What Tesla Might Get Wrong About Model Cycles

be radical Briefing | January 10th, 2023


Dear Friend,

We hope you had a phenomenal start to the New Year, and 2023 will be nothing short of epic for you. The team here at be radical is getting ready to launch our book Disrupt Disruption – How do Decode the Future, Disrupt Your Industry, and Transform Your Business, which is scheduled to launch the week of January 30th! We will, of course, keep you posted and have some goodies for you ready.

And now, this…

Decode. Disrupt. Transform.

The staggering collapse of Tesla’s stock price elicits endless reporting and commentary. Instead of focusing on Tesla’s self-proclaimed “Techoking” and his many attics or the surely overinflated price-to-earnings ratio of Tesla’s stock price, let’s look at a quirky strategic decision Tesla took in the way they manufacture their cars.

The automotive industry, since time immemorial, has operated on model cycles. You design, build, promote, and manufacture a car for a few years. You make changes to the car, announce the updates, and release the new version of the car (usually marked by its model year). You rinse and repeat the cycle. Germany’s standard-issue car, the VW Golf, has gone through eight generations and many more model years since its debut nearly 50 years ago.

Tesla decided to apply a software-inspired approach to their car: Instead of selling one particular car for a year or longer, the car is designed to allow for constant changes. The thinking is that regardless of when you buy your Tesla, you always get the latest and greatest model at this particular moment. It’s a drastically different approach to designing and building cars – one which is being hailed as revolutionary by its proponents. But also one which, I believe, bites Tesla in the tail…

You lose a significant marketing opportunity without the opportunity to showcase your latest advancements on a regular schedule in a neatly packaged deal – the annual trip to the big car shows with all their bells and whistles. Not only that, but you further lost your ability to upgrade your customers from one model year to the next (leaving the sustainability aspect of this out of the discussion for now). Personally, I couldn’t tell you how a Tesla Model S, which I buy today, differs from the same car I bought ten years ago – other than the controversial steering yoke.

It’s an interesting lesson in established consumer behavior, expectations, and why, sometimes, it just doesn’t pay to swim against the stream. Maybe this will all change, and consumers will be fine with the approach, but for now, there is a reason why car manufacturers at large are keeping things the way they are (and companies like Apple iterate on their products using the same model – look at the Apple iPhone and its annual upgrade cycle). (via Pascal)

What We Are Reading

🤓 Innovating in Uncertain Times: Lessons from 2022 Do you have FOMO when new tech trends emerge? Emerging technologies are critical and demand attention and investment, but we must exercise patience and avoid falling victim to the hype. Responsible exploration is key. JaneRead

👑 The Most Important Leadership Competencies, According to Leaders Around the World Five themes emerge when identifying the competencies of strong leaders. Among these are high ethical standards, providing a safe environment, and being open to new ideas and experimentation. MafeRead

🪖 ChatGPT and Other Chat Bots Are a ‘Code Red’ for Google Search Of all the late 2022 think pieces on ChatGPT, etc., this might have been the most interesting and perceptive in exploring disruptive implications and a possible revolution in how we experience the internet. JeffreyRead

🎓 Papers and patents are becoming less disruptive Not only a practical perspective on disruption in academia, but a thought-provoking article touching on the question of true progress amidst vast knowledge. JulianRead

🐾 Opinion: We Didn’t Domesticate Dogs. They Domesticated Us. Dogs domesticated us. Despite humans having a long history of eradicating wolves, the success of the carnivore becoming a dog comes down not to the survival of the fittest but the friendliest. PedroRead

How Mental Time Travel Can Make Us Better People Thinking about the future (“mental travel time”) – even if it’s just for one minute, promotes prosocial behavior. A new study found the link and shows the power of future thinking for groups. PascalRead

The Thin Wisps of Tomorrow

🧑‍🎨 Playground AI launched as one of the better text-to-image AI interfaces.

🫰 Fascinating insight into the economics of running a (very successful) YouTube channel.

🔮 Absolutely fascinating Twitter thread about predictions from the year 1923 about the year 2023.

🙀 What could possibly go wrong?! With just a three-second sample of any voice, the transformer-based TTS model VALL-E can produce speech in every voice.

🎙️ Ezra Klein in conversation with Gary Marcus about all things ChatGPT.

🙋 Extreme questions to trigger new, better ideas.

Internet Finds

Love design? Take a look at the nominees for the Good Design award. Some oddballs in there, for sure – but also some great inspiration. 🎨

In Case You Missed It

🏴‍☠️ The Heretic: KPIs

🧨 Disrupt Disruption: In our latest episode we spoke with Josep Castellet, Group Head of Innovation at Oberalp Group and learned, among many other things, what innovation teams can learn from the famous Swiss Army knife, why sustaining innovation is underrated, and how to lead innovation teams.

Radically yours, take good care, friend!

— Pascal, Mafe, Pedro, Vivian, and the three Js (Jane, Jeffrey, and Julian)