The world is enamored with Tesla. Auto journalists praise its cars and financial analysts constantly tout the company’s potential. But there’s a critical problem with Tesla’s product strategy: it’s not actually disruptive, which will likely cause it to struggle to scale. This may seem like heresy—even the analysts who are bearish on Tesla in the short-run are bullish on its long-term potential. But Telsa is starting from the top of a market, selling high-end vehicles at high prices. To scale, Tesla will eventually have to grow down market but there are real impediments to doing so. That’s why the most successful innovators usually do the reverse.

There are three internal barriers to “growing down the market” that are akin to sailing against the wind. The first is the company’s overhead structure. A company’s starting point determines the characteristics of its overhead structure that, barring a major restructuring, it will carry throughout its life. Companies that start at the bottom of the market develop overhead structures that are profitable at low unit prices. When the company moves into a higher-price market, it keeps the lean cost structure, so its margin grows and profits increase. Conversely, firms that start at the top of the market develop costly overhead structures that require high unit prices to support their high service levels. As they grow down the market and each unit is sold at a lower price, there are fewer dollars to pay for high overhead costs, and so margins shrink.

Additionally, the incentive structure is misaligned for employees and value chain partners. Tesla currently sells only one model, the Model S, a $75,000 four-door hatchback, but it plans to launch two additional models over the coming years. First, the Model X, an SUV expected to debut towards the end of this year. In 2012, the Model X was expected to cost approximately $50,000 but Tesla now says that it will cost approximately the same as a comparably equipped Model S. In 2017, Tesla plans to launch a “mainstream” luxury car, the Model 3, which it estimates will cost $35,000, although analysts have begun to question the feasibility of reaching that price point.

Consider a Tesla salesperson tasked with selling all three models. That individual is incented to sell as many of the most expensive model (the Model S) as possible. Regardless of commission structures, the nature of the sales process ensures this. It likely takes approximately the same amount of time and effort to sell a Model S as it would to sell a Model 3, so the sales person will rationally attempt to make the most productive use of their time by selling as many expensive items as possible. Overcoming this would require an inefficient and cumbersome incentive program to encourage sales of Model 3’s, but that’s exactly what the company doesn’t want—Tesla wants its sales people to focus on the highest margin item; it has to if it’s going to be profitable.

The third issue that plagues companies attempting to move down-market is the nature of their priorities. A colleague at Harvard Business School is fond of saying “Tesla doesn’t know how to do cheap.” And that’s exactly why they have not delivered on a price target for any of their vehicles yet. Faced with the decision of omitting a fantastic feature or adding it and raising the price by just a little bit, Tesla will consistently add features. Individually, the decisions have no impact; collectively, they add up to real money and cars that were targeted for one price point end up launching at a much higher one. A well-known analog to this was Apple’s failed “cheap iPhone,” the 5C, which was supposed to compete head-to-head with low-price Android phones; but like Tesla, Apple’s genetics don’t allow it do “cheap,” and the 5C launched in no-man’s land—an underperforming expensive phone and an outrageously over-priced cheap phone. Expect a similar outcome from Tesla’s attempts to move down-market.

Unfortunately for Tesla, the problems with growing down-market are only compounded when competitors begin to respond. Entrants that attempt to compete in established markets with large incumbents must compete from a resource disadvantage, which is extraordinarily difficult to overcome. Resources are anything that can be hired or fired, bought or sold. Examples include cash, brands and institutional knowledge, and resources accumulate over time. One of the most important resources for companies in the auto industry is the model lineup.

Companies like Audi, BMW and Mercedes have built broad model lineups, with products to suit every need and fancy. By comparison, Tesla has one—the Model S—and any customer that doesn’t want a 4-door hatchback cannot buy a Tesla. Tesla recognizes this and plans to expand its product lineup over the coming years with the introduction of its Model X SUV and Model 3 lower-priced sedan. But this isn’t a simple process; the company needs to triple its model lineup while simultaneously competing in the Model S market. For a small company with limited engineering resources this is difficult and requires making tough tradeoff decisions between investing in the current product or the model extensions. The challenge is much less significant for incumbents who already possess enormous product teams working on each model in their lineup. It’s almost like Tesla is fighting with one hand tied behind its back.

By entering into a high-end niche, Tesla was able to initially avoid this problem and actually competed on a resource advantage. Its initial customers strongly prefer electric drivetrains to non-electric platforms. Therefore, Tesla was the only company with a product in the category, but the critical factor preventing incumbent competition also limits growth—the market is a small niche that isn’t big enough to justify a competitive response. Incumbents’ only option would be to spend billions of dollars to create completely new EVs, but the market is too small to justify that investment, so competitors couldn’t respond. But as Tesla grows out of its niche, each new customer it targets cares less about the electric drivetrain and increasingly values other attributes. This means that each future sale is more dependent on resources for which incumbents have a significant advantage, making each “next sale” more difficult than the last.

But wait, don’t companies that enter at the low end face a similar problem? They do, but disruptive entrants benefit from two advantages high-end entrants do not. First, because disruption creates asymmetric motivation, incumbents aren’t actually fighting against the entrant; the importance of which cannot be overstated. Disruptive products create asymmetric motivation by targeting incumbents’ least desirable customers or creating new markets with new customers; the disruptor wants to sell to those customers, and incumbents are happy to let go of their least desirable customers, or feel no pain from the unrealized opportunity.

Second, disruptive products are built with business models that are profitable at much lower prices than incumbents’. Therefore, while they initially don’t offer as much performance as traditional offerings, customers are willing to give up some performance for the disruptive products’ overwhelmingly lower prices, which incumbents cannot match because their model cannot achieve profitability at the lower prices. Together, these factors level the playing field and give the disruptive entrant a much higher probability of success.

As Tesla attempts to scale, it’s likely to discover that its internal impediments, combined with competitor responses, make it much harder than anticipated. The symptoms of these problems will manifest as product launch delays, cost overruns, and higher than expected prices. Better approaches would be either to focus exclusively on a high-end niche that is too small to entice incumbents or to enter the bottom of the market with a low-price product and disruptive business model.