Elon Musk’s Daring Pays Off For Tesla by Geoff Colvin @FortuneMagazine 11:34 AM EST E-mail Tweet Facebook Linkedin Share icons The latest news from Tesla tsla reveals new realities about the business environment that leaders in every industry need to understand. The company is circulating a table showing how 2015 unit sales of its Model S stack up against sales of other luxury sedans, as Fortune’s David Z. Morris explains. The bottom line is that the Model S outsold all of them, with 25,202 units sold last year; the runner-up was the Mercedes S-Class, with 21,934 units sold. All of the nine competitors that Tesla listed suffered sales declines last year, most of them by double-digit percentages, while Model S sales increased 51%, reflecting the company’s increased production. Of course, the comparison is artfully composed to Tesla’s advantage; that Mercedes will run you at least $95,000, while the Tesla Model S starts at about $70,000, for example. On the other hand, the Tesla outsold the similarly priced Audi A7 by a factor of three last year. Astoundingly, Tesla is now fully in the big leagues of luxury sedans. A few take-aways with broad relevance: -This is an industry that was supposed to be impossible for outsiders to enter. The capital requirements are so large and economies of scale so important that the global giants seemed to hold all the cards. In fact, far from permitting new entrants, the industry has been consolidating into a few behemoths. Yet Tesla, founded 13 years ago, is now an important competitor in the most profitable segment of the business. It achieved the impossible by pioneering a fundamentally different technology and using a different business model that eliminates dealerships. If this industry can be disrupted by a startup competitor, any industry can be. Sign up for Power Sheet, Fortune’s daily morning newsletter on leaders and leadership. -Because electric car technology is still in its infancy, Tesla’s products will get substantially better and less expensive for years to come, while conventional cars get only incrementally better. Even as the giants work feverishly on developing their own electric vehicles, they will have a hard time catching up with Tesla because of the accumulating knowledge it gains from its significant head-start and its higher-volume production. -Mission is power. No one can quantify the advantage that Tesla gains from creating a product that holds at least the promise of making the world a better place. But in attracting and motivating employees, and in enticing customers, it’s undoubtedly big. -And yet – it could still all go wrong. Tesla is not out of the woods. It struggled to produce those 25,202 Model S cars last year plus the first Model X SUVs; for comparison, Toyota made about 9 million vehicles last year. When the mega-players are ready to go big with electric cars, they could flood the market, underprice Tesla, lose money (as Tesla does now), and presumably win a war of attrition. What we can say for sure is that Tesla is making far larger competitors sweat, and in retrospect, the audacity of CEO Elon Musk and his co-founders was breathtaking. Whether you’re an incumbent in your industry, or a disrupter, or some of each, this story will continue to hold lessons for everyone.