By: Mike Montgomery
Beating expectations on Wednesday, Tesla Motors TSLA -4.11% reported $1.6 billion in revenue for the first quarter on a 45% sales jump from last year. The fact that the climb came with a 57 cent per-share loss didn’t bother investors who were braced for a 58 cent per-share loss.
The Elon Musk hype machine rolls on as Tesla prepares to roll out 500,000 units of its newest car, the Model 3.
Cars are not the kind of thing people usually wait hours in line to buy. But that’s exactly what happened last month when Tesla Motors started taking down payments for the Model 3. The car won’t even be available until 2017 and certainly no one has given it a test-drive, but at $35,000, it costs less than half the price of a Model S — and that’s all most people need to know.
Silicon Valley types like to throw the word “disruption” around a lot, but Elon Musk is truly disrupting the car industry. Not only did he manage to create a car so exciting that people are lining up overnight just to put down a payment, but those locations where customers were dropping their money? They’re not even actual stores. You can’t buy a Tesla there — you can only purchase one online. The storefronts you see are simply places where people can test-drive the vehicle. This business model, which bypasses the dealership, is of course upsetting the car-sales landscape and is under attack by the dealership lobby.
But it’s important to remember that disruption in and of itself should never really be the end goal. Not every industry needs to be disrupted. If entrepreneurs are going to work to disrupt, they have to make sure there is a positive end goal — that consumers are going to benefit, that work is going to become more efficient or that some overall good comes from the disruption.