Can Tesla Motors Inc. Solve America's Traffic Congestion Problem?

Tesla’s next “recall” may have the answer.

Jun 18, 2014 at 12:19PM

Source:  Wikimedia Commons

Nothing makes Tesla (NASDAQ:TSLA) shareholders shriek louder than the mention of the possibility of a recall being announced. Don't worry -- the next one coming up is just another over-the-air software update, which means current owners don't have to do a thing. The update actually could make their lives much easier; it could eventually change life as we know it by using computerized logistics to take GPS to a new level for everyone on the road -- literally everyone.  

Back in January in an interview on CNBC, Elon Musk, CEO of Tesla, said that the software updates are similar to ones that occur on your cell phone. Unlike with vehicles made by other manufacturers, you don't need to physically bring in your car for service. Musk prefers the word "remedy" and even cleverly tweeted that the word "recall" needs to be recalled.

Safety first
Part of the reason why a recall of any motor vehicle sounds so scary to investors is that the word instantly causes fear about potential design flaws and safety issues. Nobody likes the public to be put at risk by a faulty product, a state of affairs that can be very expensive to fix, not to mention be potentially damaging to public perception of a company.

As with any new technology, some people are skeptical and apprehensive about Tesla's vehicles. Safety is an important selling point (and the Model S has been rated as the safest vehicle on the road), especially considering that the company has yet to spend a single penny on advertising and relies on the media and word of mouth to spread its reputation.

Perception is everything in terms of safety right now. Musk even said, during the company's June 3 annual stockholder meeting, that the underbody shields that Tesla now offers as a standard feature on its vehicles "aren't really necessary." He said half-jokingly that the shields would be sort of helpful "so that you can drive over concrete block[s] and be OK."

Not surprising, Musk was quick to remind everybody that there has yet to be a single major injury involving a Tesla vehicle. Not only did a guy drive "through two concrete walls at 110 miles per hour," but Musk revealed that apparently somebody literally drove off a cliff in one of the cars and walked away fine.

Musk announced that the newest software that will be coming to the Tesla Model S later this year will allow customers to personalize their cars. The vehicle will actually "learn your behavior" and automatically adjust to what you want.

Additionally, the software will be equipped with a new type of GPS on steroids. It will alert you to sudden changes in traffic and recommend other routes. But that's not what's truly remarkably.

What the software will be able to do is use the data from other Tesla vehicles as a priority data source for what's happening on the roads. This means that as production and sales continue to multiply and Tesla hits the mass market, then each car will be guided logistically to figure out the best path for each so as to ease congestion on the roads. Even those drivers without a Tesla will benefit from Tesla's vehicles being redirected away from congested areas.

Foolish final thoughts
Musk also said in that call, "So, as the number of Model S in the neighborhood increases, the quality of the traffic will actually improve quite considerably."

As long as Tesla helps clear the streets and continues its safety track record, count me in. I think others will appreciate it, too, which will allow a little extension in the time frame before Tesla has to begin advertising to really sell its products.

Warren Buffett's worst auto nightmare (Hint: It's not Tesla)
A major technological shift is happening in the automotive industry. Most people are skeptical about its impact. Warren Buffett isn't one of them. He recently called it a "real threat" to one of his favorite businesses. An executive at Ford called the technology "fantastic." The beauty for investors is that there is an easy way to invest in this megatrend. Click here to access our exclusive report on this stock.


Nickey Friedman has no position in any stocks mentioned. The Motley Fool recommends Tesla Motors. The Motley Fool owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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