3 Lessons Tesla Motors Learned From Apple

They say that imitation is the sincerest form of flattery. If that's the case, Tesla Motors (NASDAQ: TSLA  ) owes a lot of its success to some major lessons learned from Apple (NASDAQ: AAPL  ) . The companies don't compete in the same markets or even make similar products, but there are three ways in which Tesla has followed Apple to its recent success.

Integration is key
When electric vehicles were first being developed, the thought was that swappable batteries were desirable and that using standard parts would reduce cost and make the vehicles more available to the mass market. A123 Systems and Ener1 developed batteries that companies could design around when Fisker, Th!nk, and Volvo began designing electric vehicles.  

But rather than building a car around a battery, Tesla built a battery that was integrated with the car. The Model S's battery is a flat design beneath the driver's feet and ads to the rigidity, lowers the center of gravity, and assists in safety. This integration in the design of the Model S saves space and allows Tesla to pack more energy storage into the vehicle.

General Motors' (NYSE: GM  ) Chevy Volt, on the other hand, was built with batteries that look like they come straight out of a box, with little regard for the car's design. If you click here you can see images of the Volt's battery and contrast it with images of the Model S battery here. Clearly, Tesla spent more time integrating the battery into the car's design, making it an asset rather than a liability.

When Apple's iPhone and iPad were introduced, they similarly went against the conventional wisdom that consumers needed a replicable battery and instead focused on saving space and increasing performance. Integration of the battery has been a key to the success of both companies.

Performance over cost
Instead of trying to build an inexpensive electric vehicle like the Nissan Leaf or the Chevy Volt, Tesla went for high performance and extended range. Like Apple, if Tesla was going to make money developing a new and innovative product, it had to wow customers with performance and offer features that could command a premium price. So far, that's proved to be the winning strategy in the EV market.

A range of up to 265 miles, acceleration of 0 to 60 mph in 4.2 seconds, and a top speed of 130 mph are enough to get any auto enthusiast's heart pumping. Compare those figures with an electric range of 38 miles and a 0-to-60 time of 8.9 seconds for the Volt, and you can see the appeal for high-end buyers, who may be willing to pay a premium.

The parallel here is that when the iPhone was introduced, Apple was charging $499 or more at a time when you could get a new phone for free with a contract. But the product was so revolutionary and so technologically advanced that the performance outweighed the cost. The same model has worked for Tesla.

Control distribution
Tesla has shunned the traditional automotive distribution model for a company-owned distribution network. This approach gives Tesla control over the look and feel of stores and allows the company to control the sales process. With limited stores, there's also an aura of exclusivity.

Source: Wikimedia.

With its own distribution network, it's also easier to explain how an electric vehicle works and what's needed to make the transition to electric than if Tesla had partnered with another distribution network.

This approach is very similar to when Apple began launching its own stores. Instead of going through Best Buy or other traditional outlets, it was able to control the shopping experience, and the Apple Store became an iconic part of Apple.

Foolish bottom line
Tesla has upended conventional business practices in the car business and taken many of its cues from Apple's success. I think that's a formula for continued success in a growing electric-car market.

So far, Tesla's plan to disrupt the global auto business has yielded spectacular results. But giant competitors are already moving to disrupt Tesla. Will the company be able to fend them off? The Motley Fool answers this question and more in our most in-depth Tesla research available. Get instant access by clicking here now.


Read/Post Comments (3) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 04, 2013, at 9:00 PM, JRP3 wrote:

    I wish people writing about Tesla and EV's had a better understanding of the technology. The Volt is not an EV, it's a plug in hybrid, and in a different category than EV's.

  • Report this Comment On June 05, 2013, at 11:33 AM, wdrobertson wrote:

    This article is full of errors and Mr. Hoium should do more research before posting such nonsense. He may be trained as an engineer but never practiced. Telsa uses 18650 cells, the most common Li-ion battery out there. They used them cause they are readily available and cheap. The Volt pouches are another solution that is off-the-shelf as well. Both packs are designed to fit in spaces that allow for proper battery packaging, cooling, safey etc. Guaranteed the Telsa pack is more expensive to produce. They are choices set at the onset and one is not obviously better than the other given targeted markets. As one is a PHEV and one is an EV they have different requirements. If it wasn't for carbon credits, Telsa would be flowing in red ink. I doubt the carbon credits where part of their business plan at the onset.

  • Report this Comment On June 05, 2013, at 11:42 AM, jeffhre wrote:

    Travis, you actually have an entire article about Tesla taking cues from Apple and don't say a single word about George Blankenship? Is that the next article? So far all the articles about Tesla leadership (management) have focused on Elon Musk.

    Yes JRP3 the Volt does have a hybrid mode. This occurs after the battery energy is exhausted. Then the gasoline generator provides most of the electricity required by the Volt's electric propulsion motor. The rest is provided from battery regenerative energy supplied by coasting, downhill driving, and braking. Once battery energy is depleted the Volt is able to use either, all electric mode, after steep down hill driving for example, or choose parallel or series hybrid modes, depending on which is more efficient.

    This puts it in a different category from the traditional plug in hybrid. A category which itself is not exactly intuitively traditional since, Toyota and Ford only began selling examples this year.

    All of which were inspired (or frightened) into development by the Tesla Roadster shining a light on how future market share may be threatened by new forms of electrified vehicles.

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