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.
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.
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.