Is Tesla the Apple of the Automotive Industry?
JULY 9TH, 2020
AUTHOR: KEVIN STILLERMAN
Tesla and Apple
Tesla and Apple have much more in common than you might originally realize.
From visionary founders, to innovative technology, to vertically integrated business and marketing strategies, Tesla and Apple seem to have figured out an equation for success.
It is becoming more and more difficult to ignore the parallels between Tesla and Apple. Which begs the question, is Tesla the Apple of the Automotive Industry?
Elon Musk and Steve Jobs
Elon Musk and Steve Jobs are often labeled as visionaries, and rightfully so.
A visionary is someone who is able to harness their imagination and wisdom to envision a better future and act upon their vision.
In the case of Apple, Steve Jobs was able to take a vision of personal computing and married it with the power of the internet and communications.
In 2007 he unveiled his masterpiece to the world, the iPhone. Steve Jobs saw an opportunity to invent a novel piece of technology and most importantly was able to execute and deliver on his dream.
Similarly Elon Musk saw an opportunity to change an industry.
The automotive industry began in 1908 when Ford began production of the Model T, a vehicle with an internal combustion engine. 100 years later the first high performance and range all electric vehicle, the Tesla Roadster, was delivered.
Elon set out on a mission to “to accelerate the world’s transition to sustainable energy”, and similar to Steve Jobs has been able to successfully execute on this goal.
Since the launch of the original Tesla Roadster, Elon has launched a wide variety of all electric vehicles. In addition, he has developed the infrastructure necessary to successfully create a network of charging stations.
Elon has proven that electric vehicles can be both “sexy” and have high performance.
Anyone can dream, but few can make their dreams become a reality. This is what sets people like Elon Musk and Steve jobs apart.
Their relentless passion and drive allows them to overcome difficult challenges and continue forward progress.
They both have the ability to imagine a future far different than the present, and they discovered a way to deliver that future. This trait that has boosted them both to such high prestige.
Disruptive Technology
Technology often advances very incrementally. Improving slowly over time with very small advancements.
Yet every once in a while a company comes along that develops such a disruptive technology that it forever changes the future.
These types of companies are daredevils in a sense, assuming a large amount of risk and diving straight into uncharted territory.
This requires a clear mission and goal and a singular focus to make the goal a reality.
In 2002 Blackberry released its first phone. Prior to then most phones were clunky and only has basic functionality.
When the Blackberry 5810 came out, it could handle emails, basic web browsing, and had other utility features. There was no question the Blackberry was ahead of its time.
Yet just 5 years later the release of the first ever iPhone took front and center stage.
The iPhone took Blackberry’s improvement in cellular phone technology and made it look incremental.
The iPhone’s large color touchscreen was very responsive, and the user interface was easy to navigate and learn.
There was a new undisputed champion in town.
Similarly, Tesla has gained a large head start of other automotive companies who are now struggling to catch up to the EV giant.
Companies such as Audi, Kia, Porsche, Chevy, BMW, Jaguar, Volkswagen, Hyundai, and even Hummer have electric vehicle models (either already one the road or coming soon) in an effort to compete for market share against Tesla.
This is a tough challange consdering Tesla already has several high performance long range models available for purchase such as the Model S, Model 3, Model X, and Model Y.
This is the definition of trend-setting. A disruptive technology shows itself to be what the people want before they know they even want it. Tesla and Apple have innovation in their blood.
Cost of Technology
In the early days for both Tesla and Apple critics would constantly point out the cost of the technology was too expensive.
Yet somehow these companies still confidently marched ahead and ignored these critics.
This conviction was likely backed by Elon and Steve’s strong understanding of Moore’s Law.
Moore’s law tells us that the number of transistors on a microchip doubles about every two years, though the cost of computers is halved during the same period of time.
This means Tesla and Apple believed that their technology would improve over time as the cost of the technology continued to decrease.
It appears as if they were right. For Tesla, lithium-ion battery science and chemistry is continuously being improved while the cost of energy (per kWh) is steadily decreasing.
This allows Tesla to increase the performance and range of their electric vehicles while decreasing the cost to consumers and increasing profit margin.
Apple has been able to increase the capability of its iPhones while maintaining a relatively stable pricing model.
There may be a large initial resource investment to advance technology, but the benefits typically substantiate the costs.
Both Tesla and Apple seem to have a strong grip on this concept, and have used it to their advantage.
New Product Pre-Launch Buzz
Weeks, months, even years before the products from these companies come out people are excited and anticipating their release.
Both Tesla and Apple are notorious for building momentum and hype around their upcoming products and software updates.
This is by no means an easy challenge, yet somehow both of these companies have been able to do so time and time again.
This may speak to the Tesla and Apple’s steady production of high quality products in their respective industries.
Continuously innovating and coming out with improved versions of the tech we, as consumers, love has proven itself to be a recipe for success.
With zero (or minimal) marketing these companies are able to make people aware of their products, typically by word of mouth.
At a near exponential rate, Tesla and Apple build anticipation, energy, and buzz leading up to the highly awaited launch day!
The day when consumers get their hands on the newest, the latest, the future.
Inevitably consumers are once again pleasantly surprised to find their expectations exceeded! And so the cycle continues.
Loyal Customer Base
With both Tesla and Apple it seems you either love them or you hate them. But those who love them….REALLY love them!
The Apple vs Android and Tesla vs Internal Combustion Engine debates seem to be never ending.
The polarizing nature of these companies brings along people with quite strong opinions.
Despite all of the negativity seen from the other side, the fans and supporters of these companies all have one thing in common, a deep routed belief in the company’s mission.
This strong conviction creates a highly loyal customer base that is continuously growing at a very high rate.
As Tesla and Apple continue to execute with fantastic products time and time again, the supporters gain even further confidence in the trajectory of the company.
Loyal customers disregard daily headlines of the company and pay attention to the bigger picture as Tesla and Apple continue to innovate, execute, and deliver products that perpetually raise the bar.
Vertical Integration Strategy
Tesla and Apple both follow a vertical integration strategy.
This means that they keep the core aspects of the business in-house, allowing them to directly control the hardware, software, services, suppliers, distributors, and retail.
This umbrella-like approach enables Tesla and Apple to minimize dependencies on other companies, and allows them to run quickly, smoothly, and efficiently.
By controlling more aspects of the business, Tesla and Apple can minimize marked up goods and services from third party suppliers and distributors.
In addition, they are able to better control the overall quality, functionality, and overall user experience of their products and services.
Vertical integration also eliminates much of the back-and-forth nature of working with outside companies. This saves time and money.
The efficiency gained by the vertical integration strategy puts Tesla and Apple ahead of the pack.
For Apple this is well demonstrated by iPhone (hardware) + iTunes (software) and for Tesla with its Car (hardware) and Autopilot (software).
As the software side of the business continues to advance, Tesla and Apple have transitioned farther from the hardware business and closer to the services business.
Typically the services side of the business generates high profit margins, creating healthy cash flow that can be used to further advance the company.
Summary
There is no magic equation that defines success. There is no cookbook recipe to follow that will lead you down the right path.
Tesla and Apple are prime examples of success. Further studying their business approaches may give you a good starting point to build a foundation for any innovative idea.
It appears that a successful company is one led by a passionate and innovative leader with a clear mission. This should be accompanied by a highly motivated and efficient team of smart individuals.
With innovating technology, the product speaks for itself, and the masses adopt it because it is a “no-brainer”.
