Zero advertising, zero discounts, zero patent protection (if used in good faith) and sparse press notices. Tesla’s marketing and business model is certainly novel.
So how does the electric carmaker - whose boss Elon Musk popped up at number 52 in the latest Forbes list of the world’s most powerful – plan to make money?
At a rare presentation to journalists and business leaders in London, hosted by business and tech community Nimbus Ninety (www.nimbusninety.com) Tesla’s UK and Ireland director Georg Ell gave a bunch of insights into the company’s culture.
“We make the analogy to the cloud versus the server model,” said Ell, who came to Tesla from IT start-ups: he was a director at enterprise social network Yammer just as
Indeed, he likes to say that Tesla is ‘a tech company that happens to make cars’ and stresses the importance of the vehicles’ wired capabilities. “We have software that updates every three or four months, or even faster,” he told the audience, comparing the cars to computer software systems receiving automatic online updates.
“This makes discussions with insurance agents very interesting,” said Ell. “This is a car that gets better with age, instead of depreciating.”
At Yammer, Ell helped to pioneer the adoption of social media by companies. Now he is bringing those lessons into the automobile industry, making the car a living part of the online ecosystem.
Georgia;color:#000" href="http://www.forbes.com/ebooks/curbing-cars-americas-independence-from-the-auto-industry/?utm_source=articlelink&utm_medium=direct&utm_campaign=carsebook">Curbing Cars: America’s Independence From The Auto Industry investigates why a growing number of Americans are giving up their cars. This illuminating account of our changing automotive habits is available now for download.This approach chimes with several major trends: the internet of everything, cloud storage, software as a service, low carbon technology and disintermediation – Tesla employs no third party sales agents and likes to start and maintain conversations with its customers.
Among the automatic updates, some will enable Teslas to become self-driving. Although this dream remains distant, Tesla models will be ready when the day comes. Lane keeping assist, parking assist and various sensors can all be improved over time, with no need of help from a mechanic.
Ell made no mention of the much-delayed model X, currently scheduled for delivery late in 2015. Instead he stressed the open source model that the company is pursuing, making its patents available to the rest of the industry in the hope that they will get on board the electric wagon.
“If you’re blazing a trail, if you’re mission-driven and you’re conscious and thoughtful of what that mission is, you shouldn’t be cutting your way through the jungle throwing landmines over your shoulder so that people struggle to follow,” said Ell. “So we’re removing the landmines.”
In a further echo of his techy past, Ell borrowed the language and spirit of Silicon Valley start-ups: “The best perk you can give smart people is the chance to work with other smart people,” he said, revealing that “the fastest way to lose an argument at Tesla is to say ‘such and such a company does it this way’. You get an immediate bullet to that argument.”
Nor did he talk about the $74.7 million net loss the company registered for the third quarter of 2014 (double the same period in 2013), instead discussing the $5 billion, nine million square feet battery ‘gigafactory’ under construction in Nevada which will, he claimed, “produce as many lithium batteries by 2017 as the rest of the world combined.”
Tesla hopes to drive battery and assembly prices down so that the company’s entry-level cars cost no more than £30,000 ($48,000), in order to compete with the BMW 3 series and the
The company is certainly accelerating its reach in the UK, opening showrooms in Birmingham in November 2014 and then Manchester, Newcastle and Edinburgh soon, while adding to its network of charging points. The first right-hand-drive cars were delivered to UK customers in June 2014.
Himself a hybrid mix of nationalities – English, Portuguese, German and Croatian – Ell is a lively and convincing evangelist for the electric vehicle. He cites poor air quality being the second most common cause of early death in the UK and is clearly in love with his boss Elon Musk. “He’s Michelangelo, he’s Da Vinci,” said Ell.
If Tesla can get its act together and deliver cars as smart and engaging as Ell, one day it might even make some money.
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