Tesla Model Y Leads The Market And Lessons on Category-King Products

It is a new age and a new king is here: Tesla  is leading the future. Yes, “For the first time ever, an all-electric vehicle — specifically the Tesla Model Y — is now the world’s bestselling car. According to analyst data from Jato Dynamics, the Tesla Model Y has surpassed Toyota’s RAV4 and Corolla models to top global sales rankings in the first quarter of 2023. That’s especially impressive given pricing for the 2023 Model Y starts at $47,490, considerably more than the 2023 Corolla ($21,550) and RAV4 ($27,575).”

This is a validation that innovation must not necessarily result in cheaper or lower cost within a product category. In other words, we are wrong when we posit that in a consumer business, that innovation must lead to a reduction in price.

The overriding theme is that disruptive innovation must come with a better price model even at a superior product performance. What Tesla has done here is clear: pricing, while important, is not the only factor to win a market. Tesla Model Y is outselling old products even though it is about twice their prices.

Rethink your #strategy and deliver products beyond Needs, Expectations, and aim at Perceptions of customers. At perceptions of customers, you create fandom, turning customers into fans. And that means, you have set a new basis of competition, totally orthogonal to what your competitors do. Being cheap cannot guarantee a market share; you must move beyond Needs to at least meet the Expectations of your customers.

The interesting thing is that all products that succeed at the level of perception are usually disruptive in their sector or industry. Google search cannot be considered to fall in the category of perception because many people already craved for better search because neither Microsoft nor Yahoo was offering a good one. So a product could be disruptive and yet not a percepting product. However, all percepting products are disruptive.

Comment on Feed

"…innovation must not necessarily result in cheaper or lower cost within a product category."

But in an African market this may not work because development as factor would cripple the effort.

Telsa buildingthe super charger network is an EV adoption kicker or enabler.

— Elvis C. Umez (@elviscumez) May 29, 2023

My Response: Absolutely, products vary. Yes,  if Elon Musk had submitted his pricing model for winning a market share, for an MBA thesis, he possibly might have received a D. It is not common to be 2X mean cost and still win market share in a consumer business where many things are against you. The non-EVs have the whole world but EVs are just a few markets with electricity. Yet, in those small markets, Tesla outsold all.

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