#8 Crossing the Chasm: Price, Range, and Long Distance Travel
Dave I'm really enjoying this thread and I thank you for your insights.
I agree that Tesla understands the Tech Adoption Curve. One aspect I haven't seen you mention is the gap between the Early Adopters and Early Majority as described in the book
Crossing the Chasm. Quick summary for those who aren't familiar with the idea:
Early Adopters are willing to put some effort into getting the most out of a new type of product. Majority customers expect products to Just Work without any more effort than they were expending on the older product. The tech innovator can sell their product to Early Adopters on the basis of technological innovation. In order to sell to the Early Majority the company has to adjust its product's ease of use and its marketing to fit the new mainstream market.
For example, Apple didn't invent the smartphone. Blackberry, Palm, Nokia and others were there first. Apple's iPhone took off because it was compelling to the majority customers. Apple made it across the chasm; Blackberry and Palm didn't.
For electric vehicles I believe charging represents a big part of the chasm. EV charging in the past has been a sort of chicken and egg problem. Nobody would build a charging network because there were no vehicles to charge, and nobody would buy an EV because there was no place to charge it. Tesla decided to solve the problem by building both the car and the network. In order for EV's to be usable by the majority the Supercharger network will have to be well established. Yes, I know nearly all charging should take place at home. But in order for people to get over the dreaded Range Anxiety once and for all they have to know that charging is something they never have to think about.
Maybe I'm getting ahead of your agenda but I look forward to reading what you have to say about the chasm and Tesla's probable strategies for overcoming it.
Hey Wart, thanks for bringing up the "chasm". Here's the way I look at it. Geoffrey Moore's book (Crossing the Chasm) is generally addressed to the high-tech field where there often exists a huge chasm to mass adoption. Sometimes it's just really hard for people to understand a new high-tech product.
In Tesla's case, their product (an electric vehicle) is fairly easy to understand. But still I think there are two main factors that are barriers to mass adoption. The first is price and range. I put these together because range affects the price of the car. So, it's important for people to have enough range in a car so they can replace their existing ICE cars. Sure, some people might settle for a 100 mile range electric car, but for most they need at least 200 mile range so that they can easily do day trips (ie., an hour to another city and back). I think Tesla has been very, very smart in this regard. They understand the range and price issue. That's why they started with a high-range, expensive car in the Roadster. It's because they didn't want to compromise on range (even though they probably could since it's a roadster) and they wanted it to be priced competitively (which the Roadster is in the high end sports car market). The same goes for the Model S. Tesla knew that they needed good range (ie., 200+ mile) and also to be cost-competitive with cars in their market segment. They knew they couldn't do it yet for a lower priced market, so they started with the large premium market.
The same will go for Gen3 or the entry level luxury sports sedan market. Tesla won't compromise on range or price. Gen3 will have 200+ mile range and it will be priced competitively and perform competitively with the BMW 3 series. This is Tesla's formula for success.
The same thing will happen for other cars in the future. It appears Tesla will make a truck after Gen3, but they'll only do so if they can have range (200+ miles) and it can be priced competitively with the ICE competition (will probably start with a large truck since it'll be easier to get the range/price target Tesla needs). And in the further future (ie., 2022-2023?) Tesla might release a Gen4 vehicle (ie., $25-30k) to reach further down into the economy market (ie., Camry/Accord) but they will only do so if they can provide the range (200+ miles) and it can be priced competitively. The main factor for the price is the cost of battery, and I don't see Tesla being able to reach the cost of battery they need for Gen4 until 2022-2023 at least (it could be a few years later than this). But to me Gen4 is just a matter of time before it's released (assuming a successful release of Gen3, of course). While Gen3 will propel Tesla into the 2+ million cars/year range by 2022-2023, it's likely going to be Gen4 that can propel Tesla into the 10+ million cars/year range by 2030.
Anyway, back to the barriers of mass adoption. I said that the main barrier is price and range, and Tesla has a clear plan to address this (thanks to falling battery costs). The other barrier is range anxiety and long distance travel. With a 200 mile range car, any trip that is less than 80-90 miles one-way is of little concern to the owner. However, for longer distanced trips it's important for people to know that they can travel easily and comfortably. I think Tesla has a 4-prong approach to this issue:
1. Increase number of Superchargers.
I personally think Tesla has a whole "other" set of Supercharger plans that they haven't released or revealed. I think this will coincide with Gen3 release and ramping. With Gen3, Tesla will need to significantly build more Superchargers and/or will need to provide more stalls per Supercharger as well. Tesla knows this and I think will be aggressive in scaling Superchargers to meet the demand.
2. Reduce Supercharger charging time.
This is in the realm of JB Straubel's team and as far as I know they are very focused and very intent on decreasing Supercharger charging time over time. I'm not sure how much and by when they can reduce the charging time, but I think they will make gradual improvements and will lead the industry in this regard. Any improvements in Supercharging time is going to help convince people that they can travel easily and comfortably in a Tesla EV.
3. Free Supercharging.
Since filling up a tank of gas is faster than Supercharging (and will likely be so for the foreseeable future), it's imperative to try to make Supercharging as appealing as possible. Tesla's decision to offer Supercharging as a free option (for 85kWh cars) is a genius move to counter range anxiety by increasing the appeal of long distance travel in a Tesla.
4. Autopilot.
Charging is one part of long-distance travel, and if Tesla can make other parts of long-distance travel more comfortable than they have a shot of making the overall experience more appealing to people. This is one of the major benefits of Autopilot. Autopilot allows a person to travel more comfortably long distances. If/when it works, it's definitely bound to make a big splash and it will likely redefine our idea of what it's like to drive long distances. If Tesla releases this first and continues to iterate aggressively, then they have the potential to instill in people's mind that Tesla is the leader in autopilot technology and that in turn will help people to think that traveling long distances in a Tesla is at least "as comfortable" as a ICE car (ie., even though a Tesla needs to be Supercharged on a long distance trip, you can ride in style with Autopilot).
A fifth area that I think Tesla should focus on is to provide accurate real-world range estimations during long distance trips. I think currently Tesla has done a poor job in this area. Several months ago I drove a Model S from the Bay Area to the San Diego area, and the most nerve-racking part of the trip was that I didn't know exactly how many rated miles it would take to get to the next Supercharger station. I was in a rush to get to the San Diego area, so every minute was important. I tried to Supercharge about 20 miles more than I needed, but there were other factors like elevation that the Model S rated miles didn't take into consideration. Most of my trip, I was thinking how the Model S ought to be able to tell me exactly how many rated miles it's going to take to get to the next Supercharger station (currently it shows how many rated miles you have left and navigation shows how many miles to the next Supercharger stations, but with elevation it's possible to use a lot more or less rated miles than what the navigation shows with distance. It can be nerve-racking. Some people use
EV Trip Planner to calculate rated miles between Supercharger stations beforehand, but why should I need to "plan" for a trip like that? The car should just tell me how much to charge and ensure I make it to the next Supercharger.)
For Tesla, this should be a relatively easy task. The basic function is the car should be able to tell me how many rated miles I'm going to use to get to the Supercharger station. If I leave a Supercharger station with not enough rated miles to get to the next Supercharger station, the car should alert me and let me know that I'm not going to make it to the next Supercharger station unless I charge more.
In the past couple years there's been a few instances where journalists have run out of charge during a long distance trip in the Model S. While it's true that they might have been careless not to charge enough at the previous Supercharging station, or they might have driven too fast (or with A/C on high, etc), still I think Tesla could prevent such "stranded on the side of the road" instances via software functions. The car should take note of the average speed the driver drives on the freeway, the weather conditions, elevation, etc. and should be able to let the owner know exactly how much they need to charge until to make it to the next Supercharger station. Let's say the driver charges sufficiently but during the leg to the next Supercharger the driver decides to drive a lot faster than they normally do. In this case, the car should recalculate how many rated miles it needs to get to the next Supercharger station. If it's not enough, then the car should alert the driver to drive more slowly (and give a suggested speed) in order to reach the next Supercharger. If the user drops below the necessary rated miles to make it to the next Supercharger (even at 55mph), then the car should alert the driver and give some options (ie., go back to the previous Supercharger, or charge at a nearby hotel, etc).
Personally I think that these type of software functions are crucial in helping to relieve range anxiety and prevent the dreaded scenario of being left on the side of the road with no battery charge. I'm actually surprised that Tesla didn't release this software functionality several months after the car's debut in 2012. It's already 2014, and I think Tesla ought to realize that this is important and make it a priority to include this in a software update - the sooner, the better.
Overall, as long as Tesla focuses on these 5 areas regarding long-distance travel I feel confident that they will be able to address range anxiety in a compelling manner. And as they mitigate range anxiety with these solutions, then Tesla's cars will become more and more appealing as they offer long-distance range (200+ mile) at a price that is competitive with other ICE cars in their segment.