TESLA AND EV INNOVATION DIFFUSION
Mr. Musk, as the business man, obviously wants to see his business, Tesla Motors, make profits and beat the competition in the automobile market. Yes, obviously, but it happens to be that Mr. Musk is the type of entrepreneurs, who is also extremely driven by his vison of the future and the idea. Tesla Motors wants to redefine the dominant design, that is well established in the todays automotive industry, and that’s why they are seen as innovators in so many processes in regards to the automobile company – form design and research to production and product delivery.
2015 was a difficult year for Tesla Motors, because they have been making a loss of $4,414 on each car they sold. The reason for such arithmetic’s is company’s predicted yearly sales by 2020 will hit 500,000 cars, for which, they have to come prepared and invest a lot of cash whilst the demand is, generally, pretty low for the time being. The investment in the production facilities and the infrastructure worldwide are enormous – about a $700 million a year and the loss indicates that the diffusion stage of the Tesla’s pushed innovation is only set to yet become significant.
The ambition for EV vehicles to diffuse in the market and become a dominant design – is a long term ambition (FIGURE 7). The adoption rate of EV vehicles is less than 1% worldwide in the major markets, however, there are positive signs about what the nearest future brings.
The diffusion stage for EV’s is between Innovators and Early adopters stage, depending on the market (country). There are many reasons for that, and Tesla, with it’s competitors, are set together to overcome the barriers to enjoy increased sales of their products, as well as the greener world.
Factors of adoption include- switching costs (price), infrastructure, time and driving range also it is important to consider individual psychological intentions to adapt an EV.
There are many reasons that hold back the diffusion of the innovation within the society. Consumers learning curve is one of such important reasons. People still are at the stage, where they already aware of the new technology in the car market, however curious about many aspects of it that arise during the usage of the EV. There are some type of people, who are prepared to take risk and adopt an innovation at the early stage, known as the early innovation adopters, however there just a very limited number of people with such attitude. Consumers have to posses knowledge about the technology, thus wait until, in their opinion, it becomes well known and the majority of problems are sorted out. Many people are skeptical about the success of the EV for many reasons i.e. safety, range etc.- all of which can be solved with enough knowledge supplied to the people.
Even though, in many countries, governments are active advocates of the EV technology and it’s future, they have to be active players in the diffusion of such innovation within the society, thus have to provide amore supply and demand-side policies to stimulate faster rate of innovation adoption and its further development.
This is important because Tesla can’t provide all of the market with EV’s due to obvious reasons – its supply capability is limited. Diffusion in social systems emerge from psychological processes such as attitudes, values, emotions, social norms, and identity. Diffusion of EV’s in the world markets is the role of major car manufacturers that will be able to address such diversified needs. The model diversity, pricing, complimenting goods (e.g. chargers are still, despite being present already, are not sufficiently supplied), services, etc. despite active position of Tesla Motors – cant be provided by Tesla alone, what holds back the diffusion process. Having said all of this, we can see that are obvious market barriers that are still present.
To conclude the diffusion question, countries have to actively develop certain policies addressed to speed up this process, allow for more affordable finance for both consumers and manufacturers (new companies will be founded, who’s pure product will be EV’s e.g. Faraday Future), market policies development that will encourage purchase and development of EV’s instead of the current dominant design. Tesla is on the right pathway and it’s aim and goals are clear. They are pioneers in the market for purely electric vehicles and the figures say that this is the next “big business”.