Tesla Make its ambition for global hegemony known when He announced his intention To build a factory in China. This step is logical – China he is The largest auto market in the world. But may be short-sighted.
By continuing to follow the higher levels of the market, Tesla will participate in a zero-share market share rather than a new market of unparalleled size. The competition will be fierce, such as the BMW and Audi companies, which are determined to stick to their more profitable customers and respond similarly.
Instead, the greatest opportunity for any car manufacturer is to develop the market in general through destructive innovation – not in the magical sense of Silicon Valley of the term. The devastating architect of innovation, Harvard Business School professor Clayton Christensen, explains that the disorder occurs in Low end Of the market – not the end adorned with high-tech features and flashy designs.
Destructive innovation succeeds by converting complex and expensive products into simple, affordable products, allowing more people to benefit from offers. By their very nature, they expand the market, they are the source of new growth.
Instead of taking a page out of the rules of the game, Tesla is busy Keep innovation. The company plans to use New factory To build a model 3 and a Y model. Assuming Tesla continues to determine its current location, these cars, like the other Tesla models, will enter a well-established market to compete for current performance measures, such as acceleration, style and luxury.
Maintaining innovation is important in that it provides an industry, but offers little growth, as not all consumers can access it. And As sustainability of the innovations targets more profitable consumers in this industry, we can expect leading automakers to resist tooth and nail to maintain their core customers. Instead, the destructive strategy provides an easier way to tap into the Chinese market, which is already happening under the eyes of Tesla and other leading automakers.
There is a break in the low end of the market.
Chinese manufacturers of low-speed electric vehicles (LSEVs) – small vehicles that are usually above 45 mph, have limited driving range, and sell less than 2000 $ – Creating a market that was not there, by selling cars primarily to people in rural China who never owned them. We call these customers nonconsumers the cars. The most important performance measures for non-beneficiaries are not speed, style or comfort, but affordability, accessibility and simplicity. Therefore, as long as LSEVs meet these criteria, the beneficiaries will usually be willing to buy them. After all, having a car can not travel very quickly or very quickly is much better than alternatives: bicycles, motorcycles or agricultural vehicles.
By targeting non-residents, LSEV's manufacturers have moved away from direct competition with existing car manufacturers – who have a lot of resources, such as capital, factories and supplier relationships – and have already established a foothold that allows them to move steadily to the market.
This devastating way has allowed LSEV manufacturers to launch a new wave of growth that Tesla and other car makers should taste. During the decade that was available in China LSEVs, sales rose. According to the Global EV Outlook 2017 report of the International Energy Agency, between 1.2 million and 1.5 million units were sold in China in 2016 – casting a shadow over the number of electric and hybrid cars sold worldwide in the same year. Undoubtedly, the growth potential of LSEVs in China is enormous – more than Half a billion The Chinese lived in rural areas in 2016.
Whether LSEV's manufacturers are able to profitably profit to higher levels of market performance not yet seen. What we can say with certainty is that there is enormous untapped potential that can be discovered – both in China and in other emerging markets.