Tesla redefines ‘luxury’ segment as industry shifts focus to technology

Tesla’s official website dubs the Model S, X, and 3 as “premium” electric cars. Nevertheless, Tesla’s electric cars such as the Model S have proven to be formidable entries in the luxury segment, particularly against mainstays from legacy automakers such as the Mercedes-Benz S-Class and the BMW 7 Series, which are characterized by plush amenities and expensive interior accents. How then, are Tesla’s premium vehicles, which adopt a minimalistic theme and an almost spartan interior, performing so well in a market where more is usually better? By invoking a sense of luxury through deep software integration, of course.

To say that Tesla’s electric cars have their own fair share of critics is an understatement. Among the criticisms directed at the company’s vehicles is the fact that they do not have the same luxurious features found on other vehicles in their class. Critics of Tesla would be quick to point out that the company’s vehicles are not fitted with the same premium materials found in their German rivals. Tesla’s cars continue to sell, however, because as those who have found themselves behind the wheel of a Tesla know, the company’s electric cars are just an entirely different breed of vehicle, offering a completely different driving experience.

It’s not difficult to find social media posts from Tesla owners who state that they would never go back to driving a car powered by an internal combustion engine again. With the release of the Model 3, the number of new Tesla owners are increasing, and so are the numbers of positive reviews for the company’s electric cars. Considering Tesla’s plan for the Model 3, it is no surprise that the vehicle, which features a radically minimalistic interior, is frequently dubbed as the “iPhone of cars.”  

In a way, comparisons between Tesla and Apple are understandable, considering that both companies release products built around custom software. Apple designs its software for its hardware, ensuring that its offerings, such the iPhone, functions and performs optimally. This integration of hardware and software ultimately became the trigger that changed the market’s perception of what smartphones were capable of. Other manufacturers attempted to take on the iPhone through their own devices, including Samsung’s Android-powered S and Note series. To match the smoothness of Apple’s iOS-powered iPhones, Samsung equipped its flagship devices with as much specs, features, and accessories as the smartphones can handle. Samsung eventually pushed too far with its “more is better” strategy once, and the result was the Galaxy Note 7, a smartphone that literally went up in flames. Today, a perfect Android phone exists, and that is the Google Pixel series, a smartphone line built specifically for Android OS.

For now, Tesla’s competitors in the luxury segment are adopting a strategy not that different from Samsung. They adopt software and tech, but the level of integration is not that deep. Tech used by legacy carmakers, such as BMW with the top-tier M3’s heads-up display, could be seen as simple add-ons to a legacy platform and very little else. Tesla, on the other hand, builds everything in house, making software that works for the car and a car that works for the software. This becomes evident in improvements rolled out through over-the-air updates and features such as Enhanced Autopilot.

This integration allows Tesla’s electric cars to feel like a unified experience — one that can redefine how some perceive cars as a whole. For drivers of the premium electric cars, driving such a vehicle could be a turning point, similar to when one used a touch-based smartphone for the first time after using devices with physical keyboards for years. With the release of the Model 3, and based on positive reactions from the vehicle’s owners, it appears that the iPhone of cars has definitely arrived in the auto industry. As for the “Google Pixel of cars,” it seems that it might take a while before that vehicle would be made.

Tesla redefines ‘luxury’ segment as industry shifts focus to technology
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