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Here’s How The Tesla Inc Model 3 Could Change Driving Forever

From Jon Markman: Humans are lousy drivers. The fix is coming later this year. A new car promises superhuman driving powers and it will change everything, says a noted analyst.

Adam Jonas, an auto analyst at Morgan Stanley, believes new driver-assisted safety features in the Tesla Model 3 could make the $40,000 electric car 10 times safer than any car on the road today.

That’s a really big deal. In a research note to clients, Jonas points out “safety is the No. 1 determinant of car purchases,” according to car companies. He expects that will lead to an “ah-hah!” moment in competitor boardrooms when shiny new Model 3s began rolling off the assembly lines later this year.

This is not the first time Tesla has pushed the envelope. In 2003, the idea that an electric vehicle could compete with conventional cars seemed ludicrous. That changed in 2004 when Elon Musk, the founder of PayPal, became chairman. He believed electric cars could be fun, fast, futuristic and safe.

The first Tesla was a head-turning, electric two-seater fastened to a Lotus chassis. That ticked the first three boxes and won the fledging carmaker a legion of loyal Silicon Valley 1-percenters. The next car, the Tesla Model S, focused on safety above all else.

Tesla outfitted the Model S with expansive crumple zones and a low center of gravity while removing heavy moving parts like a driveshaft and an internal-combustion engine. The Model S impressed the U.S. National Highway Traffic Safety Administration so much that the NHTSA awarded the car a 5-star safety rating, not just overall, but in every subcategory. In August 2013, a Tesla press release boasted that the results showed the Model S had achieved the “best safety rating of any car ever tested”.

The Model 3 promises to be even better. A new array of 360-degree cameras and ultrasonic sensors will identify external threats. And a powerful supercomputer developed by Nvidia (NVDA) will make sense of the deluge of data.

The end product should be an automated-driving software package that is “always on”. Its sole purpose will be to avoid collisions when human judgment fails.

It comes at the right time. More than 30,000 people in the U.S. lose their lives in traffic accidents each year. And the NHTSA reports that this number is on the rise as texting and the constant buzzing of mobile app notifications distract drivers.

Other companies have noticed. Volvo, BMW and Ford are pushing aggressively forward with self-driving cars. They will negate human involvement altogether. And Musk often speaks about self-driving as a “solved problem”. He’s helped by very enthusiastic Tesla owners who routinely push the limits of its ill-named Autopilot software.

Near term, the closest automated driving competitor is Toyota. Its Guardian Angel software package will take over steering and braking if the human behind the wheel has a lapse in judgment. The company invested $1 billion in the project and set up research facilities in Silicon Valley and Michigan. That’s a good start but the technology will not roll out in production models until 2020.

Tesla Model 3s are coming later this year.

And that’s the rub. Car companies are grappling with a strange transition. True, self-driving cars are coming. They need to make investments and determine what that will do to existing business models. Meanwhile, they still need to compete with Tesla and its ridiculously safe, mass-market Model 3. That’s tricky.

It’s also reflective of the time. Advances in computing power, data analytics and modeling mean pie-in-the-sky concepts like truly self-driving cars are not just possible, they are near. It’s a great time to be a consumer and an investor.

Jonas is right, everything is changing. Change is opportunity. And there are lots of opportunities in the companies that make the sensors, software and the hardware components needed to make the transition.

Tesla Inc (NASDAQ:TSLA) closed at $263.16 on Friday, up $8.38 (+3.29%). Year-to-date, TSLA has gained 23.15%, versus a 4.62% rise in the benchmark S&P 500 index during the same period.

This article is brought to you courtesy of Jon Markman’ s Pivotal Point.

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