Tesla Roadster: New Power to the People (Part 2)

[This is part 2 of a guest post by Eckhart Beatty. You can read part 1 here. -Ed] If Tesla's philosophy seems revolutionary, it's because it is. It's unabashedly here to "make waves," to redefine the rules throughout the industry. It's simply not meant to be like any other car on the road today.

Fast (sometimes referred to as "muscle") cars have always won the hearts of the driving public. But the perception of speed has driven many to purchase cars that sport acceleration they don't really need and top speeds that are—well, (ecologically and economically) unsustainable. Based on the spiritual precept that "time is an illusion," speed and acceleration become dubious notions or values, as well, since they are both functions of time. But the love of cars won't die easily. We must concede the fact that America still adores its cars, and probably always will--particularly sporty ones. What if you could enjoy the pick-up without sacrificing the wallet? With Tesla, drivers can actually have their cake and "drive it," too--if you will. You sacrifice only driving range (albeit a generous 250 miles) and just over three hours charging time. But you would never have to wait in line at another gas station again or worry about finding gas. Electric rates should be essentially the same (almost "free") wherever you go.

Perhaps implicit in Tesla's mission, it would appear that from now on the new definition of "power" inherent in automotive technology should be shifted to acknowledge the relative savings they afford you as you travel from points A to B in comfort and style and the luxury of not having to decide which gas is the cheapest.

Behind the Design Coup: Disruptive Technology

In most industries, a radically different design or technology comes to the fore every so often. Such a design, coming seemingly "out of nowhere" and attaining what author Malcolm Gladwell refers to in his book of the same name a "tipping point," can "take over" almost overnight. Market analysts refer to this as a "disruptive" technology or business practice.

Disruptive technologies--such as those found under the Roadster's back seat—may be coming just around the corner now in the automotive industry. Anyone who has read Clayton Christensen's The Innovator Dilemma will recall dramatic examples of these in a number of divergent industries. Cars' internal combustion engines have--curiously--resisted such disruptions with respect to their engine designs since their inception in the late 1800s. (We probably have the fossil fuels industry to thank for this.) These engines are still overwhelmingly dominant after just over a century. However, with declining supplies of oil in these tense times in the Middle East, and the damage Katrina wrought to the oil ports in the Gulf of Mexico, the climate may be ready for a dramatic shift away from fossil fuels, or a disruption.

Winning Marketing Strategy

Eberhard's game plan may be to introduce a true enthusiast's car where money is not an issue for its intended demographic segment. The Roadster, not yet publicly available, is projected to cost some $80-$100,000. As a class, the wealthy can most readily buy the cars to help pay the high expenses of a product not yet enjoying the benefits of economies of scale. The intended result is getting them out into the mainstream while the public warms up to its perhaps even bigger market potential for the non-wealthy just a couple years down the road.

Once he has established a phalanx of support from high performance enthusiasts, he can then send out a contingent of moderately priced sedans. Conservatively appointed vehicles with scaled down versions of the Roadster's power system will target the average person's needs and budgets. They are expected to arrive on the scene in 2008. Far more affordable than the Roadster, the sedan just might help Tesla claim even more solid market share far more quickly than the Roadster has. Also, it would stand to greatly broaden the market for Tesla's vehicles. In fact, a third and even more affordable car model may well hit the market within the next three years.

In so doing, he hopes to dispel the myth that electric cars are by definition inherently "punishment cars," the phrase Eberhard likes to use to refer to his Roadster's erstwhile second cousins sporting mediocre styling and room inside. One thing is likely: even without advertising, many automotive enthusiasts will have heard of Tesla before too long.*

*Within less than a month of the Roadster's release, the first 100 vehicle orders for a slightly more expensive limited edition already have been placed.

[This has been a guest post by Eckhart Beatty. -Ed]