A good friend of mine, a brilliant dev/ops guy with several successful startups under his belt, option-trades Tesla’s stock when he’s not developing cloud systems and social platforms. Like many successful tech workers, this friend has an unshakeable faith in technological progress which underpins his support for Tesla. “Look,” he tells me when I suggest that Tesla’s stock valuation is wholly unmoored from its fundamentals, “new technology takes over and transforms everything. We see it again and again in other sectors, why wouldn’t it be the case for cars?”
His favorite example: the transition from film to digital photography. “Sure, it was crazily expensive to develop… but it matured rapidly, took over the market and nobody looked back. Why wouldn’t electric cars be the same?” Attempting to answer his question got me thinking: what would it take to fundamentally revolutionize the auto industry to the extent that digital revolutionized film? More specifically, what would the “digital” car look like?
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The mistake my friend makes in assuming that Tesla’s electric cars are poised to revolutionize the auto industry is the same mistake car enthusiasts make when analyzing the auto industry: understanding the technology too well. Car enthusiasts understand the benefits of things like rear-wheel-drive, transmission types, and the relative merits of forced- versus normal-aspiration, and judge the merits of a car based on this understanding. Similarly, high-tech types understand that electric drive systems are fundamentally more simple and elegant than internal combustion engines, and assume that fewer moving parts and more packaging options will result in a fundamentally better car. Both are correct to the extent that the market values enthusiastic drives and technological elegance… but the reality is that neither of these ideals move the average consumer’s pulse.
Those of us who are old enough to remember a time when it was widely used will recall that film was not a fundamentally problematic technology. Sure, it took developers anywhere from an hour to a day to process the images, but this was hardly considered an inconvenience. Digital photography took over not just simply because it was better than film (indeed, the debate rages on among photographers), but because it was better than film for the emerging digital world. As computers and internet access became more ubiquitous, so did digital cameras… and together they made photography one of the major social activities of the digital age.
Electric cars, on the other hand, have not developed alongside any megatrends that might similarly advantage them. Though there may be some synergy between the dominant high-tech sector and the EV in terms of battery technology, there’s no sign of a hoped-for “Moores Law-effect” in battery technology. More importantly, the typical consumer’s lifestyle and relationship to the automobile has not fundamentally changed in any way that benefits electric cars. Whereas Facebook and Instagram create endless new demands for digital photography and cameras, electric cars are stuck driving on the same roads and in the same traffic as gas-powered cars. And though they are mechanically simpler, EVs don’t deliver a radically improved user experience over the “legacy technology.”
So if EVs aren’t the “digital car,” what is? Once again, the answer lies not in changing technology but with the changes in society. As young people increasingly live their lives in the digital world, they see less and less need to own their own car in the traditional model and often turn to car sharing for their occasional needs. Therefore it stands to reason that the “digital car” is one which allows you to travel without leaving the digital space, and one which does away with the traditional model of car ownership. In short, the “digital car” is in fact the autonomous car.
Autonomous cars is the only automotive technology that truly reflects the social shift from “meat space” towards the digital realm. As such, and in the fine tradition of all disruptive technologies, it also destroys the car as we know it. Without drivers, the design of cars would change dramatically and the finer points of their drivetrains and handling would lose all their remaining importance. With the ability to have a car drive to your front door, the need to own a car at all would all but disappear. Certainly slogans like “The Ultimate Driving Machine” would have to be rethought. Enthusiasts may shudder at this vision of the future, but for most consumers replacing “driving” with “arriving” would be an appealing revolution in the automotive experience.
The real question is whether this digital leap will be forced on an unwilling auto industry by a company like Google, or if a Jeff Bezos is lurking somewhere inside one of the automakers, ready to destroy an old business in order to define a new one.