Tesla is turning to data-driven offerings to make up for potential losses in EV market share (TSLA)

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Tesla, the Elon Musk-led automaker, is leaning on vehicle data to introduce several new initiatives, according to recent reports.

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The automaker’s cars can now self-diagnose internal problems and order replacement parts, The Drive reports. A Reddit user who owns a Tesla Model 3 posted a picture of his vehicle’s infotainment center, which showed a notification of an issue with the car’s power conversion system. The car automatically placed an order for replacement parts to be delivered to a Tesla service center, where the owner’s car would be repaired.
Meanwhile, Tesla is also working with insurers to introduce a new insurance plan that’ll reportedly be cheaper than competing plans offered by other insurers,according to The Wall Street Journal. The automaker is working with Markel Corp, a Virginia-based insurer, as well as another unnamed insurer, to develop and offer the plan, which Musk first teased in April, on Tesla’s Q1 2019 earnings call. Tesla claims to have better data on its cars and drivers than any other firm, which it says will help it price the insurance plan under those of competitors.

Here’s what it means: Tesla is turning to new, data-driven offerings to tap a growing, multi-billion dollar opportunity and make up for potential losses in EV market share. Tesla has enjoyed an early-mover advantage in the EV space to date — the Model 3 sedan was the best-selling EV in the US last quarter.

However, competition is ramping up, as a number of luxury automakers plan to introduce models that’ll compete directly with Tesla’s over the next couple of years, such as Audi’s e-Tron SUV and Porsche’s Taycan. To combat this risk, Tesla can use the extensive stores of data it has collected to build tech and services that make its cars smarter and less expensive to own.

And even if Tesla does lose market share to rivals, monetizing the data could provide a solid supplementary revenue stream for the company — McKinsey predicts that the global market for monetizing car data could be worth between $450 and $750 billion by 2030. Tesla could charge its car owners for remote diagnostics and predictive maintenance, for example, or sell car data to third parties.

The bigger picture: Tesla is just the latest firm to join the battle among automakers to maximize the opportunity to collect and subsequently monetize car data. Jaguar Land Rover, for example, announced a new program last week that allows drivers to make money in the form of cryptocurrencies by enabling automatic data reporting in their vehicles. And last year, GM launched a feature that detects when a car’s fuel tank is low and directs drivers to a nearby gas station, where they’ll get a discount on fuel. Gas station chains then pay GM a fee for steering customers their way.

In order to maximize the opportunity to monetize car data, automakers will need to build extensive partner networks with cloud providers and data analytics firms. Automakers may not have the large in-house data analytics teams required to parse the huge stores of data collected from cars.

That’ll require they seek third-party partners, which some automakers have already done. For example, last October, Volkswagen inked a partnership with Microsoft Azure to develop a purpose-built automotive cloud platform. This partnership will help make the transmission of data between cars and the cloud more seamless and secure, which could, in turn, make the process by which Volkswagen analyzes, stores, and ultimately monetizes the data more efficient.

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Source: Business Insider – nshields@businessinsider.com (Nicholas Shields)