Kevin Yu arrived in Japan in 2008 from the U.S. to lead the PayPal charge, heading up the operations of the micropayment system here. Earlier this year, he changed fields, and joined Tesla Motors as Director of Asia Pacific. Tesla is the designer and maker of the Tesla Roadster, a car that has confounded the world by being a high-performance, good-looking sports car that uses not a drop of gasoline—being all-electric.
Hollywood celebrities have lined up to purchase this piece of advanced technology, and Japan is one of the first markets outside the U.S. to offer this truly revolutionary product.
A little before this interview took place, Tesla and Toyota announced some tie-ups, with Toyota agreeing to buy $50 million in common stock of Tesla upon the completion of its IPO, selling a California assembly plant to Tesla and announcing technology sharing tie-ups.
Journal: How would you describe your role at Tesla?
Kevin Yu: My role is to function as the Director of Retail Operations in Asia Pacific, meaning I am effectively the senior person on the ground here in Asia, and my job is to build a team to get our cars on the road in all Asian markets, outside Australia. My brief from Elon [Elon Musk, co-founder of Tesla] was “Bring Tesla to Asia, and do whatever it takes to make that happen.”
Our first targets are Japan, Hong Kong and Singapore. Then we’ll focus on China, Taiwan and Korea and other Southeast Asian markets over the next year or so.
Journal: What about servicing the cars once you’ve sold them?
Yu: We see ourselves as more of a technology company than a traditional auto dealer. We have teams of professionals, “Tesla service rangers” who make house calls to work on your car. Maybe not so unusual in Japan, but pretty rare in the U.S. Access to this service is part of the price of the car.
The Roadster is a new product; people need to get comfortable with the product, and if we don’t keep them 100 percent satisfied with it, they won’t buy a second one.
When I talk about a “second one,” remember the Roadster is hand-built, the parts are very expensive, and our margins are low, so I’m talking about the future Sedan model here. In order for the Sedan to sell, we have to ensure our initial customers are convinced that electric vehicles are for real, they’re reliable, and they’re here to stay. Reliability also comprises the after-sales care—the service rangers are a key part of this.
Journal: I guess that’s an important sales point in Japan?
Yu: Yes. All over Asia, we’re looking at service centers even before the showrooms. After all, we’re selling through word of mouth, we’ve never done a media buy or print campaign. We decided not to talk to media until we had cars on the road. We didn’t want to be seen as selling vaporware. It’s super-important that people can actually see and touch the car and then buy it.
Most companies in the technology industry release a lot of news, but don’t release a lot of products. It’s one of the reasons I was attracted to working at Tesla—one of the few companies who seem able to follow through on their promises. If you keep announcing products that will come out “two years from now,” people will lose faith in you.
Journal: But doesn’t a sports car seems a strange choice for the first vehicle?
Yu: Not really when you think about it. A car weighs about 800kg, it can’t be much less than that. In our car, about 50 percent of the total weight (1280kg) is battery. To make the rest of the car, we have to go exotic—carbon fiber, etc. which is expensive—in order to get the range. That’s not going to work with something like the [Nissan] Leaf. No-one’s going to pay $80,000 for a Leaf, which is what it would cost with carbon fiber, the Roadster’s competition is the $130,000 Porsche 911 turbo (23 million yen in Japan). At that price point, carbon fiber makes sense and the car becomes more than an R&D exercise inside a major corporation. So when you sit down and look at the economics, a sports car is logical.
Also, to ramp up the industry so that economies of scale start to kick in, you need interest. And interest comes from excitement. So you build a sports car. We’re not just making a box on wheels, we’re making a sexy box on wheels.