Thomas Edison’s lightbulb ushered out the gaslight era as completely as it ushered in the age of electric power. But the gas companies didn’t fall victim to disruption immediately, and it could be argued they never entirely succumbed. When Edison’s invention first threatened gas lighting, incumbent firms borrowed the filament technology from the electric bulb to improve the efficiency of their gas lighting fivefold, starving Edison’s new company of profits for 12 years and nearly bankrupting him. Experts in disruptive innovation point to that kind of move to bolster a doomed technology as the last gasp of a dying industry, and of course they’re right: Edison and electric lighting prevailed in the end. But by the time the disruption was complete, gas companies, having bought themselves more than a decade of breathing room with their gas-powered lightbulb, had prepared a profitable exit into the adjacent heating business. Responding to disruptive innovation may be one of the greatest challenges managers in established firms face. On the one hand, they’ve been warned that disruption can sneak up and quickly destroy their business. On the other hand, experience tells them that disruptions can take years, sometimes decades, to play out. This disruption seems to be playing out again in the Automotive industry with the traditional auto manufacturers refusing to let go of traditional Internal Combustion Engines (ICE) and embrace the newer hybrid technology, because again most of their profit and business comes from the developing world where majority of the population values social image higher than fighting climate change, and this social image is tightly related to owning materialistic things and activities like buying a car bolsters this social image. With ICE being around for such a long time the manufacturers have managed to get the price down which is fraction of what an entry level Hybrid vehicle would cost thus a people from these developing countries looking to get their first car would inevitably get an ICE Vehicle because of the lower barrier(which us cost) of entry. Thus there isn’t a strong incentive for the auto makers to embrace the newer technology because they still benefit from serving these markets and investing in R&D for newer technology has a lot of risk attached to it which the auto makers aren’t willing to take. But one company which has been on the forefront of this revolution and embracing technology is Tesla. Few companies have attracted as much scorn and adoration as Tesla. When Tesla launches a product like the Cybertruck, the reception tends to be divisive: critics see it as further evidence that founder Elon Musk is out of touch and doomed to fail, while supporters buy in — within a month Tesla received 200,000 preorders for the new vehicle. Compare that to the Ford-150, the world’s best-selling car in 2018, which sold just over 1 million vehicles that year. Disagreements aside, there is no question that the company has shifted the auto industry toward electric vehicles and achieved consistently growing revenues (passing $20 billion in 2019). At the start of 2020, Tesla was the highest performing automaker in terms of total return, sales growth and long-term shareholder value. Surely, there is a method to what seems like madness to so many [1]. Tesla’s recent breakout market performance is proving some of its skeptics wrong. In mid-January of 2020, Tesla’s market capitalization had reached $107 billion, and it surged past the giant German automaker Volkswagen to become the world’s second most valuable auto company behind Toyota. Tesla’s valuation now exceeds that of Ford and GM combined.
