Prior to the Americans losing in Vietnam, the French lost. And they lost it all on one battle. They were decimated at the town of Dien Bien Phu. The French occupied the small town near the border of Laos and were confident of technological and strategic superiority. One small error, they ignored the towering mountain overlooking Dian Bien Phu.
The French forces ignored it because it was a muddy mess and so steep and unsteady that it was impossible for troops to climb. Not to mention heavy artillery. In retrospect, it might have been a good idea to look at little closer at that mountain. In our example, the muddy impossible to climb mountain is making a mass market, super cool, $35,000 car with 215 mile range.
The Vietnamese forces under General Giap spent nights pulling a 40 Howitzers up the miserable mountainside. quarter inch by inch. Night after night of bombing. At one point the canon started to slide and a soldier threw his body to be crushed in order to stop the gun. The meat of his body slowed the slide just enough to save the gun. Days or misery and lack of food but they somehow managed to reach the top of the mountain overlooking Dien Bien Phu. Once they had the superior position, the whole French garrison was sitting ducks and they decimated them and caused the French to flee Indochina and their former colony.
The US and later China would have been wise to heed this lesson. The Vietnamese army was not to be taken lightly. And in Today’s day and age General Giap is Elon Musk. His dual Howitzer and Trojan Horse started firing and invading this week. And like the French, automakers were baffled.
This was a fun week. The Model 3 was finally released and the response was stupendous. The biggest launch of any product in history and it’s still going on. I went to sleep last night and preorder sales were somewhere around 250,000. I wake up to 325,000! The consumers have spoken. Loudly.
The consumers live in the digital age. Not the industrial age. Automotive executives are still reliving the glory days of the 60’s and 70’s. Well maybe not exactly that bad but too close for comfort. Today it’s all about software. Consumers want something unique but they see the difference in the software and way that it is setup. Maybe they want a rose or gold color but by and large the outer differences in laptops and cell phones have vanished. All the difference is on the inside.
Which apps they have. Which photo editing tools they are using. How they are managing their data. It’s all stuff that someone looking at them in Starbucks couldn’t possibly know. And the Model 3 is like that.
It could be a sports car, (ludicrous mode) it could be an economy car. it could be auto-driving, it could be self driving. It could even be a part of a cities public transportation. The only difference between most of these is software. It’s becoming a one size fits all on the outside car world. Inside, there will be plenty to choose. And those choices will be real things. Like being able to have your car pick you up in LA when it’s parked in New York.
The world of “fake differences” is over. Do you remember when the dealer would ask all kinds of questions. You would end up paying 30% more along with your extended warranty that you know you didn’t want but somehow had shoved down your throat anyway. Well thats now how Elon Musk and Tesla operate.
In fact with a Model 3, the opposite will occur. You bought a car with only XYZ features but when you wake up it’s now self driving if you want. That’s what he’s doing. He destroying the value chain where you had to pay more for everything. He’s giving you the coolest car. For the cheapest price and then he’s giving you more.
Mercedes investors went bananas last night at the annual shareholders meeting. Google it. “Why don’t you we have a competitor to the Model 3”? “Why are all our competitors virtual?” These are painful questions to a proud team of executives used to fielding soft balls. But last night it was fastballs coming in all night. And everyone was frustrated. The executives were the most frustrated because truth be told, they don’t even know what the Model 3 is going to do yet. And that scares the bejeezus out of them.
How fast will it be? What is the futuristic ‘spaceship’ steering that Elon Musk talked about this morning? How can you copy something you haven’t seen? How can you prepare for something that you know darn well is going to keep surprising you? How can you make the consumers stop buying the Model 3?? Can I stop this merry go round? I want to get off! I think that’s what they were saying in German…
Elon was a one man Art of War, wheeled in his Trojan Horse and snuck his cannon up the muddy mountain (considered impossible) at his own Dian Bian Phu like the Vietnamese did to defeat the French prior to the US entering to it’s first and only military defeat.