I still run into people who question the logics of Tesla who started with their Model S at the 'top of the market'. They think it makes more sense to start with smaller electric vehicles instead of full blown luxury sedans. The smaller EV approach is used by most of the other OEMs, look at the Nissan Leaf for example.
However, it makes perfect sense to start a car company from that end of the spectrum, or with such a new technology for that matter. When the big OEMs of today started out, cars were a luxury product. The horseless carriage was for the happy few. After the process was refined enough so that it could be scaled, the car went for mass adoption. They all started at the top.
Mercedes is mostly known for luxury cars, but also there you see that the latest tech-features initially get rolled out in the top end of the market. Cruise Control? Air Conditioning? Standard on most cars you can buy now, but they all started as luxury options.
How does it make sense? A new technology often comes as an increased price. It is new, it is produced in limited numbers. Both add up to a higher cost price. It is therefore easier to wrap such expensive options in a product where customers are already paying some kind of premium.
Safety in numbers
Another benefit from the luxury approach is the safety in (low) numbers. If a problem is found in a new technology (fail often, fail fast anyone?) it helps if the problem does not require millions of recalls. Compare Tesla which updates the car-ware via the WiFi to the case of VW where millions of cars have to take a trip back to te garage (or worse) to get the Emission-Cheating software removed.
For Tesla starting out in the high end of the market made sure that if a problem would arise, it would be easier to manage than when they had tens of thousands of cars on the road. It was the only, smart way to start Tesla and keep things manageable. On top of that, this has been part of the big _’Secret Tesla Motors Master Plan’_ from the start.
Photo Credit: Evano Gucciardo on 500PX