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Asymcar 10: Asleep at the switch

The orthodox vs. the unorthodox: Tata, Tesla and Toyota. Why might an asymmetric competitor lose and a symmetric competitor win?

We begin with Tesla and Apple. We continue with aluminum vehicles and re-visit information asymmetry as Horace exploits it to buy a Mercedes on eBay.

We talk about car APIs (Aux input jack and ODBII) and much, much more.

A brief discussion considers the perils of endless line extension up and down the market, perhaps fueled by financialization.

This is a good one.

Asymcar 10: Asleep at the switch | Asymcar.

  • victor

    Hi horace, clay’s integration vs modularization theory may be a clue of why incumbants are not being able to respond to tesla:

    Mit technology review: Other electric-car startups—such as Fisker Automotive—have failed. And even established automakers have struggled to sell their battery-powered cars. What makes you different?

    JB Straubel Tesla Cto: Part of it is that Tesla designs its own batteries, motors, electronics, and software controls. It’s not very glamorous, and not even always customer facing, but in the end that’s what makes the car work and what makes it different from other electric cars, and makes it compete effectively against gasoline cars.

    An example?

    Our superchargers allow us to charge the Model S more than twice as fast as other cars. To do that kind of charging, everything has to be working in perfect synchrony. The cooling system; the electronics that are talking to the charger; the connection to the grid. That whole thing has to work as a system flawlessly. If we outsourced the charger, or outsourced those other pieces, we couldn’t innovate as quickly. We couldn’t roll out things anywhere near as fast.

    Here is the full interview:
    http://www.technologyreview.com/featuredstory/524541/driving-innovation/

  • Frank

    Thank you Horace, this was a very exciting episode of Asymcar; I learned so much from you, and really enjoyed the theory.

  • Anthony Daniele

    Hi Horace. After listening to your “financialization” argument, I tried to think about what assumptions the bean-counters from the incumbents are making which may evaporate in the future (the “off the cliff” scenario you spoke about).

    I came up with 2, which I think you’ve spoken a little about on the show, but probably warrant some more discussion:
    1. Fuel costs don’t figure in the car manufacturers numbers, but do for consumers. If Tesla can find a way to capture that advantage, it could be a game changer e.g. combining the sale of a Tesla with a home solar lease which would make the car effectively free to run and offer a home energy solution also. This could also improve the economics of car sharing services.
    2. Servicing costs are higher for internal combustion engine cars, and a certain amount of after sale income is assumed in the incumbent’s numbers. Once again, if Tesla can offer generous warranty terms and/or offer a flat-fee service agreement, they would be providing what no-one else can.

    Solar panels are becoming popular among people with low incomes because they offer certainty on future energy costs. Telsa could effectively offer the same with personal mobility. As with solar panels, however, the cost of the core product needs to come down first. Once they do, the factors above will become more pronounced.

  • Oui Oui

    The real reason why the Apple board wants Tesla is Elon Musk. He is the one person who could run Apple with a giant vision. He’s as close to Steve Jobs as Apple will ever get. Although Apple has smart people, they all lack vision and leadership because they were followers under Steve Jobs. Jony Ives can design a product but he can’t design the future like Elon Musk.

    • GlennC777

      I disagree, not about whether Elon Musk is visionary, but about whether his vision would be right for Apple. People like Jobs and Musk are driven to be obsessed with the particular things their minds are attracted to. Geniuses in general share this quality, I think. It is as much a right-hemisphere “emotional” quality as a left-hemisphere “analytical” quality.

      Musk has done extraordinary things but has never shown much interest in the kinds of personal and computing devices Apple makes. This is why I don’t think there is any chance of any kind of merger, although opportunistic cooperation in some areas might make sense.

      • Oui Oui

        I never said that his current vision would be right. I think he could create a vision that would be right for apple. And I do think that Steve Jobs would have gotten into cars. A cheap investment for apple to get into cars, beautiful, magnificent cars, and get Musk as CEO.

        Also, that right hemisphere, emotional is missing at the top of apple now. That’s where Steve used to sit. Now, it is just the opposite.

        Apple would be a magnificent company with Musk at the helm, in my opinion.

    • http://www.asymco.com Horace Dediu

      If a business depends on genius, the best thing to do is to shut down and give the assets back to the shareholders.

  • Oui Oui

    Good in theory but never practiced and sometimes shouldn’t Apple relied on Steve’s genius and vision when he returned from Next. Should it have given everything back or sold out to Sun? Asymco exists solely because of his return.