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Tesla’s Burning Car Response Highlights Industry Blind Spot

by Roger Lanctot | Nov 25, 2013

Three car fires affecting Tesla’s Model S in the past month have caused the National Highway Traffic Safety Administration (at the invitation of Tesla CEO and founder Elon Musk) to announce a safety investigation, the results of which will likely not be available for months. Tesla’s stock price has taken a hit and financial analysts expect sales to suffer, but Musk keeps turning crises into marketing opportunities, while highlighting a significant auto industry blind spot: software updates.

In response to the fires, Tesla announced a software over the air update to raise the speed at which the car automatically lowers itself by an inch for better aerodynamics. For more details, read Musk’s blog: http://www.teslamotors.com/blog/mission-tesla.

(Of course, what Tesla’s Model S really needs is Mercedes Benz’s Magic Body Control, which is capable of dynamically anticipating road undulations and setting vehicle suspension settings on the fly: http://tinyurl.com/n2q3b3g. But you can’t download sensors.)

In his blog, Musk invites NHTSA to investigate the fires while emphasizing the fact (based on National Fire Protection Association data) that a driver is 4.5x more likely to experience a car fire in a car equipped with an internal combustion engine than in a Tesla Model S.  Musk also notes the absence of any injuries or fatalities in Model S fires vs. “400 fatalities and 1,200 serious injuries” from 250,000 car fires occurring since the middle of 2012 in the U.S.

In his blog, Musk also offers an update and an expansion of the existing Model S warranty to compensate owners who may experience future fires and notes plans for a software update to give control of suspension height to the driver.

Software updates remain a sore point for car makers dependent on franchise dealers. Dealers have made clear their concerns regarding software updates and how those updates rob them of a valuable point of customer interaction.

In spite of dealer resistance, car makers such as Chrysler and Toyota have enabled software updates via connected smartphones for basic app updates and installation. And flash drives are still used for map updates and software upgrades by other car companies. In both instances, though, the customer has the option of having the dealer manage the update. (Ford and Fiat, in particular, have made broad use of flash drive updating with mixed results.)

Tesla’s software update philosophy is simple – Tesla will deliver and install the update at a time convenient to the owner at no cost. Following the update, Tesla will provide documentation detailing the extent of the enhancements added to the vehicle.

GM and OnStar have had and have used a similar approach for the past few years, but have played down the capability out of concern for harming dealer relations. Instead of leveraging firmware over the air updates (FOTA) as a competitive advantage – capable of adding value to the car after the sale – GM has only gone so far as to highlight vehicle diagnostic capabilities in its advertising.

Another reason for GM to downplay its FOTA capabilities is the difference between the 3G telecom module from AT&T in the Tesla Model S and the 2.5G telecom module from Verizon currently used by OnStar. Tesla is actively leveraging the wireless connection to enhance the user experience with streaming audio, and access to Google Maps and a Web browser in addition to software updates.

OnStar, in contrast, has been far more conservative with its wireless connection emphasizing low-bandwidth applications such as remote door unlock/lock, remote start, turn-by-turn navigation, stolen vehicle tracking and recovery and diagnostics. That conservatism may change by this time next year as LTE-equipped GM cars begin arriving in the market.

In the meantime, GM will do well to take notes on Tesla’s approach to software updates and the marketing points the company is able to score – unencumbered by franchise dealers trying to protect their service business. The challenge for GM and the industry is to find a win-win solution for dealers, OEMs and car owners to convert software updates to a competitive advantage a la Tesla.

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