Lead: "Harvard Business Review" this week published a review article by Harvey Business School and MIT Sloan School of Management technology lecturer Lou Shipley (Lou Shipley), analyzing how Tesla can subvert traditional cars Industry, and became the darling of Wall Street. He believes that Tesla has established four advantages over traditional automakers.

The following is the full text of the article:

Tesla ’s recent breakthrough market performance indicates that doubters may have made a wrong judgment. By mid-January, Tesla's market value had reached 107 billion US dollars, surpassing the German auto giant Volkswagen, becoming the second-largest automotive company in the world after Toyota. Tesla's valuation now exceeds the sum of Ford and GM. Skeptics on Wall Street may be shocked, and Tesla's innovative business model poses a threat to the survival of the entire automotive industry. Why it came out like this? Marc Andreessen, the co-founder of Anderson-Horowitz, a well-known venture capital firm in Silicon Valley, made a famous assertion in an article published in 2011: "Software is eating the world." A big advantage for Sila.

In today's software-centric world, traditional automakers are not fully prepared for competition. Unlike flexible Teslas, they are large in scale, serious in bureaucracy, slow to respond to customer demand, relying on traditional auto financial services to drive sales growth, and culturally very different from software companies.

They also know this. Last fall, the public, still teetering in the car emissions scandal, stated that Tesla was an "important competitor." The biggest challenge facing Volkswagen and other traditional automakers is the lack of expertise required to compete in the era of software-based cars. Tesla and high-profile innovator Elon Musk have upended this industry with a history of more than a century in just 16 years.

Why did this disruption happen so quickly? We can see how traditional auto industry leaders have achieved what they are today. In the 1920s, there were about 200 manufacturers in the automotive industry. Subsequently, this fragmented market gradually integrated, forming several industry giants. These giants use huge capital to build industry barriers and believe that such barriers are unbreakable.

Tesla ’s rate of innovation in the high-end car market is more like Google and Amazon than traditional car companies. Tesla's soaring market value sends a clear signal to all automakers that they need to establish a more innovative, Tesla-like business model in order to continue to survive.

At present, Tesla has done better than traditional car manufacturers in at least four aspects:

1. Tesla develops cars in a similar way to software products

The way Tesla develops cars is to develop software on unique hardware. This is very similar to how Apple developed the iPhone, or how Microsoft used Intel chips and Dell PCs. Therefore, Tesla can optimize the software functions in the car every few weeks. This is completely different from the traditional auto industry model. In the past, after you bought a car, the car will remain unchanged for a long time.

Because there are fewer parts, the total cost of ownership of Tesla cars is significantly lower than that of fuel cars. The owner does not need to pay too much to change the oil or spark plug. Automobile manufacturers are actually very clear about this, and have made considerable profits from the after-sales service of automobiles.

2. Tesla simplifies the purchase process and allows consumers to control everything

Tesla does not put advertisements in newspapers or radio, but adopts a similar software sales model. Tesla knows that consumers are smart, so it just tries to find consumers. They know the buyer's shopping decision process very well.

Buying a Tesla car is easy. You just need to go online, choose a model, add features, pay a deposit, and make an appointment for pickup time. In contrast, when buying a Japanese brand car, you need to communicate with the sales staff, and the latter will not give the price directly. He will constantly go to the manager to communicate whether the price of the new discussion is appropriate. When the customer mentions the car, the salesperson will also hope that the customer will give 10 points of praise so that he can get the bonus.

3. Using the strength of battery technology, Tesla minimizes the total cost of ownership in the vehicle life cycle

The structure of Tesla electric car is much simpler than that of fuel car. Industry insiders estimate that Tesla electric vehicles have only about 20 parts, while traditional fuel vehicles have about 2,000 parts. This simplification greatly reduces the owner's cost of ownership. Tesla recently acquired several battery manufacturing companies and applied these technologies to its own vehicles, which may further reduce the cost of ownership. Although other auto manufacturers are also striving to establish professionalism in the field of batteries, as the market develops, they will still be in the position of catching up.

4. Adhere to environmental protection and cope with global warming, Tesla has occupied the market trend

From a marketing perspective, Tesla already has a great advantage in certain areas. Everyone wants to use cars that are pollution-free, do not need to go to gas stations, and are truly environmentally friendly. It will take a long time for other manufacturers to catch up in this field.

What should the automotive industry do in this situation? Traditional car manufacturers will provide more electric cars in the 1920s, but they are not necessarily software-based cars. These products are just traditional cars with electric motors installed.

You can be sure that there are security risks in software cars, just like any other connected technology. However, by building models and managing these risks more efficiently, Tesla can consolidate its leadership.

Now, traditional auto manufacturers must think about how to transform into a software company. However, considering the situation of these companies, they are like traditional software companies facing the challenges of emerging startups. They can only acquire competitors and promote market integration. We should pay attention to this activity, because such integration is likely to come soon. (Viking)

From: Sina Technology