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atTesla is a backwards car company.

atTesla is a backwards car company.

Ha! Got your attention.

Im only half kidding. Correct me if I am wrong. Most car companies bring new cars to market at the LOW end of the market and over the years build better quality cars at a higher pricepoint. Honda is one, KIA as well as many more right?

But our favorite car maker Tesla did the exact opposite! Making the high priced models first.

I know why they did it that way, it was the best way to do it, for all the reason EM stated so many times.

Im just pointing out the obvious for fun. Just another example of the huge difference between Tesla and the rest of the world.

carlk | 16 novembre 2014

There are many companies build cars from high end. Most of them stay high end but sometimes a few want to go to the more popular markets to survive or to make profit. All low end companies dream of going higher end someday but more don't succeed. Tesla is different in the sense this high to lower end migration is all planned for from the begining.

petochok | 16 novembre 2014

I think it's worth noting that it wasn't Martin's, JB's or Elon's choice to start at the top. The reason this is so is due to the cost prohibitive nature of new technology.

Brian H | 16 novembre 2014

Note that "Determine if success is a possibility" has guided which aspects of the car they tackled to innovate with first. In many respects TM sticks with the best proven solutions (18650 batteries come to mind) and tweaks them and integrates with innovations (central touchscreen control of the car's functions, e.g.) for best overall effect.

petochok | 16 novembre 2014

If Tesla were to stick with the idea of "proof of concept" to prove that BEV's can go the distance, they had no choice but to start with an expensive car as a first release (since it needed a large quantity of very expensive batteries) and use the funds from its sales for R&D and the next car.
So no, they did not have a choice with what they set out to do. The idea was to avoid making another golf cart, or a car that would scare a potential buyer away with a design that screams "Electric Car!"

carlk | 16 novembre 2014

Tesla has stated from the begining the reason it starts from high end is to showcase the electrical motor's biggest advantage to the world. If people did not realize it with the Roadster, if people did not realize it with the MS, people should realize it now with the P85D. Who would have believed that you can make a 691 hp 3.2s super high performance car with little or no sacrifice of efficiency.

Red Sage ca us | 17 novembre 2014

When the 'horseless carriage' first arrived, more than 120 years ago, they were all 'toys for the rich'. A lot is said about how the Ford Model T was the first 'everyman's car'. Yet even that was not initially affordable to the masses. And the Model T was not the first offering from the Ford Motor Co. Mr. Ford had to raise funds from sales on the high end to get off the ground.

It was improvements in the manufacturing process, using vertical supply chains, and the perfection of the assembly line process that brought the cost of the Model T down to reasonable, affordable levels. All that took dedication, hard work,and a massive commitment of funds.

Sound familiar?

.

hxnqj

Earl and Nagin ... | 17 novembre 2014

Almost all new technologies start at the high end, then work down. Just look at everything such as glass windows, domesticated horses for transportation, running water, plumbing, televisions, phonographs, stereos, calculators, computers, cellphones, . . .
All of the new Asian companies making those sorts of things are just copying existing technologies that have already been made into commodities by companies that started at the high end.

DonS | 17 novembre 2014

Companies need lots of capital to jump into the mainstream. To reduce capital costs and risk, the saner move is to go after a niche market. This is often at the high end, but can also be sideways. Minivans and crossovers started as sideways niche markets. To go after the high volume low end, the new company usually needs to significantly undercut competitor's prices.

killbeas | 17 novembre 2014

Tesla had a unique opportunity in the auto market. When a paradigm shift occurs in technology that allows a step change in capability to occur, the methods by which a newcomer can overcome the barriers of entry (which are very substantial)to the market aren't usually what others would do. Tesla seems to have chosen a method to bootstrap themselves up to be a viable competitor in the general market with the quickest strategy possible. That is, they chose to introduce cars in a segment which typically enjoys high margins for niche performance delivered. These margins are allowing Tesla to quickly build a design (Model III) targeted for a much more price sensitive volume segment of the market. It seems to be working quite well.

It amuses me that most of the "talking heads" commenting on the business channels and websites in the car business don't seem to understand these marketing/business fundamentals. I suppose they have been mired in the ICE paradigm so long with incremental improvements as the only differentiators between competitors, that they literally don't know how to deal with a paradigm shift since there hasn't been one in their lifetime until now.

Rocky_H | 17 novembre 2014

Wow, +many for @killbeas! Very astute business analysis.

blue adept | 20 novembre 2014

Lamborghini, Ferrari, Alfa Romeo, Duesenberg (which intro'd a luxury model and never really looked back, but...), are just a few fledgling automobile manufacturers that come to mind that hit the ground running with the production of high end models right out of the gate, so....

Brian H | 21 novembre 2014

But didn't deign to produce a 'People's Car'!

EmpiricalAudio | 21 novembre 2014

Lets face it, only the relatively wealthy are inclined to consider an electric car at this early stage in the infrastructure build-up and frankly the current state of battey technology. The only way this happens if the performance of the vehicle is sufficiently compelling. Elon Musk is a visionary with resources and one who is passionate about making disruptive changes that can actually save mankind, at least I hope he feels this way. His strategy is spot-on.

Because I was not beholding to venture capitalists or investors, I was also able to do things my own way in my company, including starting with the highest performance products. Like Tesla, I dont advertise either. All sales are by word of mouth.

Since we have such an excellent method now of communicating world-wide, is it really necessary to spend a lot of advertising dollars on something that is so superior? I think not. Better to pass the savings on to the consumers, and/or use the proceeds to develop the infrastructure or better battery technology.

Brian H | 22 novembre 2014

Yeah, though the "buzz" he and TM generate, including the interview face time he gives are also advertising (the best "free" kind). (Not really free, as there are direct expenses, and his time is far from valueless!)

As an accounting issue, I wonder how his interview time is logged and expensed? Hmmmmm...

Red Sage ca us | 22 novembre 2014

That's part of the reason I wouldn't want Elon Musk to waste five minutes of his time chatting with me. His time is much too valuable.