The Tesla S Isn't a Car - It's a Rolling Tablet

By Rob Enderle August 26, 2013

Electric cars aren’t selling that well – with the huge exception of Tesla, which approaches this market more like a tech company. An article in Green Car Reports on why Tesla has succeeded while others have failed got me thinking.

From the stores they sell the car in to how they deal with their customers, Tesla is much closer to, say, Apple than GM.   This has allowed the company to succeed with one incredibly expensive car while other firms have either failed (Fisker) or are struggling to move volume (GM).   I don’t think Tesla is at the end of its revolution in terms of how cars are moved to market either; I can see a Tesla-driven future where you and your car company are far more closely coupled for the long term, and where you are far happier with both your car and your car company than you are today. 

Image via Shutterstock

Buying a Car

We do this infrequently, but the typical process of buying a car is that you go into a dealership where they love you to death as a potential buyer and you negotiate a deal, often requiring hours and multiple trips to the “sales manager” (you may actually feel your license was taken hostage during this process at some point) for a car that comes close to what you thought you wanted, which they either have on the lot or can trade with another dealer to get. You then are trotted over to a finance person and spend what seems like forever (this has gotten somewhat better over the years) filling out forms.

If it is a high-end car, you are assigned a service professional to work with and you call them when you need to have the car serviced.   If it is a low-end car, you may not have this “perk.” The only time you’ll hear from the dealer is if there is a recall on the car, when it is time for a service, or if the dealer has a sales event where it can sell you something else.  If you leased, you may get a special discount if you buy from the dealership, but again you likely could have negotiated that anyway, and the only reason to go back to the dealership is if they have a new car you like better than anything else or if you formed a relationship with your service professional.  

Your car is stuck at the technology level it started in unless you want to modify it, and you are on your own with regards to warranties and problems related to the modification. The dealer only really cares about you when you have the car in for service or are buying in the first place. 

Buying a Tesla

You walk into a store like an Apple store located in a mall. Some young person with a tablet tells you all about the car and you can set an appointment to test drive one. They will help you figure out what you want in your car (no pressure) and the price is the price. You’ll then order a car that is built just for you and you’ll wait several months before it arrives.  You’ll always finance, but the process in painless and you’ll sign for a unique six-year purchase contract – although the car will be returned in three years and they’ll swap you into something new and fresh at that time.  

For service, they drop the car off at your work or home and leave you with a brand new Tesla loaner. If you like the loaner better than the car you have, they will give you an aggressive deal to swap the cars out. During the time you have the car, it will be updated as much as possible to bring it in line with the current cars (software not hardware).   You can go to the store and charge your car for free or go to any Tesla charging station and charge it for free. The car is wirelessly linked to Tesla and the company monitors the car to anticipate problems (much like IT equipment is monitored) and to provide help if you get into trouble. In short, the Tesla process is much closer to a tablet purchase, with one exception – they really engage with you while you have the car.

Now the one downside I’ve heard is the folks you are working with are very young, kind of like the Apple Genius bar.  This means that, while they are nice, often they may not be as helpful as someone more experienced might be.   

Generally the result should be more loyal Tesla buyers who return to buy new cars on a three-year rotation, much like cell phones are on a two-year rotation.  

Wrapping Up: The Future

I can see this process going farther than it currently does. When the Teslas come back after three years, they will be refreshed and resold as lower cost cars, cosmetically updated.   We are close to what is basically a set monthly charge for a car that gets automatically replaced every three years.  This would suggest a far more modular approach to the car, so that it could be more aggressively updated during the three-year period and the car would continue to look new during its term of service. This would make the remanufacturing of the car at the three-year point more easily done as well.   

I would also expect to see Tesla be the first to experiment with Vehicle Wraps because they hold up better than paint and, designed properly, you could for a nominal charge change the entire look of the vehicle by peeling off the old wrap and putting on the new. This would allow you to stock more completed cars that would still be very easily ordered and if the seats and interior trim were modular as well you could configure a car blank into a custom vehicle in two to three hours (or less).  

In the end, I think we are moving towards subscription transportation, and if Tesla can figure this out first it won’t be long until everyone realizes that success is all about loyal retuning customers, relationships with them, and providing cars that can be loved and rotated on a set basis just like an iPhone. It makes me wonder if Apple will ever sell cars or Tesla (Elon Musk) Consumer Electronics.   Stranger things have happened; IBM used to sell kitchen utensils, and the Tesla is basically a dedicated connected tablet on wheels. 

Edited by Alisen Downey

President and Principal Analyst, Enderle Group

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