Do Electric Cars Dream of Invasive Species (4/28/2010)

In writing the previous post on Tesla Motors and equivalence it dawned on me that the company bears all the hallmarks of an invasive species.  I suppose it should have been obvious except for the fact that the company has not yet had widespread success and it could well be argued that Tesla will disappear as soon as the Chrysler Volt and other electric/hybrid offerings from the mainstream automotive companies move into full production mode.  Additionally, internal combustion engine (ICE) technology offers a longer “between-charge” range than electric vehicles (EVs) and has an enormous infrastructure built up to support it. And if you consider that EVs have actually been around longer than ICE and yet have consistently failed to compete successfully against it, scenarios in which the big and the established beat the small and the new seem quite plausible.  So what are the chances then that Tesla Motors will become a large scale success and be a leader in a radical transformation in both the automotive and energy industries?

I’m going to argue, as you might expect by now, that the more characteristics of invasive species an organization exhibits, the more likely it is to be a disruptive innovator.  So let’s review which of these characteristics, these invasion principles, are exhibited by Tesla Motors. First, a refresher list of the principles:

  • Start, act and think small

  • Take an outsider view

  • Speed up your cycles to get to resources earlier

  • Embrace disturbed environments and tumultuous times

  • Think hybrid

  • Exploit underutilized resources

  • Play nicely with other invaders

  • Know when to attack (grow fast, spread fast)

  • Be a serial invader

Which of these then apply to Tesla?  Well, clearly #s 1, 2 and 3 do. In the August 2009 edition of The New Yorker, General Motors’ then Vice Chairman Robert Lutz was quoted as saying, "All the geniuses here at General Motors kept saying lithium-ion technology is 10 years away, and Toyota agreed with us -- and boom (#3), along comes Tesla. So I said, 'How come some tiny little California startup (#1), run by guys who know nothing about the car business (#2), can do this, and we can't?'”

#4 doesn’t seem to apply as much, except that the increases in oil prices over the last couple of years and the US government’s apparent desire to reduce dependency on foreign oil in the long run creates unstable conditions for the production and consumption of energy which should play to Tesla’s advantage.  It should be noted, however, that Tesla started in very different conditions which were not nearly as conducive to EVs.

#5 is where Tesla detractors might have their strongest argument.  It’s well known that consumers are, in practice, unwilling to make performance trade-offs for a “common good” like energy conservation or reduced emissions.  That means they may well choose, at least initially, a vehicle that gives them a between-charge range comparable to their existing ICE on a tank of gas (or a large part thereof).  In that respect at least plug-in hybrids have the advantage over a pure battery play like Tesla’s and may therefore win out.

Tesla clearly follows principles #6 and #7.  Elon Musk runs not just Tesla Motors but also SolarCity, and the two companies are, naturally enough, partners.  This means that Tesla customers can use solar power, harnessed by SolarCity’s products, to charge their EV, whether that’s a Roadster or one of the forthcoming lower cost models.

But the link to other innovators doesn’t stop there.  From Wired, August 2006: “The central concept of Tesla Motors, founded in July 2003, is that there is no need to reinvent the battery, particularly for a product with a small initial market. Eberhard (Tesla’s founder) simply adopted the lithium-ion technology used in laptops and harnessed the momentum of the computer industry. Let Dell, HP, and the rest of the sprawling PC business, with their billions of R&D dollars, do the hard work of extending battery life and driving down prices. He’d piggyback on their innovations.”

#8 is another question.  Is Tesla growing or spreading quickly enough?  Will 15 Tesla stores (currently) across the nation be enough to do enough to dispel the image of Tesla as a Silicon Valley company with little or no relevance to the “average” car buyer?  It’s difficult to know and perhaps still too soon to be relevant. The company has demonstrated the efficacy of the EV at the luxury price point but not yet at the Prius one (approx. $22,000 - $32,000).  Evidence from pre-orders for the S Model and for the mainstream competitors may give Musk the information he needs, or perhaps he can turn to the Tesla investors over at Google for data on relevant search activity over time.  Incidentally, Google Trends currently reports a modest increase in search volume over time and a more noticeable increase in news coverage since the beginning of 2008 but nothing to suggest a critical mass of interest. Perhaps, therefore, too soon for the invasive expansion.

#9 may be the deciding factor.  All other things being equal, the best predictor of a species’ invasiveness is whether it has been invasive before.  In this case Elon Musk, Tesla’s CEO, co-founder and major investor, can comfortably tick that box as founder of Zip2 and PayPal, with other invasions currently underway at SpaceX and SolarCity.

So, Tesla rates a 6 out of 9 just on number of principles applied, although the existence of serious competition from Toyota and GM (see #5 above) is an important factor in deciding its invasiveness.  My final guess is that EV technology will be the long term winner over ICE, causing significant transformations in the automotive and energy industries. As for the company itself, I think it may benefit from an Apple halo effect; Tesla is way cooler than GM, and its devices are way cooler too.  Expect an invasion in the next year or two.