Detroit Just Got Crushed

Detroit Just Got Crushed By Elon Musk

Sometimes, you need an innovator to show you what you didn’t know you were missing.

Innovation and disruption of the big auto’s outdated ways has been the Tesla trajectory since Elon Musk founded the company back in 2003. Yes, it’s been almost 15 years, can you believe it? Last week, Elon Musk showed why he’s the most feared car salesman on earth. On Thursday, Elon Musk conducted what will go down in history as the largest crowdfunding campaign ever, with servers at full capacity, taking in $1,000 at a time, with total sales commitments in excess of $12 Billion (and the tally board is still clicking).

Hey General Motors, the 1970s Called. They Want Their Business Model Back.

Tesla’s new Model 3 car designs themselves are evolutionary, distancing Tesla from their competitors with sexy body styling, a glass roof (seriously cool), speed (0-60 in under six seconds!), a 200+ mile battery life, and a host of other fresh new features. But the gamechanger that put real distance between Tesla and the rest of the pack was Tesla’s fully functional distribution channel.

Musk schooled us all on how to do direct-to-consumer sales of high-ticket items. In about twenty minutes, with a high-impact presentation and unveiling, Elon successfully positioned Tesla as important new and sustainable consumer technology (think Apple, Oculus Rift, Facebook, etc.), while simultaneously branding his competitors as relics.

Forget the feature and benefits chart, just by comparing distribution methods, Tesla’s presentation of a car “for the rest of us” leads us to quickly conclude that the rest of the car manufacturers are still stuck in a decade that at best was pre-internet, but more likely, pre-color TV (1950s or 60s?). Whatever decade they’re stuck in, we all finally GET IT now, and can share in Musk’s vision. And that’s not so good for Michigan, Germany, Korea or Japan. The sales distribution method itself ages the alternative brands, making them into “grandpa’s oldsmobile,” before they’ve even rolled off the truck.

Detroit’s C-level folks must’ve shit a brick when Tesla’s tally board went live, displaying in real-time how many pre-orders Tesla sold. The retail folks at the local Ford, GM and Chrysler dealers must be on the horn to Detroit today, asking what the executives have in mind to get people into the dealerships this fall, knowing over hundreds of thousands of willing and able buyers (and their families) won’t be coming in for a test-drive this year, nor any time soon. Harsh news, given car sales are just beginning to rebound since the housing crisis of 2008.

If the past four days are any indication of how the next year’s going to go, America’s smokestack automakers could be in peril soon, and the next Presidential administration may not be as generous with a bail-out this time around. The American consumers have grown to love Tesla for the past decade, and now that the Tesla’s pricepoint is competitive, after a year of whetting consumers’ appetities with the Roadster models, they can’t wait to get one for themselves.

Taking a page out of Steve Jobs’ playbook, Elon Musk introduced the world to the new Model 3 Tesla. He did so from the stage of his SpaceEx headquarters in Los Angeles, California. Lee Iococca would have been proud of his performance last Thursday; not only for its perfectly choreographed pitch and staging, but its perfectly delightful results. In less than 15 minutes, Elon Musk closed more car sales in one day than all the “traditional” car dealers in the USA make in a fiscal quarter.

It’s only been three days, and as of midnight last night, over 300,000 Tesla Model 3 units are pre-sold. Sales of Tesla Model 3 will likely exceed $20 Billion in less than a month’s time. With that said, do you think the CEO of GM will be making an announcement soon, pre-selling the Chevy Volt?  Gosh, it sucks to be second, because Elon Musk locked and loaded a whole new generation of car buyers, and the likelihood of GM, Ford and Chrysler exec’s holding their own successful crowdfunding effort is pretty slim. The likely strategy by Detroit’s “big three” is all-out warfare with Tesla, in the hopes Musk misses his anticipated delivery date of “late 2017.”

Here’s the video from the livecast event last Thursday.


Houston: You’re Next.

It was pretty clear in 2003 that Elon Musk was going to do his level best at re-defining the automobile itself, after he walked away with hundreds of millions in proceeds from the sale of his previous businesses (including PayPal). That said, well over ten years later, what most of us didn’t realize then was, he’d not only re-define the automobile, but the entire manufacturing, distribution, marketing and sales process. 

What we haven’t seen yet is what effect Tesla’s success (and other electric car sales) will have on fuel sales. In other words, we’ve only gotten a glimpse of what the business model behind the cars is all about: energy. When 500,000+ vehicles hit the road next year, where will they turn for re-fueling? It won’t be at the local gas station. It’ll be in their own garage, re-charging their Tesla batteries. The ripple effect a million-plus new electric cars on the road will have will be enormous, and very interesting to witness, don’t you think?

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