I think that's what Tesla is hoping for. However, I don't see it happening.
Tesla wisely is going after premium buyers, that market is niche by definition. They've done that because car is a major purchase unless if you a lot of money and you are more willing to take a chance on a new car company.
But beyond that, it doesn't matter if Tesla is building a better car, it matters if consumers think Tesla is building a better car. And tesla doesn't have the same brand loyalty in a very competitive market.
Secondly, if you're buying an electric car for environmental or gas price reasons, there are other options. I can lease a Nissan Leaf now for $199/month. The amount of money I save on daily gas cost driving my Honda will almost come to $199!
It means I can have a car for 3 years for free (minus the $2000 singing fee). Tesla just can't compete with that!
Ok, I see where you are coming from. But aren't you getting ahead of yourself? The luxury car market is what, 1 million cars annually [1]? So these 'niche' cars which have good margins give Tesla the capital to do the next step which is bring the costs down.
I think folks who drive a model S will pretty quickly understand that Tesla is building a better car, so if someone was in the market, and open to an electric, Tesla is a contender.
I expect the majority of Tesla's sales to be 'status symbol' sales initially (just like Hummer's sales) and later a more durable market will develop. And I think it will benefit from being considered the 'best' you can get, Elon is a pretty compelling figure as well so very trendy.
Where we differ I expect is that I expect they can translate that early success into a broader class of car.
I think Tesla is going after the premium buyers at the moment, but that can change very quickly if the Model S lives up to it's hype and they actually start turning a profit.
There are no cars on the market that even come close to the Model S, the Nissan Leaf has a pathetic 73 mile range. The Tesla is 10x the car the leaf is, performance and luxury-wise, and it get's almost 4 times the range on a single charge. The Model S Signature (equipped with an 85kWh battery for a 300 mile range) MSRPs at $87,900; a Nissan Leaf MSRPs at $37,250. Sure, that's a pretty significant jump in price, but when you consider the fact that the Model S competes with a BMW M5 performance-wise, you see it isn't all that crazy.
Even if you take the 40kWh Model S that will MSRP for $49,900 you can see that it's a way better deal than the Leaf. Sure, the Models is $12,650 more than the Leaf, but you actually get a reasonable range (160 miles) and the luxury and performance that the Leaf just cannot compete with.
Tesla wisely is going after premium buyers, that market is niche by definition. They've done that because car is a major purchase unless if you a lot of money and you are more willing to take a chance on a new car company.
But beyond that, it doesn't matter if Tesla is building a better car, it matters if consumers think Tesla is building a better car. And tesla doesn't have the same brand loyalty in a very competitive market.
Secondly, if you're buying an electric car for environmental or gas price reasons, there are other options. I can lease a Nissan Leaf now for $199/month. The amount of money I save on daily gas cost driving my Honda will almost come to $199! It means I can have a car for 3 years for free (minus the $2000 singing fee). Tesla just can't compete with that!