What exactly did Tesla do so right?


To my knowledge, Tesla Motors were one of the first electric vehicle sellers for the ‘general’ public.

For context, the Model S debuted in 2012, and to this day, it still seems to be a very popular car.

How come other car manufactures cannot (or have taken many years) to come close to the performance and popularity of the Tesla models? Is it that hard to create 500km+ ranged electric vehicles? Tesla did it 10+ years ago, why has the rest not?

In: 2

They went all in for EVs from the start. Established manufacturers are dragging their feet, and other pure EV companies are late on the ball.

In addition, they seem to understand that engineers and R&D are the life blood of the company.

Tesla focused on the luxury car market. This is a relatively small market so there were not really room for two electric car manufacturers. It allowed them to spend money on expensive engines and batteries without making the cars overprized in the market. Other manufacturers focused on reasonably priced cars such as the Nissan Leaf or the Renault Zoe which therefore had less budget for batteries.

What have happened in the last 10 years is that the cost of batteries have gone down a lot so that more reasonably priced cars can afford the big batteries. Electric cars have also become more popular as people are more comfortable with it so the electric car demand have risen high enough for there to be more manufacturers.

As the other commenter mentions, for Tesla, there was no concept of product cannibalization. The major manufacturers of the day were going to sell cars regardless. From the existing manufacturer’s standpoint, selling 5 million ICE versus 4.9million ICE and 100K EVs was not compelling. They saw it as taking from the left pocket and putting it into the right pocket.

With that viewpoint, they had no incentive to invest billions on “risky” technology. And this technology threatened to displace their decades experience and investment in things like engines.

While a bit superficial, the car makers were “old school” – Mid-West to East Coast types – which means they thought of electronics and software as supplemental. Tesla was, at the time, very much a “tech born”, Silicon Valley type company.

A couple of things that Tesla did well:

First, they made “cool” electric cars. Prior to Tesla, the electric and hybrid cars were generally popular with those concerned with the environment. There was nothing really sexy about driving a Prius. But the original Tesla Roadster was basically an electric Lotus. It was a cool looking car.

As someone else stated, Tesla was born into the Silicon Valley world, with a heavy reliance on software. Other car companies used a bit of software, but things like over the air updates was not a thing.

Finally, other car companies ran into the classic “innovators dilemma”. They couldn’t really market electric cars as better than gas because gas powered vehicles were the overwhelming majority of their sales. Tesla didn’t have this problem – they could say “buy a Tesla because it’s a better car than your gas powered car” without attacking their own products.

The classic big car manufacturers were hesitant to move into EVs because it wasn’t clear at the time that there would be a market for them, and they were doing just fine selling ICE (internal combustion engine) cars. There was also a big initial cost that had to be overcome in terms of getting the necessary infrastructure in place. Who wants to buy a car that you can’t take anywhere because there are no charging stations? And even if there are *some* charging stations, what if you need to travel out of state and they don’t have them there?

One very good move that Tesla made to overcome this issue was to start with high-end luxury sports cars. The people who bought these vehicles did so to show them off and take them on short drives. They were wealthy enough to afford another car (or several) as their main vehicle anyway, so the range of their Tesla made no difference to their mobility. Also, it didn’t matter if there were only charging stations in some areas, because Tesla was only looking to sell a small volume of cars with big profit margins in those early years. They didn’t need to sell big volumes to make enough money.

This move had another advantage: it branded Tesla’s EVs as cool and desirable. If they had started with a sensible, reasonably priced mid-sized car, which might have seemed like the obvious move to attract lots of customers, then the first impression that the general public would have had of Tesla and its EVs would have been decidedly “meh”, and it would have been hard to sell people on EVs over ICE cars that way. By making EVs (and specifically *their* EVs) sexy first, they were then able later to use that image to sell cars in the lower segments (first the model S and model X which were still luxury vehicles and thus maintained the brand image, and then later the model 3).