Music industry sources say the carmaker has had talks with all of the major labels about licensing a proprietary music service that would come bundled with its cars, which already come equipped with a high-tech dashboard and internet connectivity.
I understand most of what Elon Musk tries to do, but I don’t get this one. He should integrate all of the big services into the cars and let the customers choose. Making a new music service doesn’t seem to solve a problem for consumers.
Yeah, not sure what the hook is here. Most Tesla customers must already have at least one music subscription. What is going to make them want to use the Tesla one instead of Spotify, Apple, Amazon, etc?
Maybe he’s been listening to the same fools who keep urging Apple to buy Tesla.
no. Just no.
Isn’t Tesla already losing enough money on every car they make?
So, basically, this: https://imgs.xkcd.com/comics/standards.png
Tesla includes a subscription for 4 years to Spotify for cars in Europe and Slacker radio in the US/Canada. They’ve got a special rate negotiated, but even at half, it is costing them hundreds of thousands of dollars every month.
Creating their own streaming service would give users the same functionality (name a song and the car plays it) while saving Tesla a significant amount of money.
There is a difference between losing money in every car you sell, and taking that money and reinvesting it in the company. Tesla has a gross profit margin of almost ~25% per vehicle sold. Auto industry average right now is ~12%.
I think what he meant is streaming music service is almost a guarantee to be a losing money business ala Spotify.
But how can their customers access those songs while at home?
OR! They could just not bother including the streaming music subscription and change the entertainment UI to connect, behind the scenes, to whatever.
That’s exactly what it sounds like they are doing. They don’t give you the login details unless you call them, the car is just setup with access. It will be very easy for them to redirect the cars to their service with a software update assuming they are really trying to create their own service.
See my comment below, this would likely save them money.
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Uh, no, that’s not what Rick was saying. Tesla doesn’t need to get in the middle of this in any way, shape, or form. Just provide the cars and put hooks into the car’s audio system that can play nice with whatever streaming provider their users have. They shouldn’t be creating their own service at all.
My point was that they don’t have to include the Spotify sub or any sub. If an owner subs to a streaming service, provide a way for them to connect that to the Tesla control center. I want Apple Music, you want Spotify, no problem, we choose that in the Tesla UI and boom, done. The solution isn’t to do their own music service, it’s to let me choose whichever I want.
Ha! Cross posted. What are the odds…?
They don’t, but it is a great user experience. Same thing with the cars internet access. You get the car and stuff just works and you don’t have to worry about it.
I’d love it if they let me choose the service, I don’t really like slacker radio. I’d much rather use Spotify.
My entire point however is valid, and a response to the article. They can potentially provide the same experience they are providing today for less money.
My comment was mainly a light crack, but I’d love to be convinced that Tesla has even a slight chance of success.
This is a notoriously capital-intensive business. Where do you see reinvestment that is actually going to result in the dramatically increased future production capacity the company will need?
I’ve seen their projections, but again, this is a company notorious for missing almost every deadline and projection they’ve ever offered. I can’t see any reason this would change.
Most demoralizing of all, the company’s losing track record exists despite impressive sales of very high-cost vehicles to wealthy buyers, while their future depends on being able to sell much larger quantities of far lower-cost vehicles. In other words, far more production capacity (capital) at far less cost per vehicle, requiring exponentially higher efficiencies.
I like the idea, I like the cars, and I’d love to be convinced.
Joe, you’ve got me just about convinced that Tesla at least thinks they can come up with a money-saving alternative to a costly perk that buyers actually benefit from.
Elon Musk is a very clever guy and he’s decided to pretty much put the entire world on his shoulders.
I wish him luck. And, if possible, quite a bit of actual magic, as I’m afraid he’s going to need it.
Tesla’s plan from the start was to create an expensive vehicle, and use the income from that to build out production for a less expensive vehicle. First they had the roadster, they used income from that to develop the Model S. They then used income to design and develop production line for the Model X. They have since been reinvesting all income to development of the Model 3. As I mentioned earlier, Tesla’s profit margin per vehicle is twice the industry average. 25% is huge. Tesla has shown a loss for the last 2 years because they’ve been reinvesting that money to increase production capacity.
Roadster -> starting price >$100,000
Model S/X -> starting price ~$65,000
Model 3 -> starting price ~$35,000
So what has Tesla done so far? In order to produce 500k vehicles per year, they would need every single lithium ion battery produced world wide. To solve that, they build the gigafactory. It cost billions of dollars, and can produce as much lithium ion batteries as the rest of worldwide production combined.
Tesla has been making massive orders for robots to build the production line. And it has been under way my for some time.
Tesla receives massive shipment of robots for Model 3 production line – first pictures | Electrek
I completely agree that Tesla is horrible about deadlines.
As far as the shorts, they have lost 3.7 billion this year alone. In fact, shorts have lost more money on Tesla than ANYONE else in 2017.
Tesla is most painful stock for short sellers in 2017 | Reuters
I own a Tesla Model S. It is the best vehicle I’ve ever owned. I’m a car nut, I’ve owned and driven a lot of vehicles. I’ve had better service from Tesla than ANY other company, let alone car manufacturer or dealer. I will be purchasing from them again in the future. The vast majority of Tesla owners feel the same way.
Time and time again, Elon Musk manages to accomplish what nobody thinks can be done. They may be late, but I believe they will get there. Based off of their current stock value, I’m not the only one.
Apparently I can’t post links. But google “Tesla robot shipment” and “Tesla painful for short sellers.”
Great minds think alike. 🙂 high five