Let’s discuss Elon Musk’s company Tesla. The rise of Tesla has raised a lot of discussions whether it is a disruptive innovation or not. Business Insider states that Tesla has put the auto industry on notice. Besides that, they state that Tesla’s ideas, the way it connects those ideas to an ambitious vision of a future where renewable energy is the main source, are as compelling as the ideas coming from any other American business. They state that there is no doubt that Tesla created a greater urge regarding innovation and creating electric cars.
This might be true, but others state that Tesla is a disruptive innovation. According to Clayton M. Christensen, a disruptive innovation typically has got two characteristics. First, a disruptive innovation originates in low-end or new-market footholds and second, a disruptive innovation doesn’t catch on with mainstream customers until quality catches up to their standards.
Clayton M. Christensen states that Tesla is an outstanding example of not being a disruptive innovation, whereas some people think it is a disruptive innovation. He says that Tesla’s foothold is in the high end of the auto market, which are the customers that willing to spend $70,000 or more on a car. He also states that Tesla has elicited significant attention and investments from established competitors.
Returning to M. Matousek’s article in Business Insider. The article states that after the entry of Tesla in the automotive industry, companies like Porsche and Mercedes-Benz responded with a steady stream of aggressive investment announcements in electric vehicles.
In my opinion, this reaction means that at first, there was no urge for incumbents in the automotive industry to invest in electric vehicles, until Tesla came along. The market for electric vehicles already existed, but there was no dedicated incumbent in this market prior to Tesla’s entry. That’s why I think that Tesla did disrupt the automotive industry.
Sources:
https://www.businessinsider.nl/teslas-influence-on-the-auto-industry-2018-2/?international=true&r=US
Hi Jeppe,
Great piecy on Tesla! How ever i don’t think Tesla is a disrupter, looking at the finance they recieved even at the early days. Aswell the quality of the first Tesla was outstanding. I also recognise that the first Tesla was a niche product, because of the high-end segmenting. I would like your opinion on the following: Tesla isn’t the disruptor in the automotive industry, Tesla can be seen as a catalysator for the automotive industry.
Looking forward to your replie!