Is Tesla really in danger of becoming the new Saturn?
A few days ago Erich Joachimsthaler, CEO of Vivaldi Partners, told Business Insider that while Tesla is busy transforming the industry, it could also transform itself into your run-of-the-mill car company. Why? Because Tesla revealed the Model 3 so early — more than a year ahead of its earliest production target — its larger, deep-pocketed rivals could gain a competitive edge. “Saturn was the biggest celebration at the time in the 1990s, and then it went away,” he said.
The article goes on to say that while competitor GM’s Chevy Bolt can afford to lose money and cut prices without breaking a sweat, Tesla has no slack. Tesla, in the 2010s, is where Saturn was in the 1990s.
Another article in the LA Times, quotes hedge-fund manager Mark Spiegel: “The Model 3 will not save the company… The Model 3 is going to speed up the end of the company.” The argument here is that although Tesla is selling more cars than ever, it is also experiencing greater losses than ever.
And finally, Tesla founder Elon Musk himself admits that he wasn’t as prepared as he should have been to meet the demand for $11 billion in preorders for the new Model 3.
White floors send a brand message: This is NOT your old, messy auto-industry.
So what can Tesla do to avoid becoming the new Saturn? How will it compete with Chevy Bolt and the Nissan Leaf?
There are a few strategic differences this time around that may help Tesla survive the “Saturn scare,” and go on to dominate the auto industry:
One thing that is becoming clear is that Elon Musk is clearly the successor to Steve Jobs’ crown. His technical vision (“reality distortion field”) far surpasses the domain of the traditional auto industry executive. And, he’s changing rocket science, as well. The auto-industry, on the other hand, does not have a stellar reputation for management, let alone leadership.
- Cultural DNA
Once again, there is no comparison between the traditional automobile industry culture and Tesla. GM’s Mary Barra may be trying her best to change the culture at GM, but if you want to look at culture as an outcome, then clearly, Tesla wins again. If “cultural change is what you get after you’ve put new processes or structures in place to tackle tough business challenges like reworking an outdated strategy or business model,” then clearly Tesla is already in warp-overdrive. Can any of the other auto-makers compete with Tesla in terms of performance, design, and agility?
There is no old-company legacy holding back Tesla. All its challenges are forward-facing.
- Design and Engineering
It’s not rocket science, but what if it is? Tesla’s “design thinking” has already changed the game. And car-nerds are getting in on the design fun as well.
Tesla’s strategy and business model is based on platform thinking. While traditional car manufacturers outsource almost everything except their car engines, Tesla builds its own “gas” stations. Its supercharger network is a 30-minute pitstop to recharge both car and human. What’s more is that Tesla wants others to use its supercharger network. How open-source this will be remains to be seen. But all of this goes to prove that Tesla has a software mindset. In addition, Tesla is also building its own integrated ERP system – linking manufacturer to stores to service centers. It is creating a decentralized solar and Powerball battery ecosystem as well – technologically advanced, and again, on the innovative edge.
Is it possible to get a 30% marketshare in one month? How do you sell a car with no dealers? No commissions? No sales force? No inventory? And how about an infinite-mile warranty? Once again, Tesla is the Apple of the automobile industry. Paul J. D’Arcy has a great post on Tesla marketing.
How’s this for a sustainable mission: “Tesla is not just an automotive company, it’s an energy innovation company. Tesla Energy is a critical step in this mission to enable zero emission power generation.”
Finally, what if Tesla gets acquired? Will GM or Apple be the suitor? Prediction: Elon Musk will someday succeed Tim Cook.
In the words of Buckminster Fuller – “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” Hello Tesla!
Test ride! >>
Christian Sarkar is the editor of this site, a writer, consultant, artist, and entrepreneur.