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Automotive and New Mobility
Automotive and New Mobility / 26 March 2019
One of the advantages to be a niche brand is that you mostly cater to a group of enthusiasts; in other words, to hard-core fans who strongly support the brand and supposedly are more forgiving than ordinary consumers when it comes to flaws of any kind.
This appreciation seems to be constant in Tesla’s go-to-market strategy. Over and over again the company’s promises have differed from the factual reality: be it the announcement of product availability – required to be pushed back due to manufacturing problems, the vehicle price positioning – higher than sumptuously suggested in unveiling ceremonies, or the perceived vehicle quality itself – a serious problem for its Model 3, Tesla has regularly overused consumers’ credulity.
As much as the recent declaration to close all dealerships (just to revise this decision a couple of days later) seems to fit into this same pattern, it also suggests a surprising business logic: Reducing expenses at the tail end because costs got out of control upfront. This sounds a lot like putting the cart before the horse!
To build a sustainable business, the entire go-to-market strategy needs to be efficient, including production and sales organization. Car makers have already shown how complex manufacturing processes can be cost-controlled. An abrupt divestment of sales outlets does not solve any of these production challenges. Exploding manufacturing costs simply mean that the homework has not been done.
In addition, while a reflection of how to improve the sales force is entirely legitimate, even necessary, a mere closure of all dealerships does not look like a sensible optimization; rather like a blatant eradication.
If we agree to believe that the long-established car makers have renounced to real innovation for too long, and the field is wide open for genuine novelties in the automotive industry, Tesla has missed a chance. Rather than facing the production challenge and proposing a creative way to redefine the brand-consumer relationship at the point of sales, it went for easy salvation by the internet; just to find a good reason to raise sticker prices by partially undoing the decision to close all stores. A rather questionable interpretation of its brand-consumer relationship!
Tesla has once stepped up to disrupt the industry with meaningful innovation by catering to the needs and expectations of car drivers. The measured vehicle design for example – a Tesla still looks like a conventional car, although e-mobility would offer more radical design opportunities – is a testament of how it could become an iconic car brand.
Tesla will have to step up again and raise its game if it wants to keep a leading role in shaping the new mobility, and eventually be able to shed its nicheness.
Ultimately, its battlefield will be in China, not in the U.S., but that’s a whole other story …