Parallels between Tesla (TSLA) and Apple are abundant amongst forward-thinking investors and supporters of the EV automaker. Recently, Dave Lee explained just how similar the companies were in terms of the strategies they use to dominate their respective industries. Lee called it “The Tesla Roll.”
Lee explained that The Tesla Roll was essentially the all-electric manufacturer’s strategy for success. He was inspired by John Gruber’s opinion article titled “This is how Apple rolls.” Gruber noted that Apple often stripped its products down to their core. Once it had the core, Apple would focus on key features and continuously improve them.
Lee observed that Tesla follows a similar strategy with its products. He enumerated and explained the three components of The Tesla Roll, which are:
- Only release products that can dominate the market segment
- Iterate and improve ruthlessly
- Leverage innovations to create new products & markets.
Only release products that can dominate the market segment
Lee talked about the hyper-competitive economic marketplace in the world today and how difficult it was for new companies and products to break into such a market. “…if you’re a new company and a new startup if you have a second-place product that gives you very little chance to really survive and to thrive in the future,” he said.
“What you need is--you need a first-place product. You need a product in this market segment that is beloved, that is championed, that people are going to talk about and be excited about and buy more of and spread the word.” Elon Musk's “sexy sportscar,” the Roadster was that first-place product.
Lee explained that in the early days of Tesla, people wanted to make an electric version of the Toyota Scion, an affordable vehicle that was known for decent performance. However, that segment of the market was hyper-competitive at the time. Musk was adamant about starting with the Roadster because he knew it was a segment Tesla could dominate, especially within the EV market.
Lee’s point was supported by Bob Lutz—the former Vice Chairman of GM—in an interview with CNBC. “One of the smart things [Elon Musk] did was start at the top of the market with a large, expensive car and he got a lot of—you know—thought leaders, wealthy West Coast people and so forth. And then he started going down in size,” said Bob Lutz.
“What everybody else did with electric cars was ‘well, let’s make it tiny and cheap and ugly because people want electrification.’ No, people don’t want electrification that badly. They want a nice-looking car with great performance. And let’s face it, Elon Musk has done that,” Lutz explained further.
Iterate and improve ruthlessly
Tesla continuously pursues improvements in its products. It is blatantly obvious or should be to anyone closely following the company’s progress, which could be the reason Lee brought it up in his video. Tesla's drive to refine vehicles it has already released can be seen in the software, battery, powertrain, and other aspects of the cars the company makes.
The Model S and Model X Plaid are just some examples of Tesla’s next iterations. The EV automaker started ramping production on the Model 3 only three years ago, but it has already improved since then. Now, the Model 3 even sports some Model Y parts.
Within that last couple of months, Tesla has reduced the price of almost all of its vehicles, including the Model S, which the company just announced was the first electric vehicle to receive an EPA range of 400. While TSLA bears have their own theories about Tesla’s price reductions, bulls know it's because Tesla has improved its supply chain, technology, and manufacturing processes.
Tesla (TSLA) Leagues Ahead Of Legacy Automakers: "Step Up Or Stop Talking," Says Phil Lebeau To OEMs https://t.co/sk3J9l6Sa4— Tesmanian.com (@Tesmanian_com) July 15, 2020
Leverage innovations to create new products & markets
Lee noticed that Tesla’s innovations have led the company down other roads to explore more markets. He brought up Elon Musk’s latest interest in entering the home technology segment with Tesla’s HVAC system. Tesla’s work with the Model S and Model X’s HVAC system for Bioweapon Defense Mode might have given the company enough background to enter the home technology market with such a product.
Lee explained that the three components create a cycle, which allows Tesla to grow and expand. He outlined why TSLA is labeled a growth stock by bulls and how it turned into a billion-dollar company.
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This article is for informational purposes only. You should not construe any such information or other material as an investment, financial, or other advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, or offer by Ma. Claribelle Deveza, Tesmanian, or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.
Ma. Claribelle Deveza holds zero shares of Tesla, Inc., and currently (at the time of this article's publishing) holds zero options or securities in Tesla Inc. and/or its affiliates.
About the Author
Ma. Claribelle Deveza
Longtime writer and news/book editor. Writing about Tesla allows me to contribute something good to the world, while doing something I love.