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>>But electric cars aren't a disruptive technology. Of course they are. They work completely differently from ICE cars and even hybrids to solve the same problem (transportation). That's the definition of a disruptive technology.
Not at $100k.
There's something that's been bothering me about this whole thing. Not the Tesla, but the rest of the market. Is that it? Is it that easy? A guy who made his money selling a phonebook and then an online payment processor can read a few books, hire a few people out of the same industry he's disrupting and build a goddamn amazing car (electric or not)? Why can't the existing industry do this? Why all the mediocre produ…
There's something that's been bothering me about this whole thing. Not the Tesla, but the rest of the market. Is that it? Is it that easy? A guy who made his money selling a phonebook and then an online payment processor can read a few books, hire a few people out of the same industry he's disrupting and build a goddamn amazing car (electric or not)? Why can't the existing industry do this? Why all the mediocre produ…
Earlier quoted context omitted.
But electric cars aren't a disruptive technology. The only thing that might qualify as disruptive about Tesla is their direct to customer sales model, and I have a hard time seeing how they'll get around the entrenched interests there. The Model S is by all accounts an excellent car, and I want one, but I am bearish on Tesla the company.
Of course they are disruptive. They achieve the same capability as an internal combustion engine, but they do it in a different way. ICE automakers can't retool their supply chains overnight (or even over several years) to make an equivelent product. How are they disruptive? They achieve identical (performance wise, superior) capability with reduced maintenance and reduced fuel cost due to electricity being cheaper t…
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The classic "Innovator's Dilemma" attempts to address this - the idea here would be that electric cars are disruptive technology, one which otherwise good management practices more or less prevent market encumbents successfully exploiting. Read the book, I highly recommend it if you're interested by these kinds of questions!
But electric cars aren't a disruptive technology. The only thing that might qualify as disruptive about Tesla is their direct to customer sales model, and I have a hard time seeing how they'll get around the entrenched interests there. The Model S is by all accounts an excellent car, and I want one, but I am bearish on Tesla the company.
The definition of a disruptive technology is one that starts off objectively inferior but which, on projected technology trends, will meet the market need at some future date. The existing market can recognize these facts well in advance, but when the time comes to switch technologies finds upstart incumbents using the new technology with a cost structure the established companies cannot match.
Electric cars qualify because they do not at the same price have the same range, acceleration, or refuel time as gasoline cars. But all three aspects are improving exponentially over time. On current trends, electric cars will be comparable to or better than gasoline cars on all three metrics within 20 years.
What Elon has done is realized that the cost difference between building a top end car and a bottom end car is not that great, and at the price of a top end car he can deliver equivalent to better acceleration and range, with recharge time that is acceptable to many. This is very unusual - normally the upstarts in a disruptive market start at the bottom of the market and move up. (Indeed that was the pattern that Christensen predicted for electric cars.) But the mechanics work the same way. By the time Tesla can deliver a mass market car at a mass market price, the incumbents won't have the technology or business structure to deliver a competitive car at a competitive price.
For all of the reasons why existing companies will not be able to modify their technology and business structure to what is needed to compete with Tesla, I highly recommend Clayton's followup book, The Innovator's Solution.
There's something that's been bothering me about this whole thing. Not the Tesla, but the rest of the market. Is that it? Is it that easy? A guy who made his money selling a phonebook and then an online payment processor can read a few books, hire a few people out of the same industry he's disrupting and build a goddamn amazing car (electric or not)? Why can't the existing industry do this? Why all the mediocre produ…
Because big incumbents have little interest in changing anything. They're happy selling the same thing, slightly improved year after year, decade after decade, and only myopically competing against their "direct competitors" (i.e. all the other companies cloning each other's products).
You need new thinking, new ways of doing things and new business models to change the game and the market - something the incumbents have very little interest in pursuing.
Also, who said it was easy? You should watch some Elon Musk documentaries, to see how many times he was close to bankruptcy, not just of the business, but personal, too - all while running a rocket company, too. He might make it look easy, but it certainly wasn't, and I'm sure most still believe he'll never beat established car companies like GM and Ford (I'm quite certain he will, and make Tesla the "Apple" of the car industry).
No offense, at these price points the car better damn well be perfect. When they deliver a car at an every man's price point and score very high then I will be impressed. A year to two down the road and maintain that level of performance I will be impressed. Until then, cars are these price points have large enough margins that extra time and detail can be baked into the process. Kudos for beating the other luxury gu…
Tesla is hard at work taking the knowledge they've gained developing the Model S and applying it to create a ~$30k car, which will be meant for the every man. Until then, though, I think they deserve some recognition for beating out every car Consumer Reports has tested in their very first attempt at a sedan.
Model S is a 60-90k car. The next level down is likely 30-60k. The next level down is the 15-30k car (think Honda Civic/Accord).
There's something that's been bothering me about this whole thing. Not the Tesla, but the rest of the market. Is that it? Is it that easy? A guy who made his money selling a phonebook and then an online payment processor can read a few books, hire a few people out of the same industry he's disrupting and build a goddamn amazing car (electric or not)? Why can't the existing industry do this? Why all the mediocre produ…
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It's because Tesla makes an extra $7.5K from each car via the federal tax credit and an extra $70M each quarter selling ZEV credits. Without these they would not be profitable. So they have more money to apply to the fit and finish of the car than luxury manufacturers which don't make an electric. It's because Tesla makes an extra $7.5K from each car via the federal tax credit and an extra $70M each quarter selling Z…
But a luxury manufacturer like e.g. Audi gets to reuse engineering work from parent VW and sibling Lamborghini to improve their $100k car. Much of the comparative advantage of the Model S is due directly to the engineering differences of building an electric powertrain; they get to make different tradeoffs than BMW does in, say, an M5. The real nutcutting time will come when an established brand decides to build a hi…