“I need to be precise in my phrasing,” observes Joe Castelino from Stevens Creek Volkswagen in San Jose, California, when discussing the software that the majority of car dealerships utilize for managing inventory, marketing efforts, customer interactions, and other essential functions.

Castelino, who serves as the dealership’s service director, shares this comment with a chuckle. However, for many car dealers, the situation has been a source of frustration, as they have generally depended on a limited number of outdated vendors for their dealer management systems, alongside more specialized individual solutions.

This specific situation presented a clear opportunity, which former Tesla Chief Information Officer Jay Vijayan recognized while still working at the electric vehicle manufacturer.

Vijayan explains that his knowledge of the automotive industry was limited until he joined Tesla in 2011, after spending 12 years in product development at Oracle and then VMware. During his subsequent four years, he states he collaborated with Elon Musk to develop a central analytical system within Tesla—a comprehensive system capable of monitoring all internal operations, including the supply chain, factory processes, and retail platform.

Vijayan asserts that Tesla was compelled to develop this system internally; after assessing the software offered by existing third-party providers, the team “determined that none of them offered anything comparable to what was required to deliver a streamlined, contemporary consumer experience.”

It was at this point that a new idea emerged. If Tesla could revolutionize the experience for its own clientele, Vijayan considered whether he could similarly transform the buying and selling process for the larger, more extensive automotive sector. This led to the founding of Tekion, a San Carlos, California-based company now four years old, with a workforce of 470 employees in both local and Bangalore locations, and recently secured $150 million in new funding spearheaded by the private equity firm Advent International.

This Series C funding round, which also included contributions from Index Ventures, Airbus Ventures, FM Capital, and Exor—the holding company for Fiat-Chrysler and Ferrari—brings the company’s total funding to $185 million.

The company’s valuation now exceeds $1 billion. (Automakers General Motors, BMW, and the Nissan-Renault-Mitsubishi Alliance are also investors.)

Eric Wei, a managing director at Advent, notes that his team had been seeking to capitalize on an approaching $10 billion annual market for the past decade. However, they instead focused on monitoring established companies like Reynolds & Reynolds, CDKGlobal, and Cox Automotive’s Dealertrack—and anticipating the arrival of a superior competitor.

Wei’s introduction to Tekion came through Jon McNeill, a former Tesla president and an advisory partner at Advent.

Wei describes the comparison between Tekion’s technology and that of its more established competitors as: “It was akin to contrasting a basic mobile phone with an iPhone.”

McNeill, who previously worked with Vijayan at Tesla, also highly recommends the company, pointing out that Tekion even acquired a dealership in Gilroy, California, to serve as a testing ground during the development of its technology.

While this recognition is appreciated, it is even more significant that Tekion is gaining the attention of dealerships. Although Vijayan refrains from disclosing the number of customers utilizing its cloud software—which connects dealers with manufacturers and car buyers and is driven by machine learning algorithms—he confirms that it is currently in use across 28 states.

Serra Automotive, a national chain, with its founder Joseph Serra now investing in Tekion, is one such dealership.

The Volkswagen dealership in San Jose, where Castelino—who has no financial stake in Tekion—expresses strong enthusiasm for the time and cost savings his team is achieving through Tekion’s platform, is another.

For instance, he explains that customers now only need to log in to report a specific problem. Subsequently, utilizing an RFID tag, Stevens Creek can precisely determine when that customer arrives at the dealership and the type of assistance they require, resulting in a much smoother experience.

Tekion is also capable of providing recommendations based on a vehicle’s service record. It might, for example, suggest a brake fluid flush to a customer without a service advisor needing to review the customer’s history, Castelino states.

Critically, he adds, the dealership has been able to discontinue its relationships with numerous other software vendors, while simultaneously improving the efficiency of its operations. Castelino says, “As soon as a [repair order] is initiated, it’s immediately available to a dispatcher and a technician can begin working on the vehicle.” He emphasizes that this efficiency is consistent throughout every stage of the process. “You’re saving 15 minutes repeatedly, and before you know it, you’ve gained three hours of increased intake capacity.”

With advocates like Castelino, it’s reasonable to anticipate Tekion achieving substantial gains in market share. Nevertheless, it does face competition, with some rivals holding long-term contracts with their clients.

Potentially even more significant competition could emerge from Tesla itself.

During a Tesla earnings call earlier today, Musk informed analysts that Tesla currently houses a dozen startups within the company, including one focused on vehicle service—the very area Vijayan helped to establish.

Regarding the possibility of spinning out any of these ventures, Musk indicated that Tesla has no current plans to do so, suggesting the company has sufficient priorities at present. However, should Tekion prove successful, this situation could change.