Tesla “recalled” 1.1 million cars. That was the news. But that terminology is very deceptive because for Tesla, no one would be visiting a dealership for a fix. Rather,  the EV leader will do an over-the-air software update to deal with the minor issue with its windows. And by its ability to fix that via over-the-air software update, we can understand why this company is unique. Most other car brands will require you to take a trip to your deal.

For Tesla, it is an “update” which is the terminology for software companies. Tesla continues to open a new basis of competition, and that means transforming how to sell cars into the ways the world sells software. They have this business model where a buyer of your car must call Tesla to acquire new licenses since the ones you have are not transferable.

More so, if you want more “capacity” in that car, you can send more money to Tesla and they will add more. If you check it, Tesla has a Basic Plan, Premium Plan and Enterprise Plan – and it is a car company. But if you open the books, that is how you price software.

People, the main reason why Tesla is valued more than the top 10 car companies in the world combined is because of pricing innovation, not just the engineering feats! It makes selling cars look like selling software. Because of that, investors give it the same multiples as software companies because every car produced by Tesla will keep earning money until it is moved to landfill. No other car brand can say that!

Tesla is recalling some 1.1 million vehicles over fears that the cars’ automatic windows could pinch occupants while closing. The windows are supposed to stop if they detect an obstacle in their path, but Tesla said a possible problem with the system was discovered during testing. The automaker says it will fix the issue via an over-the-air software update. Tesla issued a similar update earlier this year after recalling more than 800,000 vehicles for a problem with a seat-belt alert. No injuries linked to the window issue have been reported, Tesla says.

• The recall affects select 2017-2022 Model 3 sedans; 2020-2021 Model Y SUVs; 2021-2022 Model S sedans and 2021-2022 Model X SUVs.
• Tesla CEO Elon Musk has pushed back against calling the issue a recall, saying on Twitter that the “terminology is outdated & inaccurate. This is a tiny over-the-air software update.”

The terminology is outdated & inaccurate. This is a tiny over-the-air software update. To the best of our knowledge, there have been no injuries.

— Elon Musk (@elonmusk) September 22, 2022

(LinkedIn News)

Comment on LinkedIn Feed

Comment 1: Tesla’s plan of people paying for car already owned makes me believe that the market is still open especially in the emerging markets. Any person who would build cars and give updates for free will kick out Tesla. But then investors are not an arm of charity organizations. Most might join the bandwagon only lowering prices charged.

My Response: ” Any person who would build cars and give updates for free will kick out Tesla.” – I wish you can show how that worked out for Linux vs Windows. Free software is not a great strategy in this world because most are “cheap”

Comment 2: Tesla car is like your iPhone, you don’t buy and go home completely. For you to keep enjoying more functionalities, you will remain connected to Apple, same applies to Tesla. Competing with Tesla in terms of number of EVs sold will always miss the point, the pricing model guarantees steady income, something that didn’t look like it would be possible in automobile industry.

Pricing elevated Microsoft, so until a business finds a way to remain connected to customers’ pockets, it will remain an endangered specie.

Those who are contemplating on price legislation need to get the memo, we should be talking about giving gas cylinders for free, while using software to ensure that the consumer continues to buy gas from designated stations…

Comment 3: Tesla is also ultimately ahead of the curve by catering to higher aspiration of people. While other car makers were adding wood panels and heated seats to cater to luxury, Tesla focused on catering to peoples interest in the environment, which is it’s optimal selling point,and earned first to market status. Others will keep in Tesla’s shadow unless they innovate something relevant- better. There’s an electric car that goes one better to actually suck up carbon emissions from the air- invented by some students. If they allow owners to earn carbon credits for certain number of miles driven- and they brand it properly- it will be a big hit. TESLA might want to look into acquiring that company.

My Response: mazing perspective. Many buy that for that “aspiration” as you noted.

In an imperfect market where demand and supply have massive disequilibrium, a  regulation which demands that a telecom company in such a market not allow data expiration on its monthly data plan (no contract, you load and it expires after 30 days), will force the firm to adjust its pricing.

Let us assume that it costs TelcoBBA  $100 to produce 100GB of data and it has ten customers. Depending on regulation, it will price this product in many ways. Let us look at the options:

Option A: Data cannot expire once bought by users. Since that data would be used since timing has been eliminated, TelcoBBA will likely make the prices higher for each of those 10 customers, irrespective of their income brackets. In other words, across the different plans of 1GB, 3GB,  and 10GB which may be available, the company will go for the killer since under all conditions, once sold, it has to serve that $100GB.

Option B: Data can expire after being purchased. Here, TelcoBBA will look at the statistical data to see how much of such purchases expire over time. If say only 70% use their data because it expires, it has “saved” 30GB. If that is the case, it can discount data plans for some customers since some people have paid and never going to use them up.

This brings me to MultiChoice (owners of DSTV and GOtv brands) and its stakeholders: “MultiChoice Nigeria, a pioneer pay TV service provider, as well as other stakeholders in the broadcast communication sector, have rejected a proposed pay-per-view for pay TV proposed by lawmakers.” If you ask them to use Pay Per View (PPV), would you force them to treat the hours for Zee World and European Champions League at the same price rate?

Indeed, you can do PPV in the US for $14 per hour but on a major boxing event, an hour can go for $1,200. PPV is dynamic and never think it means dividing your 30-day DStv plan by 30 days and you pay the minute you want. No way unless DStv has reclassified as a charity!

Comment on LinkedIn Feed

Comment 1: “If you ask them to use Pay Per View (PPV), would you force them to treat the hours for Zee World and European Champions League at the same price rate?”

No, under PPV times become unequal.
The challenge becomes how to weight times round the clock, across seasons, markets and market segments?

Some thoughts/assumptions:
1). Services that cost more to produce or with high license cost will attract higher viewing cost per sec/mins/hr.
The challenge here is finding the price point that is low enough to avoid customers dropout and high enough to make profit.

2). Services are unequally weighted by customers. While Champions League is a watch or die affair to some, others careless about it but will give anything to watch Zee World. MultiChoice can learn individual customers viewing preferences and time and put a premium on them (targeted pricing).

This (2) implies that you and your neighbour can/will be charged differently. This will be very challenging to apply and can land MultiChoice in trouble in an environment were legislation is an attractive instrument for pricing.

Comment 2: “If you ask them to use Pay Per View (PPV), would you force them to treat the hours for Zee World and European Champions League at the same price rate?” The choice to make between Zee World and UCL would have been determined by the customers, had it been there were more brand/product options for the customers to choose as well. However, in this case, it is dstv/gotv if you really want product availability and satisfaction —which has really given MultiChoice a strong market competitive advantage. Other industry players are yet to get it right in that regard. The hard fact, anyway!

My Response: Yes, that was why I opened with that imperfect market. The Nigeria case is like that. In the US/UK, there are many alternatives which will allow PPV to work

MultiChoice (DStv, GOtv), Stakeholders Reject Pay-Per-View Proposed By Nigerian Lawmakers