What it is: Tesla sells directly to the public and has taken nearly 300,000 pre-orders so far.
The easiest way to spot change is to look for success and question why the current leaders in the industry missed their opportunity. The latest change in the world comes in the car industry that hasn’t seen any revolutionary change in over a century.
The way you bought a car used to work like this. First, a car company made a mediocre car but focused on styling to convince you to buy a new one. Basically each new car model was nearly identical to last year’s model with minor improvements.
Second, you had to buy a car from a dealership where salesmen tried to manipulate you by practically cheating and lying to your face so they could make as much money off you as possible. This made the car buying experience adversarial at best and far less satisfying and appealing to practically everyone.
Third, once you bought a new car, the appeal lasted about a week. After that, most people rarely thought of a car as anything more than another form of transportation.
Tesla changed all that.
First, Tesla strives to create cutting edge cars that look like something out of science fiction. Second, Tesla sells directly to customers without the nuisance of annoyance of a middleman, deceitful sales person. Third, Tesla cars continue to provide satisfaction to its customers by giving people pride in ownership. When you own and drive a Tesla, you feel you’re in a special group with other Tesla owners, which is much the same aura of togetherness that Apple generates with their computers, smartphones, and tablets.
Tesla is basically upending the entire car industry that the car industry never thought of challenging because they were making too much money selling mediocre products, ripping people off through scummy sales people, and creating ho-hum products that few people took pride in owning soon after purchasing the product. People didn’t care about owning a Ford or a GM car the same way they feel about Tesla cars because Ford and GM make mediocre cars that do the job and nothing more.
Think of the difference between owning a Macintosh and a generic PC in a beige box. A PC might work just fine, but there’s a distinct lack of pride in ownership with a generic PC compared to a Macintosh. The only PCs that people take pride in owning are specialized gaming PCs with exotic cases that light up or highlight liquid cooling systems. Ordinary PCs don’t generate that same level of excitement in the same way that ordinary cars by Ford and GM hardly generate any excitement at all beyond being a slightly improved model over last year’s model.
Tesla cars not only look like science fiction but they actually deliver quality instead of mediocrity. Tesla is basically duplicating the aura of Apple except in the car industry. That’s the exact same level of excitement Apple products usually get. To buy a Tesla, thousands of people camped out overnight to make sure they could put down their deposit and buy the new Tesla 3. Even though Chevrolet offers a similar electric car named the Bolt, do you see anyone spending the night camped outside a Chevrolet dealer so they could deal with a lying salesman to buy a Chevrolet Bolt?
The Bolt and the Tesla are basically electric cars, but how many people will get excited about owning a Bolt? How many people want to get ripped off buying a Bolt from a sales person? How many people will still feel the thrill of ownership of a Bolt compared to a Tesla a year later?
Tesla is like Apple in the computer industry. By providing a great customer experience with a quality product, Tesla is making their products the one to buy if you want an electric car. If you want something cheaper and less exciting, then you can go with one of the established car company offerings such as the Nissan Leaf or the Chevrolet Bolt. If you want to get excited about a new way to buy cars, you want to give your money to Tesla.
The Big Three auto makers are in trouble just like Microsoft, Palm, Nokia, and Blackberry suddenly found themselves in trouble when Apple started stealing their business away. People want to buy a Tesla. Few people really want to buy a Chevrolet Bolt or a Nissan Leaf. They might buy them because these cars might be cheaper, but even if they aren’t, why torture yourself through the adversarial sales process of a traditional car dealership when you can buy a Tesla with far less hassle?
The Big Three auto makers survived because they had little competition. When the Japanese auto makers started selling quality cars, the Big Three lost their dominant position. Now that Tesla is selling electric cars directly to customers, you can be sure the Big Three will further lose their market share even more. Detroit is about to witness a further downturn in their economy because the Big Three will resist Tesla’s improvements until it’s too late in much the same way that Blockbuster Video resisted Netflix and Redbox until it was too late.
The Big Three auto makers are dinosaurs. Tesla is showing the future of the car industry that the Big Three will never be able to catch. If you want to see the collapse of business models in another industry, watch how Tesla kills the Big Three auto makers in the same way that Apple has killed Blackberry, Nokia, and even Microsoft.
The end of the Big Three business model is over. You may never need to confront a deceitful car sales person ever again just by buying a Tesla and that’s just one of many advantages that Tesla offers over its competitors.