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> But no other company will be able to out compete Tesla at manufacturing. This is the reason I feel people are betting Tesla to get an outsized pie of the EV

> But no other company will be able to out compete Tesla at manufacturing. This is the reason I feel people are betting Tesla to get an outsized pie of the EV market even when the legacy OEMs catch up. When Tesla started manufacturing things in-house, folks were rightly skeptical about their manufacturing capabilities and their stupid refusal to rely on the automobile supply chain. The stubborn insistence to vertically integrate nearly killed the company. Now that it has a market cap several times its nearest competitor, it can raise enough capital to focus on capital efficiency of new manufacturing plants to scale up production. In their battery day video, that's what impressed me the most - they have control over every cost center in their supply chain, and can optimize for quicker/cheaper manufacturing much faster than anyone else. In some aspects, Tesla completely reversed Cook's playbook, and might even succeed at it if demand for Teslas remains high for the next decade or two.

nmfisher 6y ago
Forget about TSLA's market cap for a second and look at their actual manufacturing quality, where defect rates are higher than almost all other automakers: https://www.cnbc.com/2020/06/24/tesla-lags-auto-industry-in-quality-finds-new-jd-power-study.html https://www.cnbc.com/2020/06/24/tesla-lags-auto-industry-in-... https://www.forbes.com/sites/edgarsten/2020/11/19/tesla-reliability-sinks-in-consumer-reports-annual-survey/?sh=28015bed5fbb https://www.forbes.com/sites/edgarsten/2020/11/19/tesla-reli... While I appreciate that it's exceptionally difficult to build an automobile manufacturing and supply chain from scratch, let's not pretend they've somehow overtaken conventional auto companies and that's why their stock price is high. Given the disproportionate share price when considering comparable EV sales, I'd say TSLA market cap is a function of the MDF - the Musk Distortion Field - rather than actual tangibles. That's not to say the two are completely disconnected. The MDF explains why TSLA doesn't spend a cent on advertising, which obviously boosts margins.

nmfisher 6y ago

Forget about TSLA's market cap for a second and look at their actual manufacturing quality, where defect rates are higher than almost all other automakers: https://www.cnbc.com/2020/06/24/tesla-lags-auto-industry-in-quality-finds-new-jd-power-study.html https://www.cnbc.com/2020/06/24/tesla-lags-auto-industry-in-... https://www.forbes.com/sites/edgarsten/2020/11/19/tesla-reliability-sinks-in-consumer-reports-annual-survey/?sh=28015bed5fbb https://www.forbes.com/sites/edgarsten/2020/11/19/tesla-reli... While I appreciate that it's exceptionally difficult to build an automobile manufacturing and supply chain from scratch, let's not pretend they've somehow overtaken conventional auto companies and that's why their stock price is high. Given the disproportionate share price when considering comparable EV sales, I'd say TSLA market cap is a function of the MDF - the Musk Distortion Field - rather than actual tangibles. That's not to say the two are completely disconnected. The MDF explains why TSLA doesn't spend a cent on advertising, which obviously boosts margins.