Wrong. By that logic, you wouldn't have considered cell phones as disruptive because they initially cost around $9,000 (inflation adjusted). The same for PCs, and pretty much any disruptive technology.
That's one of the central points in the aforementioned book Innovator's Dilemma. Disruptive technologies often start out as expensive products that only attract a small segment of early adopters. This leads established players to ignore them. But new technology often holds greater potential for improvement (easy gains in existing technology have already been tapped). With time, cost is reduced while performance is increased, and it wins over the market.
Tesla may or may not end up being disruptive. But price certainly doesn't rule it out.
Yeah, the $100k is a red herring. The issue is not how much it costs, but what it does, and I don't see the Model S as doing anything that incumbents already don't.
Yeah, the $100k is a red herring. The issue is not how much it costs, but what it does, and I don't see the Model S as doing anything that incumbents already don't.
You don't skate toward the puck, you skate where the puck is going. This kind of thinking is why, for example, Toyota was able to build the Prius and GM wasn't.
Japanese manufacturers started earlier, building up the necessary experience, technology, and culture at a time when nobody could sell hybrids without heavy subsidies. They took losses for years, learned the hard lessons early, and kept the disasters small. Then, when the market was finally ready, they were, too.
That's what Tesla is doing... but despite countless historical examples of market disruption, the incumbents will react with great surprise when they get their asses kicked. Today the car costs $100K. Tomorrow they will know how to build one that costs $10K.
The more interesting part of the Tesla is how it changes maintenance habits for owners. I don't know the full scope of what normal maintenance is like, but it seems like there's a lot less to think about.
If you consider the change in routine fueling habits, too, that's pretty amazing. Plugging in at night vs weekly trips to a gas station is a big deal.
I think you are confused. Disruptive technologies can either start at the bottom of the market, or the top of the market. What makes them disruptive is that they serve the needs of a market segment that is currently not served very well by the incumbents.
Oh, no doubt I'm confused. But what market isn't being served that the Model S can waltz in on? It's an M5 with a linear torque curve that you can't take on long trips.
I think you might be underestimating the technological sophistication of a twin-turbo V8 that develops 550bhp at 7000rpm, in a cabin so quiet that they have to pipe artificial engine noise in -- but set that aside. The Model S doesn't do anything that an M5 can't, save charge from the mains. That's not insignificant, by any stretch, but it also seems to me less like a different class of thing than a serious, big-time but incremental improvement.
I think this is pretty much correct, but Tesla only has to carve out a niche in each market it enters to be successful. They will enter a high volume market soon. Also, the EV feature comes with side benefits of decreased weight and size. For smaller cars this will be a bigger win as comparable gas powered cars have less space to use on passenger satisfaction. So you're missing that in your comparison. How much interior+trunk space does the model S have over the M5?
I'm not underestimating the technology used in the M5. If anything, though, the M5's technology is the one that I would describe as "incremental." They took an internal combustion engine, the mechanics of which have been well-understood for over a century now, and improved it incrementally until it became a twin-turbo V8 that has a ton of horsepower.
Contrast that to the Tesla, which has been engineered from the ground up to use batteries to power it. The car is a technological marvel, even compared to cars like the M5. And this translates to a driving experience that is different enough from ICE cars* that it makes it a disruptive tech.
*instant acceleration, no engine noise, real-time graphical feedback about the car's systems, etc.
That's how many disruptive technologies start. Then their price falls until it reaches parity with the old technology, and the choice becomes a no-brainer.
