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This is the biggest risk I see with TSLA: - Incumbent auto giants entrance diminishing Tesla's margins. - Incumbent expertise and brand that diminishes Tesla'

This is the biggest risk I see with TSLA: - Incumbent auto giants entrance diminishing Tesla's margins. - Incumbent expertise and brand that diminishes Tesla's appeal. - First mover disadvantage: rest of auto industry sees large initial ROI by piggybacking off Tesla GM can't be the only guys racing to bring Tesla experience to it's existing brand followers. Luxury makers like BMW, Benz will woo the lion share of the market Tesla originally pioneered. First movers rarely do well here unless they've cemented their brand position in the luxury space such as Ferrari, Lamborghini etc. tl;dr: When the status quo catches up to Tesla, it will put downward pressure. Tesla's winning strategy should be to limit quantity and artificially inflate unit price. It is not equipped to take on dozen automotive brands in the long run. Please correct me where I'm wrong.

idiot_stick 10y ago
>GM can't be the only guys racing to bring Tesla experience to it's existing brand followers. This has been pointed out many times on these boards, and I agree with it. Tesla (Musk) got this EV ball rolling, for real, and deserve immense credit for that. But it sounds too often here that Tesla has "won". Building cars is hard, capital intensive, and there are many massive companies diving into this. And despite what you may have heard, companies like Ford, GM, Fiat aren't staffed with idiots.
- pcurve 10y ago
  Absolutely. Big autos have huge engineering know-hows as well as resources to poach talent. One thing that may work for in favor of Tesla though, is the fact that self-driving car will fundamentally shift people's relationship with cars. Out goes the needs to have best-handling, best crash protection, best-feedback providing cars. Value of those engineering know-hows will be greatly diminished because computers will be doing the driving. Instead, there will be more emphasis on comfort, software, and efficiency.
- rhino369 10y ago
  It's also not an industry you can permanently win. There aren't significant network effects. There isn't going to be one or two electric car manufacturers. There will be dozens.
prostoalex 10y ago
Tesla shareholders are asked to take a bet on Gigafactory and competitive advantage of having cheaper battery cells than anyone else https://qz.com/214093/tesla-elon-musk-5-billion-gigafactory-gamble/ https://qz.com/214093/tesla-elon-musk-5-billion-gigafactory-... Tesla's own charger network also presents a slight advantage for potential buyers, other brands [for the moment] rely on home chargers, dealership sockets and third-party vendors like Chargepoint or Volta.
- tedivm 10y ago
  Tesla has also opened the patents for their socket and charging designs. I can see a future where Tesla isn't necessarily selling a ton of cars, but is licensing technology and selling infrastructure (such as access to charging stations). This makes the purchase of Solar City make even more sense- they may care more about moving into the utility market than the car one.
  - losteric 10y ago
    I strongly suspect that's the strategy. Reusing supply chain/parts to build competitive new energy infrastructure, licensing commercialized technology to major manufacturers in order to fund R&D, and using early adopters/status products to "beta test" the next generation.
- brilliantcode 10y ago
  The gigafactory and charger network give Tesla some barrier to entry but I don't think the costs will make a giants blink. Even more scary is collusion of giants trying to kill Tesla. Say the Japanese automakers group together to share the risk and costs of building the same infrastructure. My primary concern is the margin per unit. Only a handful of automakers today have been able to sustain their margins, namely Porsche which supposedly makes the most margin per car. If you wonder outside the luxury segment, you find razor thin margins and heavy competition. Tesla and Elon Musk deserves a big award for bringing the EV market to people who succeeded in capitalism. But as you saw with Ford, just because you were first won't guarantee your place. Heck, without bailouts, there would be very few American automakers left. And this is really where my argument for maintaining high margin per unit is essential for long term survival. That can only be accomplished by moving upwards, not downwards. The accumulative cost & risk of selling 2.5 model 3 vs 1 p90D can't be ignored. Having said that the market seems undecided between the bears and bulls on the upcoming Tesla earnings report.
gozur88 10y ago
GM has a long track record of fumbling new products. I expect Tesla will suffer from competition, but it will be BMW or Toyota that does the damage. The big advantage Tesla has, as far as I can see, is the charging network. Someone else is going to have to bite the bullet and put up a few thousand charging stations.
- skookumchuck 10y ago
  It would really suck, though, if each automaker built an incompatible charging system.
- madengr 10y ago
  There are plenty of non Tesla chargers here in Kansas City. I can charge my Nissan Leaf on a chademo charger in 1/2 hour. So I'm wondering if Teslas own charger network makes that much difference.
  - mikeash 10y ago
    CHAdeMO sucks fairly hard in some ways. First, they're not organized into a coherent network. When making a long trip, you may need to go well out of your way to hop from one CHAdeMO location to the next, or just not be able to do it altogether. Tesla's network is not entirely ubiquitous yet, but it covers 95% of cases now. Second, somewhat related to the first, they tend to be installed in small numbers, often just as single units. That makes it almost impossible to rely on them. If you arrive at a single CHAdeMO unit and it's broken or in use, you're screwed. Tesla Superchargers are usually installed of groups of 6 or more. For site-wide outages, the car will tell you and route around the broken sites. Third, they are ssllooww. Charging in half an hour sounds nice, but that's a Leaf, with a tiny battery. Plug a Tesla into a station like that and you're looking at a couple of hours. Most CHAdeMO stations max out at 50kW or less (I believe many of Nissan's are only 20kW!), while Superchargers do up to 120kW. Recharging time on road trips is generally acceptable with Superchargers, but with CHAdeMO you're looking at doubling or tripling that time, and it'll start to become a significant portion of your total travel time. Most people want to be able to make long trips. It's the #1 question I get about my Tesla. So far, no other manufacturer has shown anything capable of long trips. The Bolt could do them, if it had a reasonable charging network and could charge quickly, but it doesn't and it can't.
Fricken 10y ago
Electric drivetrains alone were never really regarded as a major competitive threat to the big carmakers. What has lit a fire under their ass is is the combination of electric, autonomous, and on-demand. This is disruptive, this scares them. Google's autonomous driving efforts alone weren't taken too seriously either, but when rumours of Apple's interest in the space began to swirl, that's when the carmakers (including Tesla) got the message and suddenly all started scrambling to come up with a strategy to develop an autonomous OS. Fast forward 3 years and here we are, with stodgy old GM in a position of confidence.
laser 10y ago
I think the counter-argument would go something like "Tesla is a technology company like Apple, leading to superior product design and user experience due to more talented people and a high level of vertical integration. Thus, in the actual long-term competition of Uber/Daimler vs Lyft/GM vs Google/Ford vs Baidu/BMW (already collapsed) vs Tesla, Tesla will win due to its ability to best develop a digital vehicle experience at an affordable cost, fastest. As an example of software advantage, Tesla is currently getting more real-world training data for autonomous vehicles than every other company combined. As an example of hardware advantage, Tesla will be producing more lithium ion battery capacity from its gigafactory than the entire world could produce a few years ago. As an example of product advantage. Well, have you been inside a Tesla?" Or something like that I think... :P But who knows, maybe Faraday Future will reveal a pixie-dust powered anti-gravity sphere that will make everyone else irrelevant.
- Eridrus 10y ago
  I don't think Tesla has any sort of talent edge in the self-driving car space. Their original autopilot was mostly built on tech from MobileEye and from what I've heard Tesla doesn't pay great either, and unlike SpaceX their mission is not unique. Having a network of cars collecting data is great, but they may not actually be able to collect all of it simply because it is super high bandwidth, whereas those with test cars can stick a rack of disks in the car and collect all of the data.
  - laser 10y ago
    Does Tesla not pay well by industry standards, or is that when comparing them to software companies? Seems like they work their employees very hard, though, so maybe they lose out on talent– on the other hand there was a time when Apple worked its employees hard and they were still able to retain top people. Regarding the data collection, that's a great point. I hope that's not the case though, as I would think the data is far more valuable than the bandwidth it's carried on. Though, I suppose the capacity simple doesn't exist to send it over the air the way you can just store locally and physically offload. Then I guess it comes down to whether the compressed data from an enormous number of vehicles still gives a significant advantage.
dmode 10y ago
As a Model S owner, I may be biased, but Tesla's competitive advantage goes beyond electric drivetrain and self driving. Other things that work for Tesla that owners love and makes it very difficult to switch - Supercharging infrastructure. My road tripping has actually gone up because of this - A software engineering mindset, which results in regular infotainment updates, constantly improving features and a vehicle that gets better with time - No dealer network - which leads to a customer first mindset.
aoeu345 10y ago
Incumbent automakers are cash cows, not startups. Tesla will spend all of it's money on the Gigafactory. GM will destroy new product lines that threaten it's current profits. Remember, incumbent auto makers are not fast moving or innovative at all. They are all cash cows. Although they can predict that a move to EVs will keep them alive long-term, such a move will always be done with a small fraction of GM's resources and labour in the coming decades, and Tesla with Elon's burning desire to destroy them are probably going to win. Remember, GM can't sell these two products on the same lot: One which is a cash cow, and one which only exists to combat some distant threat of GM becoming obsolete. Also you're forgetting that Tesla cars are just better in every sense. Better brand, faster, longer range, novelty...
- rfurmani 10y ago
  There's a lot of companies out there, and dismissing them outright is the same brand of arrogance that lets startups win over incumbents, but reversed. > better brand GM/F/Honda/Toyota/etc are reliable, BMW/Audi/Lexus/etc are luxurious and have a package that's been very carefully tuned > faster Doesn't matter to 90% > longer range Debatable, also price constrained > novelty Not what you look for in a massive purchase that you want to last 10+ years
  - aoeu345 10y ago
    First off, speed matters to the young and environmentally conscious EV market. Range has maxed at 800km on a single charge, there is no > debate to be had. GM and any other electric carmaker will be buying their batteries, powertrains, or both from Tesla after they flop with their own native lineups.
    - beering 10y ago
      Speed didn't matter to the huge Prius market. And with the Bolt supposedly getting 238mi on a charge, that's on par with a Model S 70. I think you should give GM a little more credit...
      - 10y ago
DenisM 10y ago
Tesla is a vertically integrated company, so they have squeezed all the margins out of their supply chain. The big automakers all share their supply chain and have to feed it with margins at every level. Same story with SpaceX - vertically integrated. The whole integrated/shared thing has been going back and forth in different industries at different points in time. Apple has been getting more and more integrated recently whereas earlier wisdom in PC industry was to use shared components. Musk is betting that it's time to integrate the automotive industriy. If he is right, Tesla will balooon to the size of Apple. The electric part is not the most important here.
- KirinDave 10y ago
  Personally I think Musk doesn't think this way. I think he sees the secondary aspects of Tesla's work on cars (e.g., the battery plants and larger infrastructure of the electric car industry and positioning on standards bodies) as the actual big fish to hunt for. Tesla cars are nice, but they didn't need to make the entire pipeline. They're doing that because they want to reuse the pipeline and tech in other industries.
  - baq 10y ago
    I believe Musk means it when he says he wants to wean humanity off of fossil fuels. The big fish you talk about are definitely means to this end and not the goal itself.
  - DenisM 10y ago
    That's also true imho. Do note however that gigafactory is also fully integrated, squeezing the margins out of li-ion aupply chain.
- brohoolio 10y ago
  The suppliers are squeezed really heavily by the traditional auto companies. There is very little margin in the business.
- jcfrei 10y ago
  > Tesla is a vertically integrated company, so they have squeezed all the margins out of their supply chain. The big automakers all share their supply chain and have to feed it with margins at every level. Same story with SpaceX - vertically integrated. Vertical integration doesn't guarantee better prices just because you don't rely on third party suppliers. There are other benefits, such as monopolizing a certain part of the supply chain (like batteries in the case of Tesla) but it also requires very high investments (Gigafactory). Those investments can pay off in the future but can also turn out to be very expensive mistakes - you basically wager long term pay offs against flexibility.
deleted 10y ago
[deleted]
eddieplan9 10y ago
You mean like how all the cell phone makers caught up with Apple's iPhone? Not saying TSLA has no risk: for one thing, they still have not figured out how to scale up production. But in general, I think we tend to overestimate the incumbents' advantage. Most incumbents have too many old interests that hold them back. There is an article [1] about German automakers' unwillingness to commit to EVs because the profit from ICEs are way way higher than that from electric ones because of ICE's complexity. (Similarly, this is the reason why most of the wind farms in China are not connected to the national grid, because the existing power plants do not want to shut down and lay off workers.) [1] http://www.spiegel.de/international/business/german-government-at-odds-with-industry-over-electric-cars-a-1123436.html http://www.spiegel.de/international/business/german-governme...
- swiley 10y ago
  Apple was not the first company to make a smart phone.
  - jsjohnst 10y ago
    Name a major smartphone maker pre-iPhone that's still a major smartphone maker now. Being first with an inferior product (Tesla certainly isn't in that category) is irrelevant to the discussion at hand and the parent poster didn't claim Apple was first, just that they lead the market (overcoming all the incumbents at the time) in the early days before Android caught up and passed them.
    - sangnoir 10y ago
      Tesla is inferior to all luxury brands in all aspects except being electric and self driving. When compared to Volvo, Mercedes and their ilk, Tesla are behind on prestige, interior styling, after-sales support, economies of scale, supply chain management, navigating world wide bureaucracies, etcetera. It remains to be seen if Tesla will catch up on these faster than the other brands can catch up on self driving and electric vehicles.
      - 10y ago
spectrum1234 10y ago
One big factor you missed is Tesla has the best talent.
- adventured 10y ago
  The talent at GM, Ford, Mercedes, BMW, Porsche, Toyota, Nissan, VW, etc. is immense. The only factor for those companies is focusing it, which all of them have proven they can do. What Tesla has, is talent + a big headstart. The talent part is not unique at all. The clock is ticking rapidly on the headstart, and Tesla is well aware of that.
  - deleted 10y ago
    [deleted]
xbmcuser 10y ago
Musk has been working on increasing battery production for years. I don't see other car manufacturers outpacing Tesla for the simple reason of not having enough batteries.
sillypuddy 10y ago
I think Elon Musk is ok with that. Actually, I believe that is why he started Telsa, and opened up a lot of their patents at some point. He wanted to kick-start the electric market, not have a monopoly in it.
cja 10y ago
Is Tesla a car company or a battery company or a green power company or just a power company? The cars look like a brand awareness device for the power company. If there are no Tesla cars in ten years then Tesla the power company probably won't mind much.

idiot_stick 10y ago

>GM can't be the only guys racing to bring Tesla experience to it's existing brand followers. This has been pointed out many times on these boards, and I agree with it. Tesla (Musk) got this EV ball rolling, for real, and deserve immense credit for that. But it sounds too often here that Tesla has "won". Building cars is hard, capital intensive, and there are many massive companies diving into this. And despite what you may have heard, companies like Ford, GM, Fiat aren't staffed with idiots.

pcurve 10y ago
Absolutely. Big autos have huge engineering know-hows as well as resources to poach talent. One thing that may work for in favor of Tesla though, is the fact that self-driving car will fundamentally shift people's relationship with cars. Out goes the needs to have best-handling, best crash protection, best-feedback providing cars. Value of those engineering know-hows will be greatly diminished because computers will be doing the driving. Instead, there will be more emphasis on comfort, software, and efficiency.
rhino369 10y ago
It's also not an industry you can permanently win. There aren't significant network effects. There isn't going to be one or two electric car manufacturers. There will be dozens.

prostoalex 10y ago

Tesla shareholders are asked to take a bet on Gigafactory and competitive advantage of having cheaper battery cells than anyone else https://qz.com/214093/tesla-elon-musk-5-billion-gigafactory-gamble/ https://qz.com/214093/tesla-elon-musk-5-billion-gigafactory-... Tesla's own charger network also presents a slight advantage for potential buyers, other brands [for the moment] rely on home chargers, dealership sockets and third-party vendors like Chargepoint or Volta.

tedivm 10y ago
Tesla has also opened the patents for their socket and charging designs. I can see a future where Tesla isn't necessarily selling a ton of cars, but is licensing technology and selling infrastructure (such as access to charging stations). This makes the purchase of Solar City make even more sense- they may care more about moving into the utility market than the car one.
- losteric 10y ago
  I strongly suspect that's the strategy. Reusing supply chain/parts to build competitive new energy infrastructure, licensing commercialized technology to major manufacturers in order to fund R&D, and using early adopters/status products to "beta test" the next generation.
brilliantcode 10y ago
The gigafactory and charger network give Tesla some barrier to entry but I don't think the costs will make a giants blink. Even more scary is collusion of giants trying to kill Tesla. Say the Japanese automakers group together to share the risk and costs of building the same infrastructure. My primary concern is the margin per unit. Only a handful of automakers today have been able to sustain their margins, namely Porsche which supposedly makes the most margin per car. If you wonder outside the luxury segment, you find razor thin margins and heavy competition. Tesla and Elon Musk deserves a big award for bringing the EV market to people who succeeded in capitalism. But as you saw with Ford, just because you were first won't guarantee your place. Heck, without bailouts, there would be very few American automakers left. And this is really where my argument for maintaining high margin per unit is essential for long term survival. That can only be accomplished by moving upwards, not downwards. The accumulative cost & risk of selling 2.5 model 3 vs 1 p90D can't be ignored. Having said that the market seems undecided between the bears and bulls on the upcoming Tesla earnings report.

gozur88 10y ago

GM has a long track record of fumbling new products. I expect Tesla will suffer from competition, but it will be BMW or Toyota that does the damage. The big advantage Tesla has, as far as I can see, is the charging network. Someone else is going to have to bite the bullet and put up a few thousand charging stations.

skookumchuck 10y ago
It would really suck, though, if each automaker built an incompatible charging system.
madengr 10y ago
There are plenty of non Tesla chargers here in Kansas City. I can charge my Nissan Leaf on a chademo charger in 1/2 hour. So I'm wondering if Teslas own charger network makes that much difference.
- mikeash 10y ago
  CHAdeMO sucks fairly hard in some ways. First, they're not organized into a coherent network. When making a long trip, you may need to go well out of your way to hop from one CHAdeMO location to the next, or just not be able to do it altogether. Tesla's network is not entirely ubiquitous yet, but it covers 95% of cases now. Second, somewhat related to the first, they tend to be installed in small numbers, often just as single units. That makes it almost impossible to rely on them. If you arrive at a single CHAdeMO unit and it's broken or in use, you're screwed. Tesla Superchargers are usually installed of groups of 6 or more. For site-wide outages, the car will tell you and route around the broken sites. Third, they are ssllooww. Charging in half an hour sounds nice, but that's a Leaf, with a tiny battery. Plug a Tesla into a station like that and you're looking at a couple of hours. Most CHAdeMO stations max out at 50kW or less (I believe many of Nissan's are only 20kW!), while Superchargers do up to 120kW. Recharging time on road trips is generally acceptable with Superchargers, but with CHAdeMO you're looking at doubling or tripling that time, and it'll start to become a significant portion of your total travel time. Most people want to be able to make long trips. It's the #1 question I get about my Tesla. So far, no other manufacturer has shown anything capable of long trips. The Bolt could do them, if it had a reasonable charging network and could charge quickly, but it doesn't and it can't.

Fricken 10y ago

Electric drivetrains alone were never really regarded as a major competitive threat to the big carmakers. What has lit a fire under their ass is is the combination of electric, autonomous, and on-demand. This is disruptive, this scares them. Google's autonomous driving efforts alone weren't taken too seriously either, but when rumours of Apple's interest in the space began to swirl, that's when the carmakers (including Tesla) got the message and suddenly all started scrambling to come up with a strategy to develop an autonomous OS. Fast forward 3 years and here we are, with stodgy old GM in a position of confidence.

laser 10y ago

I think the counter-argument would go something like "Tesla is a technology company like Apple, leading to superior product design and user experience due to more talented people and a high level of vertical integration. Thus, in the actual long-term competition of Uber/Daimler vs Lyft/GM vs Google/Ford vs Baidu/BMW (already collapsed) vs Tesla, Tesla will win due to its ability to best develop a digital vehicle experience at an affordable cost, fastest. As an example of software advantage, Tesla is currently getting more real-world training data for autonomous vehicles than every other company combined. As an example of hardware advantage, Tesla will be producing more lithium ion battery capacity from its gigafactory than the entire world could produce a few years ago. As an example of product advantage. Well, have you been inside a Tesla?" Or something like that I think... :P But who knows, maybe Faraday Future will reveal a pixie-dust powered anti-gravity sphere that will make everyone else irrelevant.

Eridrus 10y ago
I don't think Tesla has any sort of talent edge in the self-driving car space. Their original autopilot was mostly built on tech from MobileEye and from what I've heard Tesla doesn't pay great either, and unlike SpaceX their mission is not unique. Having a network of cars collecting data is great, but they may not actually be able to collect all of it simply because it is super high bandwidth, whereas those with test cars can stick a rack of disks in the car and collect all of the data.
- laser 10y ago
  Does Tesla not pay well by industry standards, or is that when comparing them to software companies? Seems like they work their employees very hard, though, so maybe they lose out on talent– on the other hand there was a time when Apple worked its employees hard and they were still able to retain top people. Regarding the data collection, that's a great point. I hope that's not the case though, as I would think the data is far more valuable than the bandwidth it's carried on. Though, I suppose the capacity simple doesn't exist to send it over the air the way you can just store locally and physically offload. Then I guess it comes down to whether the compressed data from an enormous number of vehicles still gives a significant advantage.

dmode 10y ago

As a Model S owner, I may be biased, but Tesla's competitive advantage goes beyond electric drivetrain and self driving. Other things that work for Tesla that owners love and makes it very difficult to switch - Supercharging infrastructure. My road tripping has actually gone up because of this - A software engineering mindset, which results in regular infotainment updates, constantly improving features and a vehicle that gets better with time - No dealer network - which leads to a customer first mindset.

aoeu345 10y ago

Incumbent automakers are cash cows, not startups. Tesla will spend all of it's money on the Gigafactory. GM will destroy new product lines that threaten it's current profits. Remember, incumbent auto makers are not fast moving or innovative at all. They are all cash cows. Although they can predict that a move to EVs will keep them alive long-term, such a move will always be done with a small fraction of GM's resources and labour in the coming decades, and Tesla with Elon's burning desire to destroy them are probably going to win. Remember, GM can't sell these two products on the same lot: One which is a cash cow, and one which only exists to combat some distant threat of GM becoming obsolete. Also you're forgetting that Tesla cars are just better in every sense. Better brand, faster, longer range, novelty...

rfurmani 10y ago
There's a lot of companies out there, and dismissing them outright is the same brand of arrogance that lets startups win over incumbents, but reversed. > better brand GM/F/Honda/Toyota/etc are reliable, BMW/Audi/Lexus/etc are luxurious and have a package that's been very carefully tuned > faster Doesn't matter to 90% > longer range Debatable, also price constrained > novelty Not what you look for in a massive purchase that you want to last 10+ years
- aoeu345 10y ago
  First off, speed matters to the young and environmentally conscious EV market. Range has maxed at 800km on a single charge, there is no > debate to be had. GM and any other electric carmaker will be buying their batteries, powertrains, or both from Tesla after they flop with their own native lineups.
  - beering 10y ago
    Speed didn't matter to the huge Prius market. And with the Bolt supposedly getting 238mi on a charge, that's on par with a Model S 70. I think you should give GM a little more credit...
    - 10y ago

DenisM 10y ago

Tesla is a vertically integrated company, so they have squeezed all the margins out of their supply chain. The big automakers all share their supply chain and have to feed it with margins at every level. Same story with SpaceX - vertically integrated. The whole integrated/shared thing has been going back and forth in different industries at different points in time. Apple has been getting more and more integrated recently whereas earlier wisdom in PC industry was to use shared components. Musk is betting that it's time to integrate the automotive industriy. If he is right, Tesla will balooon to the size of Apple. The electric part is not the most important here.

KirinDave 10y ago
Personally I think Musk doesn't think this way. I think he sees the secondary aspects of Tesla's work on cars (e.g., the battery plants and larger infrastructure of the electric car industry and positioning on standards bodies) as the actual big fish to hunt for. Tesla cars are nice, but they didn't need to make the entire pipeline. They're doing that because they want to reuse the pipeline and tech in other industries.
- baq 10y ago
  I believe Musk means it when he says he wants to wean humanity off of fossil fuels. The big fish you talk about are definitely means to this end and not the goal itself.
- DenisM 10y ago
  That's also true imho. Do note however that gigafactory is also fully integrated, squeezing the margins out of li-ion aupply chain.
brohoolio 10y ago
The suppliers are squeezed really heavily by the traditional auto companies. There is very little margin in the business.
jcfrei 10y ago
> Tesla is a vertically integrated company, so they have squeezed all the margins out of their supply chain. The big automakers all share their supply chain and have to feed it with margins at every level. Same story with SpaceX - vertically integrated. Vertical integration doesn't guarantee better prices just because you don't rely on third party suppliers. There are other benefits, such as monopolizing a certain part of the supply chain (like batteries in the case of Tesla) but it also requires very high investments (Gigafactory). Those investments can pay off in the future but can also turn out to be very expensive mistakes - you basically wager long term pay offs against flexibility.

deleted 10y ago

[deleted]

eddieplan9 10y ago

You mean like how all the cell phone makers caught up with Apple's iPhone? Not saying TSLA has no risk: for one thing, they still have not figured out how to scale up production. But in general, I think we tend to overestimate the incumbents' advantage. Most incumbents have too many old interests that hold them back. There is an article [1] about German automakers' unwillingness to commit to EVs because the profit from ICEs are way way higher than that from electric ones because of ICE's complexity. (Similarly, this is the reason why most of the wind farms in China are not connected to the national grid, because the existing power plants do not want to shut down and lay off workers.) [1] http://www.spiegel.de/international/business/german-government-at-odds-with-industry-over-electric-cars-a-1123436.html http://www.spiegel.de/international/business/german-governme...

swiley 10y ago
Apple was not the first company to make a smart phone.
- jsjohnst 10y ago
  Name a major smartphone maker pre-iPhone that's still a major smartphone maker now. Being first with an inferior product (Tesla certainly isn't in that category) is irrelevant to the discussion at hand and the parent poster didn't claim Apple was first, just that they lead the market (overcoming all the incumbents at the time) in the early days before Android caught up and passed them.
  - sangnoir 10y ago
    Tesla is inferior to all luxury brands in all aspects except being electric and self driving. When compared to Volvo, Mercedes and their ilk, Tesla are behind on prestige, interior styling, after-sales support, economies of scale, supply chain management, navigating world wide bureaucracies, etcetera. It remains to be seen if Tesla will catch up on these faster than the other brands can catch up on self driving and electric vehicles.
    - 10y ago

spectrum1234 10y ago

One big factor you missed is Tesla has the best talent.

adventured 10y ago
The talent at GM, Ford, Mercedes, BMW, Porsche, Toyota, Nissan, VW, etc. is immense. The only factor for those companies is focusing it, which all of them have proven they can do. What Tesla has, is talent + a big headstart. The talent part is not unique at all. The clock is ticking rapidly on the headstart, and Tesla is well aware of that.
- deleted 10y ago
  [deleted]

xbmcuser 10y ago

Musk has been working on increasing battery production for years. I don't see other car manufacturers outpacing Tesla for the simple reason of not having enough batteries.

sillypuddy 10y ago

I think Elon Musk is ok with that. Actually, I believe that is why he started Telsa, and opened up a lot of their patents at some point. He wanted to kick-start the electric market, not have a monopoly in it.

cja 10y ago

Is Tesla a car company or a battery company or a green power company or just a power company? The cars look like a brand awareness device for the power company. If there are no Tesla cars in ten years then Tesla the power company probably won't mind much.