by Automotive Team
on August 19, 2016

The Rise of Tesla

Earlier this summer our Automotive team spent the day at Goodwood Festival of Speed. Every manufacturer turned out to the show, all vying to draw the crowds with captivating stands and exciting cars. For me however one unexpected player stood out amongst the towering stands of the powerhouse brands.

And it wasn’t just me it seemed, Tesla’s understated stand at this year’s Goodwood FOS was packed full of automotive revellers, intrigued by the sleek design and tech on display from this plucky new industry contender.

Here we take a brief look at Tesla’s rise, from quirky start-up to genuine automotive competition.

A brief history of an industry disruptor

‘One must be sane to think clearly, but one can think deeply and be quite insane.’ – Nikola Tesla

Named in homage of one of history’s greatest physicists and electrical engineers, Tesla Motors was conceived in 2003 by Martin Eberhard and Marc Tarpenning, who together had developed the early Tesla Roadster. A year later tech billionaire Elon Musk joined the board and immediately injected a healthy dose of PR hype into the enterprise.

Musk presented the company’s ambitious goal; ‘To accelerate the world’s transition to sustainable transport.’ Tesla entered the market with the confidence that not only could they make electric cars that people wanted to drive, but also electric cars that were superior to their petrol and diesel competitors.

From start-up to genuine competition

The Roadster grabbed attention, and showed car enthusiasts who were fortunate enough to drive one that, with unparalleled torque and breath taking 0-60 acceleration, electric cars bring something to the table that combustion engines just can’t.

With a trademark display of business transparency, Tesla announced their simple business model: To enter the market with a high-cost low-volume model, sustain their growth with a medium-cost medium-volume model and grow to really compete against the industry big players with a low-cost high-volume model.

The launch of the Model S marked the beginning of this plan with a hefty price tag but an extremely successful reception, and was even voted ‘the most loved car in America’ according to Strategic Vision.

Then came the Model X that was launched earlier this year, the car that contributed largely to the draw of that crowd at Goodwood FOS. The supposed mid cost model comes in at a probably not quite mid-value price tag of around £80,000, but has been understandably popular, with all of the performance and range of the Model S but with the practicality that comes with an SUV. The model X will also make a strong case as being one of the safest SUV’s on the road, although US safety ratings are yet to be determined.

The T factor

So what is it that makes Tesla such an appealing brand, and why are they starting to make the old guard nervous?

On the surface, the aesthetic of their models seems far more in line with what people expect from ‘good looking’ modern cars. Where other brands seem to try their hardest to dress their electric offerings as their own idea of the future, Tesla have adopted a contemporary styling that very subtly stands out.

For a few years ago a new word entered the lexicon of the automotive industry, and that word was ‘iphonification’. Manufacturers have increasingly been looking for ways to make their models as connected as possible. Developing apps that allow you to lock your car from your mobile, ever improving head up displays and integrated in car software. Tesla’s in car system even has over the air updates that much like the iPhone, updates software, functionality and even the dash layout and style. However Tesla have taken the shift of consciousness from car to gadget way beyond just the car itself, they’ve taken the standard narrative of the automotive purchase journey and flipped it on its head. By moving away from the showroom model and instead utilising high street stores, Tesla are attempting to make their customers as comfortable buying a new car as they would be buying a phone. We’ve talked before about the historic distrust of dealers, and it’s very likely this approach will be the way consumers want to buy their cars in the future.

The Brand

At this point it’s important to remember Tesla’s core goal…‘To accelerate the world’s transition to sustainable transport’. Eco-Credentials are a big selling point in today’s market, and hold even more weight in light of recent emissions scandals in the industry. Giving the brand a ‘Good Guy’ persona will undoubtedly prove to be incredibly positive in such a connected world with a rapidly growing social conscience. This is already contributing to Tesla’s rapidly growing brand value, and according to this year’s BrandZ report of 100 most valuable brands, they have overtaken Volkswagen with an estimated value of $4.4 billion.

Musk himself brings a face to the brand, which since the likes of Bill Gates, Steve Jobs and Mark Zukkerberg, has become synonymous with technology and progressive brands. It would take thinking back to Henry Ford or Enzo Ferrari to find a similarly memorable character attached to a top automotive brand.

As mentioned earlier in this post, Musk and the company have lifted the veil of secrecy that so often shrouds the industry. Acts of transparency, like removing the patents on all of their electric vehicle technology, give the feeling of a tech company maintaining the spirit of the open source movement.

The Future

To put Tesla into context it’s worth baring in mind that the last start-up in the automotive industry was 100 years ago, and that start-up was Ford.

Elon Musk and all of PR hype have certainly created an exciting image of Tesla, however although their rise has clearly made competitors sit up and take notice, none of them have outwardly expressed concern. This is certainly calculated PR, but their unshaken confidence could be because, at this stage, the line between success and failure is still incredibly fine, and all of the weight of potential failure currently sits on Tesla’s shoulders.

Incredible tech and a fresh approach to an industry that has managed to stay the same for so long is clearly a good proposition, but in order to be a real competitor Tesla have to avoid falling into the same bad habits that the major brands haven’t been able to shake. When exploring Tesla’s stand at Goodwood FOS I was approached by one of the attendants and encouraged to sign up to take a test drive. It was explained to me that simple data capture would yield an email along with a date that I could test drive the Model X, I happily agreed, and never received that email. This could have been a one off but it highlights an important point, that this new approach to selling cars can easily fall into same traditional traps, creating a simple test drive journey is something we’ve found difficult in past research (test drive blog). Delivery has also been a problem, and Tesla have been very late in the release of every one of their models so far and if they can’t nip this in the bud consumers will soon become impatient and brand loyalty will be lost before it is even gained.

Whatever the future holds for Tesla it will inevitably be an exciting one. The fact they have managed to make their mark, in an industry that hasn’t had a real new contender in over a centaury, can be considered a success in itself. Ultimately however success will be measured by profitability, and Tesla’s profitability and business viability will rely on the success of the Model 3. By anyone’s standards 375,000 initial sign ups, with deposits paid, up is a good start, but it’s now more than ever that Tesla need to deliver the electric car for the masses, and in doing so, maintain the trust and loyalty of their customers that the brand has spent so much energy forging.