Tesla model 3 – A game changer or red herring?

by Chris Kirby on August 11, 2017

In the last week Tesla have officially launched the Model 3. Many are talking about this car as the ‘iPhone’ of the automotive industry, the one thing that will change the industry forever; on paper there are many similarities to the huge disruptive impact the iPhone had on technology and communications, but for me the Tesla model 3 still has some way to go to achieve a similar accolade to the iPhone .

When the iPhone launched it changed the mobile phone market forever, throwing existing manufacturers into turmoil, but it was still just a smart phone with similar functionality to other early smart phones. The difference was the increased rate of adoption; people queuing in order to buy it. Before this there was some scepticism around smart phones (some were terrible); the iPhone made them mainstream. With the Model 3 building a pre order bank that is starting to make the Range Rover Evoque launch look pedestrian, the popularity of this electric car surpasses all others.

There is a lot of debate about how practical and sustainable electric cars really are in the mainstream and that autonomous technology has a long way to go to be accepted by customers and authorities alike (these have been widely debated and are not for this blog). For me the bit that is missing is that one doesn’t work without the other, Tim Cook recently called this the ‘vectors of change’ when referring to the ‘major disruption looming’ over the automotive market.

The infrastructure for electric charging at home is a huge issue but if vehicles were available ‘on demand’ they could be charged away from residential areas where infrastructure is easier to update. On demand autonomous vehicles only become truly viable to the mainstream public, where they represent value (are cheaper) over traditional ownership models. Electrification has a huge role to play in creating that value, but key to this is the move away from ownership to subscription based ‘on demand’ models. Read more about this in our Mobility on Demand white paper

In the same way as the iPhone disrupted the phone market, the Tesla Model 3 will undoubtedly impact sales of traditional automotive manufacturers (to what extent only time will tell). The iPhone also facilitated change in many other markets, for example the music industry. It was one of the main drivers behind the move from physical sales of music e.g. CD’s, to digital sales. But more importantly it was the facilitator for the likes of Spotify to change the game forever, moving from music sales to subscription services.

If the Model 3 is to be the iPhone equivalent that will change the automotive market forever, it needs to be the facilitator for the automotive Spotify to emerge. Will this happen? And who will it be? Only time will tell. 

Author

Chris Kirby

Chris has worked across the automotive industry from dealerships to leading marketing teams for major names in auto finance. When not heading up our Automotive team, Chris spends his time on the rugby field for Towcester RFC often returning to the office on Monday with a black eye or another broken finger.

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