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A decade later, Tesla now officially a threat to the auto industry

It’s funny, electric car company Tesla has been building its business for a decade now, but it’s just in recent months that the auto industry seems to be taking Tesla’s innovations as an actual threat to their businesses. That’s because it’s only been in 2013 that Tesla has shown how it can make a small profit and use its popular electric car to compete with competitors in the auto biz. But reacting to a threat when it’s finally arrived, versus skating to where the puck is going isn’t necessarily the best way to run a business. The tech industry is littered with late-movers like Blockbuster or Kodak.

Tesla Model SWhile former GM exec Bob Lutz early on admitted that Tesla  helped inspire the creation of the Volt, GM’s CEO Dan Akerson just created a small team within GM to study Tesla and its innovations, Bloomberg reported recently. Akerson joined GM during the bankruptcy and bailout period, became its CEO before its IPO in 2010, and is attempting to breathe new ways of thinking and creating innovation into the aged auto firm.

Tesla — even at this early stage — is already showing how it can compete with the much larger and older auto companies with sales. As Quartz wrote this weekend, there are ten car companies that Tesla now outsells in California, the state with the most Model S customers. That data came from a recent report from the Polk for the California New Car Dealers Association, which also found that Tesla scored 12 percent of the luxury sports category in California the first half of 2013, beating both the Audi A6 and the Lexus GS. Model S accounted for 50 percent of the electric car registrations in California in the first half of the year.

teslaForbes notes that, in California, sales of the five luxury cars that compete most directly with Tesla Model S — the Mercedes E-Class, the BMW 5-Series, the Lexus GS, the BMW 7-Series and Porsche Panamera — are all down in the first half of the year. This despite the fact that overall car sales in the U.S. and California are up significantly since 2012. It seems like Tesla is already hurting competitors’ sales. And the Model S is just Tesla’s first more luxury mainstream car — it’s carefully building its third-generation less expensive car, which could be named the Model E and which it wants to sell in even higher volumes.

Tesla is clearly hitting its goals at this point, though it still has a way to go to get its Model X and third-gen car on the roads. But GM is smart to try to crack Tesla’s innovation code. GM’s vice Chairman, Steve Girsky, told Bloomberg: “. . . if we ignore it and say it’s a bunch of laptop batteries, then shame on us.”

Electric car entrepreneur Shai Agassi (Better Place founder and former CEO) says in a post on LinkedIn that the auto industry should try to learn more from Tesla’s underlying economics, rather than try to create a competing luxury EV. Electric cars designed by the big automakers, like BMW’s i3, haven’t been so well received. Needless to say, Tesla has a thing or two to teach Better Place — which went bankrupt earlier this year and was bought out by an investor group — like what Agassi notes in his article: make an EV “an object of desire.”

To note, early movers in the auto industry that saw Tesla’s potential to change the business include Tesla investors and partners Toyota and Daimler, both of which backed Tesla early when it was just a young company. They’ve gotten early access to Tesla’s tech and brand value.

Tesla CEO Elon Musk

105 Responses to “A decade later, Tesla now officially a threat to the auto industry”

  1. Brad Mueller

    How competitive is Tesla without the subsidies?
    How long does it take to recharge?
    How long do the batteries last?

    I really don’t think Ford or Toyota are losing sleep over Tesla.

    If Elon wants to change the automotive world he would be working on fuel cells.

    What you have is a low rent, electric Bughatti Veron.

  2. rickster

    Every negative comment against Tesla, is becoming more stupid every day as the company is creating revolutionary products, and have created American jobs.

  3. Bill Marshall

    So when those fancy electronic door handles pop out for you its cool… but what about when you hit a tree and they don’t pop out for the person rtrying to pull you out before the electrical fires consumes you?

    I know one fact about the tesla… it uses a mercedes benz shift stalk and clock spring for the steering column and they fail ALL THE TIME.

    When I read the prospectus I don’t see any money set aside for maintaining the robots that move to hundredths of a millimeter .

    I do not belive they have turned a profit anymore than a company that invests a half a billion on a cancer drug turnes a “profit” when they sell thier fiorst pill for 10 dollars than it cost to manufacture it.

    The difference is that Tesla did not spend half a billion on testing that won’t need repeating , they spent it on robots that will need replacing. So they need al of their profits and more to succeed in the future.

    I believe when the next quarter or quarter after that shows some more truth to the numbers the stock will fall and they wil regret not snagging financing while the terms were good.

    Anyone can take half a billion dollars and make a car that sells for 80k. (and they will)

  4. thought they were referencing Nicola Tesla…. i was like… a century… a century later Tesla is becoming a threat to the auto industry… actually make that multiple centuries!

  5. Interesting article. My only qualm is the headline (which an editor probably wrote).
    Tesla is part of the automotive industry, and rather than a “threat” is simply an innovator providing fresh direction. There may be individual automotive manufacturers that miss the import of what Tesla is demonstrating, but that is their individual existential issue, not the industry’s. Tesla is a positive for the automotive industry, not a threat. Automotive history is littered with companies that have fallen by the wayside as technology passed them by.

  6. Rich Killa

    I used to work in the Tesla factory plant in Fremont as a contractor. Its a cool, fun job. I operated the laser cutter and stamping out metal parts for the Model S,

  7. Since tesla makes autos, they are by definition part of “The Auto Industry”. Yeah, yeah, I know what you mean: the traditional big three of the american auto industry. however, since you’re trying to be a professional article writer, I just thought I’d point out this nit-picky observation.

  8. Spencer Whitney

    Not that I have a dislike for Tesla, but there’s a lot to be clarified in this article that people may extract without thinking about it.

    Tesla is not outselling Audi/BMW/etc. They are outselling particular models in a particular class. It’s well known that the mid-to-large sedan market is being gutted already by more fuel efficient SUVs, crossovers and even compact luxury cars, so the segment was ripe for picking.

    Also, how is the 7-series considered part of that class? It should go GS, A6, E-class, and 5-series.

    Finally, let us not forget about the accounting wizardry going on at Tesla. They’re going to have to show some *real* numbers sooner or later. When the auto industry catches up to them (ironic that Tesla originally had to catch up to the big boys), Tesla hould be prepared for a fight. They won’t have the luxury of being the only kid on the block – they’re going to have to open up real dealerships and showrooms once there’s competition.

  9. Waxil Davidson

    This is merely capitalism doing its job. If the car companies think they are a threat, then that’s on them to stop calibrating on the status quo, and drive ahead to the future rather than rely on typical standards and practices that hold everyone back. The world needs more Tesla’s, figuratively and literally. But we all know, for every Tesla there’s an Edison out there to steal from him and take all the credit.

    • Tcolonel

      Capitalism has been prevented from doing its job by the government’s heavy regulation over the auto industry. Luckily Musk found a competitive business strategy that may shake the big players up and restore some actual capitalism to the industry.

      • David Parnell


        So I guess recent history, you know the past 8 years worth of fall-out caused by the removal of regulations, hasn’t ‘enlightened’ the recesses of your mind as to what happens when that ‘heavy’ (ha!) regulation is repealed (?!)

        Tcolonel wrote: …”Musk found a competitive business strategy that may shake the big players up and restore some actual capitalism to the industry.”

        Nope ! sorry Tcolonel they are hiding behind those ‘regulations’ to try and stunt Tesla growth – car dealership associations (in bed with big auto – period) have been using franchise law to keep Tesla out of some states.

        Try again.

  10. Dick Brandlon

    Musk isn’t playing fair. He decided to make a car that wasn’t designed to be replaced every couple of model years. Instead of claiming the Tesla was “all-new,” he actually made it that way.
    In other words, Musk didn’t play the modern capitalist game – he actually produced an innovative product to improve society instead of just adding another piece of fluff to an already fluffy automobile market. Capitalism used to work like this. Car-makers signed their products and took responsibility for them. The word was Pride – something we’re not seeing a lot of these days.
    Congratulations to Mr. Musk.

    • this is why he is my current hero. He is not just doing things for profit it is his desire to help the human race out as a whole. He doesnt care about this “game” capitalists play ,he just invents his own way to do things and he is doing a damn good job of it. Of course there are other good people involved but when i guy decides he wants to go to mars realizes its not affordable to use current rocket technology, picks up an aerospace book teachs himself how to engineer starts his own company with more good people and then bam he is producing the cheapest most efficient rocket out there now and has plans to fly to mars before 2025. He is impressive and his desire to do more than just make money is what won me over.

    • one thing everyone forgets is tesla is subsisted heavily by the government last i heard 30,000,000,000 yes that’s billions. If i got that much money I would not really care about profit.

    • You obviously haven’t read the specs on these cars. The perfomance model of the S is pretty much a tire burner, and the model X hangs with Lambo’s and Ferrari’s off the line.

  11. brianguyy

    they’ve certainly become a disruptor… for BMW, Lexus, Mercedes, Audi, and Porsche at a minimum. which is a noble achievement but not like they’ve taken over the market or a big slice of the market. similar to what the Prius did roughly 10 years ago. if you drive in certain areas you will see a huge number of them, in others next to none. so at some point it still hit its saturation point.

  12. scott alatheia

    If Henry Ford asked his customers what tehy wanted they would have responded, “Faster Horses.” Instead he gavethem the automobile. Hostory is about to repeat itself and teh auto industry has three choices, (1)adapt, (2) follow trends, (3) make trends. Tesla makes trends. GM follows. Superiority and innovation can’t be imulated. Elon Musk is the real deal, just like Steve Jobs.

    *GM’s problem is they dont have anyone to say “that’s a good idea” or “thats a stupid idea” they dont know the difference and Tesla does.

      • Bill Costello

        I would. Jobs changed your life more than any other person since you were born. He brought the following things to the masses:
        The graphical interface of the modern computer with a desktop and icons.
        The mouse
        the trackpad
        the tablet you use today
        the smartphone you use today

        That’s innovation. Without Jobs you wouldn’t even have Windoze. You’d still be running DOS on your computer.

          • Tired of people like you trying to short-change Jobs.. yes, engineers built the devices, but Jobs absolutely did play a role in identifying technologies and design decisions that would progress the state of technology and make it easier to access by the public.

            • Lord Byng

              Yeah, and his decision to block Flash from IOS was a stroke of genius that means that Apple gets 40% of all revenue from all applications running on IOS… forever. Not to mention setting the state of the Internet back at least fifteen years. We have still not recovered (sorry, HTML5, call me when you can do what Flash did in 2000) and will not recover for years yet.

              Give an Apple product; “the gift that keeps on taking.”

            • aarond12

              It’s 30%, not 40%. Same as Google.

              HTML5 can do everything Flash can do and more. Additionally, most of its technologies are hardware accelerated, better allowing them to work with tablets and phones.

              Stop trolling on a topic you obviously know nothing about.

          • Jobs had the vision to design products that people absolutely love. Take the tablet. Windows had a bunch of them for the 10 years and they were virtually unknown to the general public. Jobs designed the iPad and it was the fastest-adopted technology ever.


            You could say the same about mp3 players and smart phones — Jobs designed products that revolutionized these technologies.

        • The graphical interface of the modern computer with a desktop and icons.
          The mouse

          Both stolen from XEROX and not created by Apple at all…

          the trackpad

          No idea about this one.


          They where not the first to create an mp3 player.

          the tablet you use today

          Microsoft made a tablet computer in 2003 they where not the first.

          the smartphone you use today.

          I give you that they did something new and cool here, but it is not 2007 anymore Apple is far behind their competitors.

        • To get those things working, Jobs had to steal a lot of IP from others that he could not afford at the time. Then he would undoubtedly change the markets (=world) of various producst, make a lot of money and carry on expanding his empire with that money. In some cases, he would come up with deals and pay for the IP rights to those who lost their businesses and all of their future potential but in other cases he would not. In essence, he invested stolen money, succeeded and became a reputable business person. Its like money laundering.

      • thank you for saying this. How long will it take people to understand steve jobs was not an innovator? He took things that existed and tweaked them and admittedly more often than not made them better. Furthermore comparing someone like steve jobs to elon musk is completely unacceptable to me, they are not even on the same level. What elon musk has done and will continue to do in his life time is just amazing. He is a true innovator and creator and moves out species forward instead of backwards like most big business these days

  13. Natalie

    Why are we trying to shut down a company that’s creating what we so desperately need; cars that run on cleaner energy!! Instead of trying to outlaw Telsa cars or shut down the company completely, maybe these other car companies should act like business instead of 5 years old and start creating their own electric cars to compete!

    • matt laforge

      firstly, thats the name of business. take a share in a successful market. secondly, if you’re truly for cleaner energy, then you should not be a fan of electric cars. the amount of pollution created to create one car battery is more then the amount of pollution a normal combustion engine creates over the standard lifetime of newer cars. there are compressed air cars that are far better and far superior in function and cleaner energy marketing, yet the automobile industry chooses to back electric cars because there is far more profit in that market. look into the automobile industries movements, and you’ll see that this article is propaganda. the auto industry is happy its taking. they have control over an energy shift and proits will not decrease much.

      • Voltair

        Full lifecycle comparisons between electric and gasoline/diesel powered vehicles (including the huge amounts of energy needed to manufacture either an electric vehicle or a standard vehicle) that I have seen, show an advantage for electric vehicles that varies in size based on the method of local electricity generation…Journal of Industrial Ecology, Volume 17, Issue 1, pages 53–64, February 2013, Comparative Environmental Life Cycle Assessment of Conventional and Electric Vehicles, as an example. Electric cars are better than other cars, but if someone must be truly “green”, they need to stick with a bicycle

        • It all really depends on how that electricity was gathered. If its produced by dirty coal, then no electric cars aren’t going to be any more “green”. It just moves the ladder of where the pollution is created. That’s good and all that they run clean and essentially make no emissions themselves, but that doesn’t mean the energy and batteries(that need to be replaced) didn’t make a lot more pollution.

          • Wisteso

            This is completely untrue. Even a coal power plant is far more efficient (around 45-50%) than a combustion engine which only makes use of 15-20% of the energy generated.

            Coal is also one of the worst types of energy. Hydro, solar, geothermal, and nuclear and far better and becoming extremely practical. I believe the Model S charging stations use solar energy to charge cars, to boot.

            • Guesty Guest

              This has been the argument dejour created by the oil industries to date. They want people to think that Lithium Ion batteries are going to destroy the planet. While they have localized pollutant issues (no where near nuclear waste) and somewhat of a carbon footprint in the short term, their reduction on the amount of combustibles burnt equivalent over the course 200K miles far outweighs it.

              The argument also doesn’t understand that coal power plants are going out just like the combustible engine. As a share down 20% in a decade, and it ignores areas that get fuels from non-coal (the majority of the country in fact).

              Again, the oil company got to this one, or in other terms he was one of the anti-global warming drones of the 2000s who continues his idiot war against all new technology not sanction by jebus

      • lol, battery is the issue.
        Consider this, over 70 years now the car industry has polluted the earth with lubricants, petroleum, CO2, battery and rubber. Not to mention other things like used lubricants that are poured down the drain, and dated vehicles that are disposed. They also use batteries.
        Today everything we use needs a form of battery, without one electric devices are useless. More batteries are produced today that ever before. So an EV is the least of your problems when considering the pollution. If we move away from Petrol, and rely heavily on Battery power for vehicles, and gadgets, in 70 years we would have strong recycling and disposal worldwide. Making 70 years of electric only car evolution much more worth it to the planet than 70 years the car industry had to make no significant change to their model.

        • If only there was some recently discovered material that will completely replace standard batteries. Graphene made from carbon has phenominal properties and potential to make standard batteries obsolete.

          As long as electricity keeps getting cleaner and hopefully LFTR start working in other countries, because NIMBY and nuclear are taboo in america, electric vehicles will be a great science and technology demand for america.