In a recent note, prominent auto analyst Adam Jonas of Morgan Stanley discussed how Tesla’s software-defined vehicles may increasingly converge with the mobile device market.
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Jonas highlighted Tesla’s over-the-air update capabilities and App Store-like features as examples of how its cars are taking on smartphone-like characteristics. This includes adding new functionality, entertainment and customized user experiences remotely through software alone.
As vehicles become more defined by flexible software rather than hardware, Jonas predicts the lines between the automotive and mobile device industries will blur. Features like gaming, media streaming, and third-party apps in Tesla models already point in this direction.
However, significant differences remain in purchase price, development cycles and product life spans between vehicles and mobile devices. Cars have a multi-year cadence of basic hardware upgrades compared to the annual phone refresh cycle.
But Tesla’s software-centric approach aims to make its vehicles feel continually fresh and updated. With smartphones and cars alike relying on software, CPUs and internet connectivity, the user experience gap between both categories may shrink over time.
While forecasting this software-driven convergence, Jonas maintained his $400 12-month price target for Tesla stock. This implies limited upside from current levels in the near term.
Overall, Jonas provided an intriguing perspective on how Tesla’s disruptive software focus is reshaping expectations for what vehicles can offer. Increasingly, Tesla aims to combine the freedom and capabilities of personal mobile devices with its category-leading EV technology.
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