On Friday, after a wonderful meeting with the Denver team, I drove home. Driving from Denver to Seattle is quite the trip.
There are more than five mountain passes and the route I took spanned 1,397 miles. The scenery ranges from beautiful mountain canyons, rural farm land and urban city. As impressive as it is in diversity of scenery and culture, it is also impressive in how far Denver really is from Seattle. Notable closer destinations to drive to include, Milwaukee, Detroit, Houston, New Orleans, Cleveland with Atlanta roughly the same distance (5 miles further). And as I traversed the country Friday and Saturday, I realized that on my route I could have driven the entire way in an electric car.
Tesla launched to the world their Model 3 on Thursday night at their design studio in Hollywood, California (you can watch it here). It had the gala and hoopla similar to when Steve Jobs would launch a new Apple product. As millennials and other early adopters in the crowd cheered for anything that Elon Musk announced, I noticed a very clear strategy for their communication. Tesla started out by talking not about the car but about their cause; carbon emissions. They talked about the why before the how, what, when, or the where. To the crowd, the why mattered as much or more than the car itself. After explaining their cause, Musk then described in detail the Tesla business plan. He described how Tesla needed to scale up their company knowledge and sophistication by first producing low-volume, high-price cars for very specific clients. This allowed them to go through the growing pains of becoming a car company from scratch while containing their mistakes to small amount of customers. And now with the Model 3, they have developed the specialty to deliver a mass market car.
Driving across the country, I realized the real genius behind Tesla’s business plan is not their product, but their charging stations. Over the last century, the country has been dotted with gas and service stations to make trips like mine a reality. Any vehicle is welcome at gas stations and you can get what you need quickly and be on your way. Tesla has to recreate this network across North America, Europe, and Asia for their vehicles in order to allow for freedom of travel. This is going to be their real competitive advantage over all other companies as they more than double their current network of stations. From Ford to Volkswagen, all other companies will have to build out their own charging stations for their version of the electric car. Tesla is doing it first and it will cement them as a major disruptor in the automotive industry.
The public agrees with their path. Agrees so much that at last check, 257,000 people have reserved a new Model 3, more than half of those before they even saw the car. When was the last time there was a reservation list for a mass market gasoline car? When was the last time the leader of a large car company was treated like a rock star? When was the last time we were shown the WHY and the BUSINESS PLAN of a major automaker? Not in my lifetime.