What Tesla’s Hurricane Irma Response Says About the Future of Innovation
Elon Musk’s automobile innovator is making it harder for incumbents to accept the status quo.
PHOTO CREDIT: Getty Images
Hurricane Irma attacked Florida with a high degree of ferocity -- perhaps not as bad as some had feared, but pretty impactful nonetheless. Help came from many arenas, but one was pretty unexpected: Elon Musk and Tesla.
After a Tesla owner within the mandatory evacuation zone needed about 30 more miles of range to get out of the path of the storm, Tesla agreed to unlock the full 75 kilowatt-hour (kWh) of energy within the car's battery pack. When the company then realized that the additional 15 kWh jolt could give 30 to 40 additional miles to others also trying to get out of the storm's path, they did something amazing. They temporarily unlocked other vehicles within the region so that they could access the additional mileage.
Here's how it works: unlike most old-school automobile manufacturers, Tesla is able to limit the battery capacity of its vehicles using software. They did this in order to make some models cheaper for consumers; as a result, some of Tesla's Model S and Model X cars have a battery capacity of 75 kWh but are limited to 60 kWh or 70 kWh. Normally, owners have to pay an additional $9,000 to unlock that extra 15 kWh of power, but Tesla instead did what many would consider to be the right thing by offering all customers in Hurricane Irma's way a temporary upgrade.
Besides being a great example of a company doing its part to help those affected by disaster, Tesla is also a paragon of innovation. While most state laws require drivers to bring cars in to dealerships to receive upgrades, Tesla has adeptly gotten around those hurdles by forgoing the building of a dealership network, leaving most other car companies in the lurch as they try to catch up to Tesla's capabilities.
Ultimately, there are internal challenges with respect to innovation. Often incumbents cannot afford to innovate, explains Skywire Networks CEO Alan Levy, because "they worry that their innovation will lead to lower-priced, more efficient products, thereby cannibalizing their margins."
Levy, whose firm delivers enterprise-class broadband services to New York City businesses, commends Musk for what he has been able to accomplish: "as a new, disruptive force in the automotive space with no established revenue base or embedded infrastructure to cannibalize, Elon Musk was able to completely reengineer the way cars were produced, serviced, and sold." Tesla's response to Hurricane Irma is further proof of how different it is from any other car company: Instead of customers having to go to individual dealerships or call third-parties for assistance, they are able to reach out directly to the company -- and with a few lines of code, Tesla is able to address their needs immediately.
Melonee Wise, CEO of Fetch Robotics, is another leader who applauds Tesla's actions during Irma. "One of the major benefits to being first to market is not only the ability to move quickly and decisively, but to offer a certain level of innovation and creativity that might not be available within a more established industry," says Wise, whose company develops autonomous mobile robots. There's evidence to support that more creative firms tend to do better: McKinsey found that 67% of the most creative firms had above average organic revenue growth, and 70% produced above-average total return to shareholders.
Rosanna Myers, CEO of Carbon Robotics, sees definite parallels between the automotive and robotics industries, where antiquated distribution networks hamstring innovation. Myers hits on the key problem that incumbent firms face: they must avoid biting the hand that feeds them, "while disruptors can do what's best for the customer. Tesla unlocking range to save lives is a prime example of how that agility is shifting the landscape."
Myers also touches upon a bigger, related trend: all major companies need to be, in some sense, software-centric. "Customers now expect continuous upgrades and improvements to their hardware, but a lot of old-school execs barely know how software works," explains Myers. "As we move to a world of connected devices, they're being left in the dust."
While most car companies are not yet leaving their customers in the dust, Tesla is certainly leaving them in the dust, getting an outsized amount of press and acclaim. If Elon Musk's many disruptive initiatives keep shining at the right moments, entrenched incumbents will need to figure out how to innovate at a faster clip.