The teardown specialists at IHS Inc. (NYSE: IHS) reached a surprising conclusion:
[E]verything in [the Tesla Model S’s] design makes the Tesla experience more like a media tablet or high-end smartphone than a traditional automobile. … When it comes to the user-facing segment of the Model S’s electronics, the company has radically departed from business-as-usual in the automotive market.
The IHS teardown is not completed yet, but the firm’s initial analysis focused on the two most electronics-intensive pieces of the Model S, the virtual instrument cluster and the premium media control unit, comprised of the main center stack and the touch-screen panel. According to IHS, the bill of materials for the two units is about double the cost of the highest-end infotainment system the firm has examined. An IHS executive noted:
The mobile device-like approach to the Model S’s user interface represents a very deliberate choice by Tesla. The company really wanted to do things differently and employed virtual controls — rather than physical knobs and buttons — to take over the user experience. This approach required a major investment in big displays and touch panels, similar to the approach Apple took when designing the iPhone and iPad.
ALSO READ: States Where You Can’t Buy a Tesla
IHS said that Tesla has even designed its own printed circuit boards, which allows the carmaker to deliver a significantly differentiated experience to its customers and to control its parts cost and suppliers. Does that sound like the way Apple Inc. (NASDAQ: AAPL) manufactures its iPhones and iPads? It does to the teardown specialists at IHS:
With this model, Tesla once again is behaving more like a smartphone or tablet seller than a normal carmaker. Apple, for example, keeps tight control over its iPad and iPhone designs, while outsourcing the assembly to [electronics manufacturing services] companies such as Foxconn.
The teardown of these two systems is just the beginning. IHS plans to tear apart all the Model S’s major subsystems, including the battery packs and the motor drive/inverter.
But in answer to the question, “Why does a Model S cost so much?” the answer seems to be that the vehicle has more in common with a computer than with a car. The luxury appointments that a buyer can find in many high-end cars are available on a Model S likely to provide visual evidence that the owner is driving a luxury car. After all, the electronics are invisible, but the leather seats and glass roof are not.
Top Gaining Stocks
Top Losing Stocks