In the fall of 2014 an investor contacted HBS professor Clayton Christensen with a friendly challenge. Christensen is best known for his theory of disruptive innovation, which describes how firms that introduce rudimentary products can eventually overrun established players by systematically improving the products until they meet the needs of mainstream consumers, generally at low prices. The investor, a shareholder in the electric vehicle company Tesla, suggested that Tesla’s founder, Elon Musk, is creating a new model of disruption, in which products start at the high end and move down. During its 10-year history Tesla has made just 59,500 cars, most of which cost upwards of $100,000. But it expects to introduce a model in late 2015 with a sticker price of about $70,000, and in 2017 it plans to launch one for $35,000. Musk is outspoken about his goal: to create an affordable mass-market electric vehicle that will supplant gasoline-powered cars.
A version of this article appeared in the May 2015 issue (pp.22–23) of Harvard Business Review.