Electric cars: Why Tesla is important for both the auto industry and Silicon Valley

Electric cars have a valuable advocate in Tesla, whose Model S sedan is the gold standard in the growing industry. But in addition to the growth of electric cars, Tesla's success is vital to the US auto industry as a whole. 

Mel Evans/AP/FIle
An electric plug decal is seen on the back of a Tesla electric car in Trenton, N.J. on June 16.

The Tesla Model S is undoubtedly an excellent car.

It's quick, efficient, looks good to most eyes and can compete with most fossil-fueled equivalents on even footing.

But it's arguably not Tesla's, nor Silicon Valley's most important product, according to Edward Niedermeyer writing in Bloomberg.

It's a strange concept, given just how important the electric sedan is to Tesla. It's the first true volume electric vehicle from the company, and one tasked with turning Tesla into a worldwide force. Along with the Model X crossover, it's the one that needs to make money for Tesla.

But Niedermeyer argues that Tesla's unique attributes, and the occasionally outlandish claims made by its founder and CEO Elon Musk, are even more important.

There's method behind these thoughts.

Cars are expensive and difficult to make. It's why we don't all own car companies, and it's why most startups tend to be flashes in the pan. Even huge automakers struggle at times--GM's current recall furore is one such example.

But "brash re-imaginations of the car industry", as Niedermeyer puts it, cost little--yet create the same sort of buzz as any physical product. Thoughts and ideas are a currency too, and Tesla--and Silicon Valley--are profiting from them.

The article notes that Musk is already America's best-known car executive, even though Tesla itself is a tiny brand next to the Big Three or companies hailing from Europe and Japan. His name, and his product, is widely known outside those with a traditional interest in cars or the automotive industry. Love or hate Tesla, you've probably heard of it.

Tesla's presence comes at an appropriate time too. While auto sales are typically rising worldwide, many automakers are struggling to attract the next generation of drivers.

Many reasons are given for this--not all of them accurate--but the increasing cost of driving plays a major part and Musk's promise of reinvention of the automobile is a hopeful view that could reignite passion for vehicles.

They may be expensive for the time being, but they're also an indication of change--perhaps change away from a status quo where younger people are less able to travel independently. Google, another disruptive industry force based in Silicon Valley, is tackling this from a different perspective, with its autonomous vehicles.

Tesla still sells vehicles in small numbers and Google not at all, but support for each company is indicative that at least some of the population are keen to witness change.

It's exciting and it's hopeful--qualities that the traditional automotive industry is struggling with right now, and ones they'd be advised to pay heed to.

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