Here’s Why Tesla Has A Competitive Edge In The Autonomous Cars Market

Several automakers and other companies have been working on autonomous cars, which are being touted as the vehicle of the future. Yet another,  Tesla Motors (NYSE:TSLA), has established a clear lead. The company has installed autopilot hardware in every vehicle produced since October 2014. These vehicles have now generated nearly 1.3 billion miles of data, which can be used to improve intelligence for a fully autonomous vehicle. This gives Tesla a huge competitive advantage over other players.  These include Google, whose parent company Alphabet recently spun off the autonomous car business into a separate company.  Also present are General Motors and Uber, which do not have access to any such large volumes of “real” data.  Autonomous autos developed by Google have covered around 2 million real miles, significantly lower than Tesla’s data. We believe that, as consumers start thinking of transport as a service instead of a private vehicle, the self-driving market will grow significantly. The number of private owned cars per capita is declining in cities, where there is often excellent public transportation and millennials do not prefer to own cars. In the long run, self-driving cars could augment or even replace the existing public transport infrastructure and we expect this to be a huge opportunity for automakers. (Read Self Driving Cars, Part 2 : Size Of Opportunity Involved).

See our full analysis for Tesla Motors

Model 3 Likely To Have Hardware Enabling Full Self-Driving

Tesla’s much awaited Model 3, which is likely to be on the roads by the end of 2017, will have an improved hardware suite that will enable fully autonomous driving. If this launch date is met with the promised features, Tesla will be the first company to release a fully autonomous car in the market. While other companies might not be far behind in launching similar vehicles, the installation of this hardware will ensure that Tesla can collect more data as this model launches, further improving its autonomous driving intelligence.

Model 3 is Tesla’s mass market electric vehicle and it received an overwhelming response when bookings were opened earlier this year.  According to our estimates, after its launch in 2017, Model 3’s market share will climb significantly reaching nearly 20% by the end of our forecast period.

A first mover’s advantage in the autonomous cars market comes with a huge advantage of accumulating enormous amounts of data, which is the backbone of artificial intelligence. Tesla already had this advantage and is likely to gain more once Model 3 is launched. With self-driving cars likely to be the future of the automotive industry, Tesla will have an edge over other players in this technology.

Understand How a Company’s Products Impact its Stock Price at Trefis

View Interactive Institutional Research (Powered by Trefis):
Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap More Trefis Research