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Cascade in Networks: How Tesla Chipped into and Cascade in the Car Market

Tesla when it was first founded it entered a car industry market that was well established and that didn’t basically had room for another car company, let alone an alien technology of electric cars. To give you the degree of the established market, the youngest car company in the car market is more than 90 years old. Hence, every potential car buyer, throughout the ages was has heard and gotten comfortable with these age old brands, which their parents, grandparents even might have owned. Such market are very difficult to get into, especially if ones final goal is to completely dominate the market with this new technology of electric cars, in order to move our energy consumption of society from Oil to a sustainable solar generate electricity. The founder Elon musk, understood this challenge and went about it in such model of cascade in networks.

“…When you’re making a product in a well established market, your product has to be much better than current existing brands, it cannot be slightly better. If its just slightly better will just go for the established brand, because they don’t want to take the risk with the new brand” E. Musk.  He made this observation that his product has to be significantly better, to chip in at some small cluster in the market then expand in a cascade. His strategy was to start by making high end, competitive, high priced cars, i.e. Tesla Roadster, to break the public mindset of Electric cars as slow, low range Golf cars types. He successfully made this Roadster, which chipped away at a small cluster in the Car Market, namely, the wealthy and tech savvy buyers.

The second step, was to make a mid-priced sedan, that can appeal to more customers i.e. Model-S. This car is taking advantage of the chip that was created by the former Roadster and expanding the idea of Tesla as a trusted brand in the market. To facilitate and expedite this spread, Tesla also made some ground breaking discoveries on Lithium Ion battery that allow the car to go to remarkably long ranges of about 400miles. Moreover, they planted solar powered super-charge stations all over USA and other nations, that allow fast free charging.

The Third step, is to make a low priced ~30,000 car that is affordable by the majority. This accompanied by a Tesla Gega-factory, which is being built in Nevada, will firmly establish Tesla, the now already known brand, in the Car market. The Gega-factory is a solar farm that will harness Giga-watts of energy that will go into the Tesla factory, for the production of the cars, and the Super-charging stations that will power the cars while being used.

The manner in which Tesla got into the highly competitive and well established car market, where it has to compete with age old brands like BMW, Ford and Audi, is exactly modeled by a cascade in a Networks. First appealing to a small cluster, to chip into the market, then slowly expanding converting more buyers to Tesla lovers, as their brand renown cascades through the network of this market.  The final goal of Tesla is to convert all buyers, not necessarily to only buy Tesla, but to only buy Electric cars, thereby getting us all off gas & oil powered cars. Understanding that having a monopoly over the car market is immensely difficult, they have made their inventions open source, so that other car companies can adopt their Lithium Ion battery  technology without any copyright fees. Hence, other brands like BMW can make their version of an electric car, via the state of the art technology invented by tesla. With this strategy Tesla can reach such a full conversion of the market. It does so by the combination of its own ever improving productions and its breakthrough technologies under the hood of other well established brands, due to their open source ideology.


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December 2015