Saturday, May 19, 2007

Tesla Motors - Pure Marketing Insight

There's a lot of hype about Tesla Motors. The new wave electric car looks fantastic and is backed by Elon Musk (founder of PayPal and Zip2), Sergei Brin and Larry Page and a bunch of Silicon Valley venture capital firms. This is looking like the 1 electric car that will be successful. Why? Because it is designed to leverage fundamental technologies like lithium ion batteries, lightweight aluminum components, highly reliable electronics, and electric motors to build a beautiful sports car that already has a waiting list amongst the rich and famous.

That's what most would make you believe. What it's really about is that the founders Martin Eberhard and Marc Tarpenning saw the market for this using the Silicon Valley technology lifecycle mindset. Build a product that people really want. Essentially, they knew the difference between niche marketing and mass marketing. In the past, people would try to build an electric car for the masses to satisfy regulators. GM's failed EV1 electric car is a perfect example of an underpowered, overpriced, low capacity vehicle that people did not really want unless they were willing to make lots of sacrifices. Instead Tesla's founders decided to give people what they really want - a fast car that looks fantastic and has the kind of range that fits the class of car that the target buyer would want. They used the strength of the electric motor to build a better car. It's classic "Innovator's Dilemma:" build an exclusive sports cars on a Lotus platform that can go from 0-60 in 4 seconds with over 200 miles range on a charge. Oh and as a bonus, you get low operating cost of 2 cents a mile and a car that would need low maintenance as with an electric motor there's only one moving part - the rotor. No fan belts, radiators, spark plugs, valves or muffler this was a simpler machine.

Moreover, they saw the marketing advantage that comes from building something a head turner that is exclusive to the wealthy few. With so many conscious about climate change and reducing dependence on foreign oil, this is an easy purchase to feel good about.

Tesla can march down the cost and learning curve of integrating these technologies. They can learn more about how these come together before the pressures of volume and a mass audience. Theyh can learn about what feature as most important to actual buyers.

Tesla has used a Silicon Valley approach to building the product by outsourcing the components from many suppliers and having the car produced by Lotus. That's right, this car company has less than 80 people - that's amazing.

They've done a brilliant marketing job by making this a competition to get on the waiting list. Typically, you don't want to be the first one to deal with the inevitable first production kinks. Now people are fighting for their place. Tesla's site is high end with a great product configurator. They marketed themselves well by getting reviews from a wide array of reviewers early in the process to build buzz. Their blog has an excellent variety of posts from the CEO on down. Obviously, people are reading it as there is a long line of comments for each post.

Telsa has turned the traditional negative trade-off notion of the electric vehicle on its head. Electric is the trade-on.

I can't wait for the 4 passenger version!


Sandeep said...

this is amazing... how much does it take to get on this list. are we talking lebron james money?

Rajiv Parikh said...

Yeah, just $100k to buy it. $50k down to get on the list.

Avinash said...

its really a gr8 car
when would it come to india?
and what would b its cost???