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