there is almost nothing we won’t buy online.

Want to compete with Tesla?
If you want to compete with Tesla who has no dealerships and therefore no extra costs, you’re faced with a margin problem. Cars are usually provided to a deal at a wholesale cost, then the dealer tacks on their expense structure (including profit and bonuses to salespeople).

Dealer networks are so entrenched in our culture of vehicle sales that it’s hard to see any major brand outright eliminating them, but the need for them will certainly deteriorate rapidly. The best case is those dealerships become service centers (or charging stations).

Financial resources

Many car companies went bankrupt during the global financial crisis. This makes them risk-averse and may not have the capital necessary for the R&D efforts required.

This has seen a number of automakers partner together or with technology partners to share that cost.

Want to compete with Tesla?
There are company’s with deep pockets in the world and it is possible to outspend Tesla on this. There are parts of the equation, like the Neural Net development that relies on vehicles driving in the real world, that can’t be bought. There’s also the issue of attracting the right personnel, as some of this technology is so specialised there are not hundreds of people in the world that could achieve it.

The ability to attract the top talent is also something you can throw money at, but that has to fight against someone’s belief in the vision of the company and their role in helping the company realise that.

Tesla’s mission is to accelerate the transition to electric vehicles.. a bold, lofty goal that’s an interesting challenge to go after.

Tesla Referral Link
If you do buy a @Tesla Model S, 3, X or Y, please use our referral link to get 1,500km (1,000 miles) of free Supercharging – https://ts.la/jason45054

Overall

All things considered, Tesla has a massive lead, measured in years, not months, so catching them won’t be easy. As long as demand and production remain fairly closely tied together, the company continues to invest in their technology and their people they are certainly going to be one of the largest automakers 10 years from now.

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GeneralTesla

Creator of techAU, Jason has spent the dozen+ years covering technology in Australia and around the world. Bringing a background in multimedia and passion for technology to the job, Cartwright delivers detailed product reviews, event coverage and industry news on a daily basis.
4 Comments on this post.

Leave a Reply

  • Kevin Tat
    21 July 2019 at 5:46 pm

    Well written! Proud owner of a Model S, San Diego, California

    Leave a Reply
    • Jason Cartwright
      21 July 2019 at 6:06 pm

      Thanks Kevin, have review the Model S P90D, stunning car.

      Leave a Reply
  • Eric Dehais
    3 August 2019 at 8:56 pm

    Thank you for this piece, which I think is the best review of what Tesla has achieved thus far. Almost everything is here, with great explanations and reasoning.

    Looking forward to your adding a bit about their growing manufacturing prowess, both in designing simpler cars to build/service (3-way cooling system, reduced wire harnesses) and the machines to put them together (full body frame casting) as the details emerge.

    How crazy is it to have a company that just keeps on pulling rabbits out of the hat? I really miss that about Apple.

    Leave a Reply
    • Jason Cartwright
      3 August 2019 at 9:50 pm

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