Richard Engdahl sat down with the Fool's own John Rosevear to discuss the auto industry. Now The Motley Fool's senior auto analyst, Rosevear says it all started with his 2009 article, "Talk Me Out of Buying This Stock" (about Ford -- still one of his favorites). Today he offers an in-depth look at Tesla (TSLA -1.17%) and the electric vehicle market, as well as Chrysler's unique situation with Fiat (NASDAQOTH: FIATY).
Tesla seems to have taken a page from Apple's (NASDAQ: AAPL) playbook in its approach to consumers and earning their loyalty. Whether that parallel will extend as far as developers creating apps for the electric vehicle remains to be seen.
A full transcript follows the video.
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Richard Engdahl: Is there something to that -- if Cadillac has an electric vehicle, or Lexus, or someone has it -- is there something to the fact that, "Well, that's not all that remarkable, compared to a Tesla," which is the new kid on the block, the shiny new object? The Apple of cars?
John Rosevear: Sure.
Engdahl: Do you think Tesla has built that brand strongly enough to have a brand advantage over existing cars, even if they're quality cars?
Rosevear: I'm not sure about an advantage, but I think they are going in the right direction of building a brand strong enough that even if the Audi on one side and the Cadillac on the other side are comparable value propositions, that people will still choose the Tesla because it's cool, because people buy iPhones instead of the Android phones, because the design is cool; it speaks to them.
I think Tesla is trying to get ... Tesla seems very influenced by Apple sometimes. Not in terms of hard technology, but in terms of how they develop for the customer, how they focus on taking care of their customer and offering you this "surprise and delight" experience that Apple tries to offer. I think there's some of that in Tesla too.
"The car just works, and when it doesn't, we will take care of you promptly. You become part of the community, part of the Tesla family. We look out for you." That kind of stuff breeds loyalty, and if they can sustain it they will have a following, sure.
Engdahl: Sure. The other thing that Apple is famous for, of course, is its ecosystem. Once you buy into Apple, you are better served if you also have the phone, and the iPad, and the computer.
Rosevear: Right. I just bought two Macs. I know exactly how this goes, yes.
Engdahl: Is there a Tesla ecosystem, and is that developing? Are there apps for the huge screen inside the Tesla? Are there software updates or subscriptions that are part of ...
Rosevear: I don't know. On the other hand, their installed base is like 10,000 cars right now, which is not exactly going to bring all of the iOS developers out of the woodwork to develop for Tesla.
You've been in a Model S. You know the big touchscreen is kind of the center feature there. I understand it's Android powered, but whether it's forked off Android and will run Android apps, I actually don't have any idea.
I'm sure there are some things ... there are ways you can customize it, and so forth, but in terms of that amounting to a revenue stream for Tesla, I think they need a larger installed base. They need more cars out there.
You know, we hear GM (NYSE: GM) ... GM is run by Dan Akerson, who is a CEO who came from outside the industry. He was in telecom for many years, and then worked in private equity, and then came to GM after their bankruptcy, after the bailout.
He has pushed to have more connectivity in GM vehicles. In a year or so, they will all ship with 4G capability that you can turn on by buying a subscription, basically, like a $30 a month -- I don't know the price exactly, but probably like that -- like you would with an iPad, that kind of thing, a data subscription.
He has talked about opportunities there. The screen comes on and it's brought to you by Allstate, or there are apps that can be shipped. GM selling 8, 9, 10 million cars a year -- vehicles a year of all kinds, all over the world -- that's quickly an immense installed base.
Tesla, at 21,000 if they do well this year, and 30 to 35 next year if they do well; it's different. Will they get a few people? If they were to ship a development kit and invite developers to come in, they'd get a few programmers doing it just because it's a cool product, and it's very tech cool.
I live in Massachusetts and you see them all over the place in Cambridge, in Kendall Square, which is sort of the East Coast hotbed of tech. My wife was out in Silicon Valley recently; they were all over the place in Silicon Valley there. But you go to Texas, you don't see a lot of Teslas.
The point being that the following that they have, a lot of them are successful geek professionals, so sure, that will draw some interest in putting together some apps for it, but I don't think it's a significant revenue opportunity for them in the near term.
