Product Launch

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E75: Why Tesla Is Suddenly Struggling

Tesla has struggled as of late, let’s talk about what changed and why it’s causing their slide.

Tesla has dominated the electric car space in recent years, but recently their performance has gotten worse, much worse. 

Let’s talk about what’s changed and what we can learn from their story about how to avoid a similar situation they find themselves in currently.

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Episode Transcript
Hey, folks. Sean here.

And today, what I want to talk to

you about are the reasons behind Tesla’s meteoric

rise and subsequent fall in recent years.

From a product company perspective, So if

you’re unaware, things haven’t been going well

for Tesla as of recently.

They’ve been steeply discounting.

Their vehicles and their stock prices have been on a

long, slow slide for the greater part of a year.

Now, I want to talk about the reasons for that.

And this might come as a surprise, because we’re all

kind of used to seeing a lot of news about

all the successful things Tesla has been doing.

So I want to dive into some of the things

that have been, I think, leading indicators into where they’ve

wound up performance wise at this point, because most people

are expecting Tesla just to continue to rise.

Now, there are any number of factors for that, but

I’ve read a number of recent articles like one from

Business Insider, which in my opinion, essentially knocks Tesla in

an area which is the most damning.

If you ask someone like myself and that’s

they’re considering Tesla to be essentially just another

car company, I think that’s the most insulting

thing you can say to Tesla.

Or I should say the most damning thing you can

say to them and probably the worst case scenario for

them and everything that they’ve been trying to avoid.

And I’ll explain what I mean.

I think Tesla’s original,

essentially value proposition.

And A Key Part Of It wasn’t as Much

Of Being A Car Company, it Was More Of

Being A Tech Company as and they Were promising

features you really Couldn’t Get anywhere else.

And that was part of the value

and why consumers were buying it.

They weren’t just buying it because

it was an electric car.

You could still get electric cars from other companies.

But the rise of Tesla was nowhere near

like some of the other major automotive manufacturers.

But where else were you going to get the

cool self driving tech and things like that?

Where else were you going to get an electric

car that performed better than a gas vehicle?

These were things that Tesla had done and figured

out that made their value proposition, in my opinion,

a lot stronger, which enabled them to bring the

electric vehicle as a viable option to the mass

market, which is something that, in my opinion, previously

had not been done.

So Tesla gets a lot of credit for that.

And I would consider them to have first mover

advantage in this case, which is a huge deal

if you make the commitment and the investment there.

From a product company perspective, that

can be very rewarding for you.

And thus far it has been for Tesla.

Although recently they’ve continued aside.

So I want to talk about what’s changed since

then because things seem to be going particularly well.

I Think There Are Two Key Things That Have Changed

in terms of Tesla’s trajectory, which has led to their

more recent slide and why they fall off.

And the first is that major automotive manufacturers have

figured out how to become a tech company before

Tesla’s figured out how to become a car company.

They want to talk more about this one first,

and that is that Tesla gets beat up by

things like Consumer Reports all the time.

People are constantly tearing apart their build

quality, what the service experience is like,

and a number of other things.

Consumers complain about it a lot

on the web as well too. So if you do a little bit of

research on what Tesla ownership is actually like,

it’s not all sunshine and roses.

That’s a big difference and a real problem

for Tesla because that means they’re losing essentially

what once was their competitive advantage.

Other automotive manufacturers have seen the fact that the

electric vehicle essentially is somewhat established on the mass

market at this point, and they see an opportunity

to capitalize on that because they have most of

these other things figured out that Tesla still has

yet to really figure out.

So the second thing that I want to mention is

that Tesla in many ways has over promised and underdelivered

on some of the key features that made them so

attractive, like, for example, self driving technology.

Now, most of their customers would probably say that

the self driving technology has experience, is nowhere near

what it was once promised to be, and it’s

been continually promised over and over again.

And the can kind of keeps getting kicked in terms

of when that experience has ultimately come available for the

people that have invested in it already, and they’ve invested

real dollars and a lot of money.

It’s been an expensive proposition for a

while now, but yet that experience really

hasn’t been delivered upon as such.

That creates another frustrating experience.

And at the same time, just like I mentioned

previously, other automotive manufacturers are making big waves and

a lot of progress in this area as well. Too.

So Tesla seems to have kind of gotten out over its

skis a bit in terms of what it thinks it was

going to be capable of versus what it actually is.

So what can we take away from this case study

thus far for those of us involved in building product

companies to make sure we don’t fall into similar traps?

Well, the first is be

careful over promising and underdelivering.

If you’re promising something from a product experience perspective

to your customers that ultimately you’re going to struggle

to deliver on or you aren’t sure whether or

not you can, don’t make that promise.

You need to keep that until, from a

solution design perspective, you have the level of

confidence to state that it is something that

you’re ultimately going to be able to provide.

And by a certain period of time, because if

your customers are expecting it and they don’t get

it, especially if you’re charging for it, which is

something Tesla has been doing, that’s going to put

you in a really bad situation.

And that’s where Tesla finds itself today.

And the second is if you are lucky

enough to have benefited from first mover advantage,

you have to continue to innovate.

Because if you aren’t, other people are going

to have the opportunity to catch up.

And that’s exactly what’s happened to Tesla.

So far, ford, GM and others have had the opportunity

to catch them in the market because they’ve been able

to figure out problems tesla has yet to conquer.

As such, that’s made Tesla’s life a lot more

difficult and the competition that much more fierce.

People have been educated and trained by Tesla because

they’ve had this first mover advantage, which is expensive

and time consuming, but that has benefited the other

automotive manufacturers who have figured out how to catch

up and deliver a better experience.

So, ironically, in this case, tesla spent a lot of

dollars and time educating the market and making promises that

they have not been able to deliver on.

But so far, it looks like some other automotive manufacturers

have been able to get closer to those promises.

So they’re stealing their thunder a little bit here.

So that’s another huge risk, and one

of the reasons why Tesla struggled.