Without a doubt, every major carmaker in the world is dissecting the success of Tesla Motors, Elon Musk’s electric car company that is disrupting the traditional automotive industry.
Yes, Tesla Motors is still a relatively small car company headed up by a git-r-done leader with a seemingly golden touch, but it’s not all luck, robots and smart hiring that has made Tesla a tech and automotive darling. After some initial stumbles, Tesla is no longer some garage-based startup or boutique operation, it’s a player.
While Tesla has been able to focus on just two models so far, the Lotus Elise-derived Roadster and the clean-sheet Model S sedan, instead of a wide range of vehicles like most carmakers, the industry could nonetheless learn a lot from the raging success of the Model S, which has won over petrol addicts, gearheads and skeptics alike while setting new standards for electric vehicle performance, safety and innovation.
While the Model S is no doubt a higher-end luxury car, Musk has said that more proletarian-priced models are in the pipeline and that has to have major car companies concerned. Musk, whether it be cars, spaceships or solar power installations, has shown an ability to bring ideas to market quickly and quickly scale up production levels in the short term.
So what can the big car companies take away from Tesla’s success? Here’s some things the CEOs, product planners, middle managers and plant managers at the major car companies should be tuning into.
This is one aspect of Tesla’s success that major car companies just can’t seem to understand. The Internet shorthand YMMV – Your Mileage May Vary – was born from the fine print and legal speedspeak of automakers who tried to sell cars using inflated gas mileage figures after the OPEC oil embargo of the 1970s. It has become shorthand for “don’t expect your results with our product to even come close to what’s being claimed it can do.”
They came out with cars boasting a certain mpg but the figures were rarely tied to real-world driving (a practice that apparently continues to this day). While a car under test-track conditions going exactly 55.0 mph might get 35mpg, in the real world of stop-and-go driving and highway speeds closer to 70, you mileage may vary down to about 27mpg or less. In my book, that’s false advertising, shenanigans at least and just plain bullshit at worst.
Tesla says the Model S with an 85kWh battery can go 250 miles. Guess what? It can, if you have enough self-discipline to keep your foot out of the throttle. And in the real world, drivers are exceeding that claim, sometimes by quite a bit. But it goes beyond that.
Tesla owners I’ve talked to are smitten with their cars because they flat work the way they were promised and often beyond. Apple Computer understood this as well. Rather than rush things out the door and hope and pray they work only to suffer embarrassing failures the necessitate quick fixes, both Apple and Tesla have demonstrated that heavily developing a product first and then over-delivering on customer expectations is one thing a car company – or any company – can do to sell more product and develop a loyal repeat buyer base.
It’s easy to make a quick buck by deception, but the real money is made when customers get more than they feel they paid for. When that happens, they’ll come back for more in the future.
2. Innovate and take chances no matter what or when
As major automakers spool up their EV offerings, they are offering cars with ranges that seem to top out at 100 miles – as long as you’re in Extra Slow Eco Mode and are driving downhill with a tailwind. Otherwise, expect 75 miles or so. YMMV. Really? I understand that batteries are heavy, costly and in electric vehicles, a work in progress. But 100 miles at most?
Over a decade ago, GM showed their “skateboard” concept for future EV vehicle layout and substructure. It was brilliant, keeping the weight down low and being highly modular. Then, nothing. Guess what modern electric car riffs on that idea and has improved on it by incorporating the ability to swap out the power supply? The Model S.
It’s easy to see how GM may have shelved the idea because it didn’t pencil out for profitability, but in 2002, when it appeared, Honda and Toyota already had clean-sheet hybrids on the market. GM could have leapfrogged them both and Tesla would still be associated with a quirky but brilliant inventor that no one really knows that much about. But GM chose to instead focus on gas-powered cars and now the best they have come up with is the Spark EV, a retofit of an existing model that is years behind the design features of the Model S.
BMW seems to be getting their act together with the i3 and soon-to-be-released i8, but I wonder what the EV landscape would look like today had GM gone skateboarding back in the pre-Great Recession bailout salad days. Carmakers have to answer to stockholders and they don’t like volatility, I understand that. But I wish major car companies would develop skunkworks and not let their design and innovation be ruled by the bottom line and the vagaries of the stock market. Take a chance. Sure, it might be a failure. But it might also be a home run and a game changer.
3. Support the customer after the sale – long after it
After enduring a typically arduous car shopping experience, I recently signed on the line for a new car, a 2014 model no less, with an extended warranty (I drive a lot) and some other extras that padded the dealer’s bottom line. But, the floormats for the car had been recalled so none were in the car. “We’ll call you as soon as they come in,” was the breathless promise of the smiling salesperson. Two months later, no phone call. Three months later, nothing, and wear marks were forming in my car. So I called the dealer and asked what was up. Oh, they’re here, the person on the other end of the line said with annoyance, and why hadn’t I called earlier to check on them? I nearly returned the car.
Tesla goes out of its way to support their buyers. Musk has pledged to build a network of car Superchargers across the U.S. so Tesla owners (and only Tesla owners) can drive coast-to-coast without range anxiety. On top of that, Musk is picking up the tab for all the juice. That’s a sweet deal at any price. Tesla also keeps in contact with buyers to remind them of recalls, maintenance, and more.
My friend who owns a Model S raves about the follow-up service, which includes Tesla sending out a service van to his home to give his beloved EV a checkup. Wow. Outside the car sphere, Nordstrom shoppers and Vertu cell phone owners also know what I’m talking about. It may all seem above and beyond, and maybe it is, but considering my recent car buying experience, it goes a long way toward making me save my nickels for whatever car Tesla has coming out in the future more in my price range.
Which leads me to…
4. Get rid of the big dealership model
Elon Musk is fighting hard to get his retail car stores into states so he can sell cars his way. In case you don’t know, “his way” means no big Tesla dealerships, just small boutique stores, typically in malls, with a car or two for display and test drives. If you want a Tesla, you can work with a salesperson at their store or just go online, pick your options, schedule a test drive, do the financing paperwork, pay your required monies and the order is sent to the Tesla robots and workers that will then build your car. When it’s ready, you get a phone call and the car is delivered. You don’t drive it off a lot.
The power of money in politics has never been more clear as carmakers and dealership-funded political groups scramble to throw threats and money at both politicians and lawyers to block this more retail way of buying cars, jobs be damned. Why? Because it completely bypasses the dealership middleman and all the money that stays there.
I hate to see anyone lose their job, but who really prowls a dozen dealership lots these days when looking for a car? In order to make the car buying experience as painless as possible, most people sift their choices online first, pick a few top candidates and go take a test drive before gritting their teeth and haggling with a salesperson, then a manager, then another manager and so on in what is typically an unpleasant, time consuming experience. Tesla is trying hard to change that dynamic.
Sprawling dealerships are not a broken business model yet, but just as the print industry failed to see the rise of the Internet as the greatest historic threat to their survival, car makers should heed well the lesson Tesla is teaching and change their ways before the reaper comes for their dealer’s livelihoods as well. As Tesla’s business model proves its superiority going forward and the influence of car dealerships owners wanes due to either customer avoidance or changes by the carmakers themselves to emulate the Tesla model, I believe we will see dealerships either change drastically – or disappear.
In a more perfect world, buying a car should be a fun and pressure-free experience where you don’t feel fleeced or tricked in the end, and from what I’ve been told by Tesla buyers and shoppers, they were very pleased with what they experienced. All the balloons, phony “clearance sales” and bad ties in the world can’t change the stink of the traditional car buying experience and if that could be changed, perhaps more people would think more often about getting a new set of wheels rather than treading water until their current car clicks over 200,000 miles or things start falling off and they have to do it.
As for used car dealerships, they will probably be around until the Rapture. And likely afterwards.
5. Utilize technology to improve vehicles – but keep it simple
The “Tesla video” by our friends at Wired showing how the cars are made is viral hit for good reason. It is amazing to watch how the car comes together in a swirling partnership of human workers and robotics in Tesla’s Fremont, California assembly plant. Some of the robots that help assemble the Model S do more than one job, and suffice to say they do them accurately and quite quickly, likely more so than their human counterparts could. Such is our world now.
I’m not anti-worker or anti-union. I put in a couple of summers during college as a Teamster at the Freightliner plant in Portland helping build semi tractors, but I can see the writing on the wall. From humble beginnings, robotic assembly of cars has continually moved forward and will do so forever. Every volume carmaker uses robotics to some extent but the Tesla operation was eye-opening. The video states there are 3,000 workers and 160 robotic units, some of which motor around the plant autonomously, following magnetic strips on the floor. The facility looks to be nearly as clean as an operating room instead of looking like the grease-slicked assembly lines of just a few years ago.
That focus on technology extends from the creation of the car to the car itself, of course, which is a tech showpiece on its own. The central nugget is the 17-inch vertical touch screen in the middle of the dash. While other automakers might push their screens to 10 inches or so and surround them with buttons, the massive screen real estate in the Tesla – bolstered by another configurable LCD screen behind the steering wheel for the driver – means the car has only a pair of actual buttons, one of which opens the glovebox. The other activates the hazard lights.
Every facet of the Model S’ operation is controlled by voice or on the central touchscreen, with organizes controls using an iPhone-ish rail of icons for major systems and can be used in a split-view configuration for even more flexibility. The system is easy to use and has nearly instantaneous response. It also connects to the real Internet using 3G wireless and since the car is essentially a big rolling computer with four tires and an electric motor, the car’s systems – and even future features – can be updated over the wireless connection the same way apps on a smartphone or firmware on a computer are easily updated. The system also includes telematics, which sends driver data back to Tesla so they can keep tabs on the car’s systems and any problems that crop up.
Using the Tesla screen is light-years ahead of the screen/button mix that is found in most “high-tech” cars. And since the screen is so big, the “buttons” it displays for controlling car options are also larger, more legible and easier to hit while driving. Because, let’s just admit it, despite knowing that our eyes belong on the road at all times and should not be glancing about at in-car screens, we all at some point tap away at our cars’ screens, our phones’ screens and whatever buttons and dials are present while we speed down the road. So Tesla made it as quick, efficient and easy as possible, a goal every carmaker states they want to hit but for some reason keep missing and often miss badly.
Is a giant touchscreen the answer for every car and driver? Perhaps not, but it’s a step ahead of the shuttle cockpit-level of complexity that regularly appears in cars we evaluate. The Tesla shows that even the most complex of car computer systems can be made simple to operate, adjust and update.
The Model S is not a perfect car, but judging from the accolades, awards, evaluations and red-hot sales history, it’s pretty close to the bullseye. It wasn’t luck or chance that made it that way, it was a lot of innovation, risk and new ideas, concepts entrenched automakers everywhere should revisit rather than working within the strict confines of shareholder fears, conventional wisdom and lowest common denominator thinking.
What do you think? Is Tesla changing the game? Is anyone else? Leave a comment.
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