Last week, the legendary entrepreneur Elon Musk introduced the Tesla Model 3, the company's most ambitious car yet. The company's previous models — the Roadster, the Model S sedan, and the Model X SUV — are all luxury electric vehicles. The Model 3 is Tesla's first car truly aimed at the mass market.
Mass-market electric vehicles were always Tesla's goal. Musk and Co. simply started with luxury vehicles to prove that electric cars could be sexy. But Musk has always been clear about the fact that his goal is for Tesla to be a mass-market vehicle maker.
The Model 3 is sexy. It's alluring. It looks great. But can it be a success?
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Tesla has a history of delivering vehicles behind schedule and for a higher price than originally announced. You could be forgiven for fearing the same thing will happen to the Model 3. Indeed, Musk's company has unprecedented work ahead of itself. Last year, Tesla shipped 50,000 vehicles, and it wants to start shipping hundreds of thousands. That will not be easy. But it can be done.
Often, we use the lens of "disruptive innovation" to talk about new products and innovations. This enormously influential theory, hit upon by Harvard professor Clayton Christensen, says that innovations happen when a new product comes in at the low end to serve an underserved segment of consumers, and progressively gets better, climbing up the value chain and eating up the incumbents.
But a lot of innovations don't fit into this framework. The iPhone, for example. And maybe Tesla's electric vehicles, too.
Strategy analyst Ben Thompson comparesTesla's cars to the iPhone, which was clearly an "obsoletive" innovation — meaning it rendered the previous generation of mobile phones obsolete. The iPhone didn't "disrupt" flip phones by coming in at the low end. It was immediately so much better than what existed that it simply made everything old irrelevant.
Of course, Tesla hasn't made gasoline cars obsolete — at least not yet. And it certainly won't render them useless practically overnight the way the iPhone did with dumb phones. But it's also true that an all-new electric drivetrain makes a radically better product possible. A Tesla car drives faster than a sports car, and has a trunk in both the rear and the car. It has whiz-bang features like semi-autonomous driving and a giant touchscreen control. The difference between a Tesla automobile and your run-of-the-mill Chevy is arguably as big as the difference between the first iPhone and a 2006 Motorola flip phone.
And then there's power of the Tesla brand. With its niche vehicles, Tesla established not just that the electric car was a technical possibility, but made it sexy. Here's Thompson:
Tesla means something: Yes, it stands for sustainability and caring for the environment, but more important is that Tesla also means amazing performance and Silicon Valley cool. To be sure Tesla's focus on the high end has helped them move down the cost curve but it was Musk's insistence on making "an electric car without compromises" that ultimately led to 276,000 people reserving a Model 3, many without even seeing the car: After all, it's a Tesla. [Ben Thompson]
Making a good (and profitable) mass-produced car is one of the most phenomenally complicated engineering enterprises known to man, involving countless moving parts, which explains why so few manage to do it, and even the best at it regularly screw it up.
Making the Model 3 a success is going to require expanding the complexity and scale of Tesla's operations to an unprecedented degree, which will require an attention to detail and the grinding work of execution well beyond marketing and brand-building. Musk's success building rockets and luxury electric cars shows he already knows this, and his track record to date shows he's well positioned to pull it off. But whether he actually does is anyone's guess.
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Pascal-Emmanuel Gobry is a writer and fellow at the Ethics and Public Policy Center. His writing has appeared at Forbes, The Atlantic, First Things, Commentary Magazine, The Daily Beast, The Federalist,Quartz, and other places. He lives in Paris with his beloved wife and daughter.
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