Industry Pioneer: Tesla transforms automotive business model with in-app purchases [Video]

Last week, the big news from Tesla Motors [NASDAQ: TSLA] was its decision to reintroduce a lower-priced 60kWh option for the Model S. It's conceivable that this new option will help absorb some percentage of the Tesla Model 3 pre-order individuals who were considering a higher-end version of the car. To that end, they might be unwilling to wait too long for the Model 3 and consider the Model S 60 a perfect reason to buy a Tesla now. However, it's also possible that this move heralds an exciting new strategy from Tesla Motors.


Instagram: @douglascurl

Wired* explains that the, "Tesla Model S with a 60 kilowatt-hour battery, a 200-mile range, and a lower price didn’t require redeveloping the [battery] pack, revamping the assembly line, or reconfiguring the supply chain. All it took was a few lines of code. That’s because the Model S 60 and its all-wheel-drive sibling, the 60D, carry the same 75 kilowatt-hour battery Tesla Motors already puts in the Model S 75. Engineers simply tweaked the software to limit its capacity by 20 percent. This lets Tesla quickly and easily offer a model at a lower price—thereby goosing sales—and gives customers the option of upgrading down the line as their needs and budgets change."

Youtube: Newsy

Wait... why would Tesla make this decision? "It sounds crazy: Tesla is building overly capable cars, limiting their use, and selling them at a discount—then charging $9,000 for an upgrade. Tell the dealer you want more range, hand over your money, and Tesla presses a button. Zap. Software update. Gamers, of course, recognize this for what it is: an in-app purchase, in a car." Outside of the auto industry, this is a common occurrence, "From Battle Camp to Candy Crush to Angry Birds, you’ve accepted that a 'lite' version is free and the really cool features cost money. Developers hope to hook you on the free stuff so you’re willing to pay for more. Tesla does the same thing."


Instagram: @angiegiechu

And this isn't the first time Tesla tried this approach, "Customers who pay $2,500 for Autopilot are simply paying to have the software activated. Tesla already installs the cameras and radars—the stuff that actually costs money—in every car. Early adopters who didn’t get automatic access to Tesla’s network of Supercharger stations can add it for $2,500. The hardware needed to quickly suck down electrons is already on the cars, they just needed the software... [therefore] if you skimp on Autopilot but decide you want it a year later, you don’t need a new car. If a new job brings a longer commute and a raise, paying $9,000 for 20 percent more range becomes a great option."


Instagram: @brocknanson

Wired concludes that its likely we'll see other automakers following Tesla's lead, "Want satellite radio? Tap in your credit card details to enable it. Your phone died and you absolutely need the navi system you skipped at the dealer? No problem. It’s one quick purchase away. Didn’t pay for heated seats because you bought the car in Miami, but now live in Minneapolis? You get the point. In the past, automotive dashboards had black plastic blanks where the features you didn’t pay for would have been. These days, filling them is a simple matter of updating software."

===

*Source: Wired

USD
  • US Dollar (USD)
  • Euro (EUR)
  • British Pound (GBP)
  • Canadian Dollar (CAD)
  • United Arab Emirates Dirham (AED)
  • Albanian Lek (ALL)
  • Afghan Afghani (AFN)
  • Armenian Dram (AMD)
  • Angolan Kwanza (AOA)
  • Argentine Peso (ARS)
  • Australian Dollar (AUD)
  • Aruban Florin (AWG)
  • Azerbaijani Manat (AZN)
  • Burundian Franc (BIF)
  • Barbadian Dollar (BBD)
  • Bangladeshi Taka (BDT)
  • Bahamian Dollar (BSD)
  • Bahraini Dinar (BHD)
  • Bermudan Dollar (BMD)
  • Belarusian Ruble (BYN)
  • Belize Dollar (BZD)
  • Bhutanese Ngultrum (BTN)
  • Bosnia-Herzegovina Convertible Mark (BAM)
  • Brazilian Real (BRL)
  • Bolivian Boliviano (BOB)
  • Botswanan Pula (BWP)
  • Brunei Dollar (BND)
  • Bulgarian Lev (BGN)
  • Congolese Franc (CDF)
  • Swiss Franc (CHF)
  • Chilean Peso (CLP)
  • Chinese Yuan (CNY)
  • Colombian Peso (COP)
  • Costa Rican Colon (CRC)
  • Czech Republic Koruna (CZK)
  • Djiboutian Franc (DJF)
  • Danish Krone (DKK)
  • Dominican Peso (DOP)
  • Algerian Dinar (DZD)
  • Egyptian Pound (EGP)
  • Ethiopian Birr (ETB)
  • Fijian Dollar (FJD)
  • Falkland Islands Pound (FKP)
  • Gibraltar Pound (GIP)
  • Ghanaian Cedi (GHS)
  • Gambian Dalasi (GMD)
  • Guinean Franc (GNF)
  • Guatemalan Quetzal (GTQ)
  • Georgian Lari (GEL)
  • Croatian Kuna (HRK)
  • Honduran Lempira (HNL)
  • Hong Kong Dollar (HKD)
  • Haitian Gourde (HTG)
  • Hungarian Forint (HUF)
  • Indonesian Rupiah (IDR)
  • Israeli New Shekel (ILS)
  • Icelandic Krona (ISK)
  • Indian Rupee (INR)
  • Iraqi Dinar (IQD)
  • Iranian Rial (IRR)
  • Jamaican Dollar (JMD)
  • Japanese Yen (JPY)
  • Jordanian Dinar (JOD)
  • Kenyan Shilling (KES)
  • Kyrgystani Som (KGS)
  • Cambodian Riel (KHR)
  • Comorian Franc (KMF)
  • South Korean Won (KRW)
  • Kuwaiti Dinar (KWD)
  • Cayman Islands Dollar (KYD)
  • Kazakhstani Tenge (KZT)
  • Lebanese Pound (LBP)
  • Sri Lankan Rupee (LKR)
  • Liberian Dollar (LRD)
  • Lesotho Loti (LSL)
  • Libyan Dinar (LYD)
  • Moroccan Dirham (MAD)
  • Moldovan Leu (MDL)
  • Malagasy Ariary (MGA)
  • Myanmar Kyat (MMK)
  • Macedonian Denar (MKD)
  • Macanese Pataca (MOP)
  • Mauritian Rupee (MUR)
  • Maldivian Rufiyaa (MVR)
  • Malawian Kwacha (MWK)
  • Mexican Peso (MXN)
  • Malaysian Ringgit (MYR)
  • Mozambican Metical (MZN)
  • Namibian Dollar (NAD)
  • Nepalese Rupee (NPR)
  • New Zealand Dollar (NZD)
  • Nicaraguan Cordoba (NIO)
  • Norwegian Krone (NOK)
  • Omani Rial (OMR)
  • Panamanian Balboa (PAB)
  • Pakistani Rupee (PKR)
  • Papua New Guinean Kina (PGK)
  • Peruvian Nuevo Sol (PEN)
  • Philippine Peso (PHP)
  • Polish Zloty (PLN)
  • Qatari Rial (QAR)
  • Romanian Leu (RON)
  • Russian Ruble (RUB)
  • Rwandan Franc (RWF)
  • Saudi Riyal (SAR)
  • Sao Tome and Principe Dobra (STD)
  • Serbian Dinar (RSD)
  • Seychellois Rupee (SCR)
  • Singapore Dollar (SGD)
  • Syrian Pound (SYP)
  • Swedish Krona (SEK)
  • New Taiwan Dollar (TWD)
  • Thai Baht (THB)
  • Tanzanian Shilling (TZS)
  • Trinidad and Tobago Dollar (TTD)
  • Tunisian Dinar (TND)
  • Turkish Lira (TRY)
  • Solomon Islands Dollar (SBD)
  • Sudanese Pound (SDG)
  • Sierra Leonean Leone (SLL)
  • Surinamese Dollar (SRD)
  • Swazi Lilangeni (SZL)
  • Tajikistani Somoni (TJS)
  • Tongan Paanga (TOP)
  • Turkmenistani Manat (TMT)
  • Ukrainian Hryvnia (UAH)
  • Ugandan Shilling (UGX)
  • Uruguayan Peso (UYU)
  • Uzbekistan Som (UZS)
  • Venezuelan Bolivar (VEF)
  • Vietnamese Dong (VND)
  • Vanuatu Vatu (VUV)
  • Samoan Tala (WST)
  • Central African CFA Franc (XAF)
  • CFP Franc (XPF)
  • Yemeni Rial (YER)
  • South African Rand (ZAR)