Tesla vs Others — Eclectic Past and Electric Future
Predicting future is hard but creating future is what makes a company great

Can Tesla Inc. surpass Apple Inc. to become world’s most valuable company?

Luminar founder Austin Russell has become the newest and youngest billionaire in the world. A company which sells automotive component known as ‘ LIDAR’. A high-priced ‘component’ which promises to achieve full autonomous driving capability. Volvo made a investment in the company in the year 2018 which is now valued at more than $8 Billion dollar. Luminar’s product are being sought after by nearly every big auto maker in the world but Tesla.

Tesla, the company, do not basically believe LIDAR as a technology (as a breakthrough sensor for Level 5 autonomous driving). They find it ‘expensive’ and ‘unnecessary’. In Elon Musk’s own word:

anyone relying on LIDAR is doomed. Doomed. Expensive sensors that are unnecessary. It’s like having a whole bunch of expensive appendices… you’ll see.

This is interesting. A company which is yet to find its competitor has charted its own path which is far away from the market direction itself. What makes them so confident? Why it is always Tesla vs Others?

Tesla — the pathfinder

Tesla (Motors) was founded in July 2003 and 17 years later the company is one of the most trending (and may be infamous) stock on the Nasdaq. Moved from $80 to $600+* — that’s a massive rally (For Year 2020 — till 11th Dec. 2020). The company founder “Elon Musk” himself thinks company is over valued however always toiling to keep the production running and deliveries going.

Tesla (real Elon Musk) knows that path to profitability cannot be selling cars but unbundling the ecosystem. It needs to make money from all the accepts and hence currently it leads the pack for a company which doesn’t aim to solve transportation but other consumer markets too. Here’s some potential synergies:

HVAC (Heating, Ventilation and Air Condition) (B2C and B2B) Full Autonomy Driving Software Package (B2B) Batteries (B2C and B2B) Solar Roof through SolarCity (B2C and B2B) 2 Wheeler (Scooter and Bikes) Finance / Auto Loan (B2C) Auto Insurance (B2C) Charging Network — Pay per use (B2C and B2B) Car Subscription (B2C) IP Licensing (B2B)

Manufacturing is hard, and capital intensive. If Tesla needs to accelerate the ecosystem they need to share their power-train and battery technology in exchange of manufacturing scale-up. For emerging markets, none of current model would make sense. Emerging market expects pricing to be around $15,000 for a decent car which is less than half of its cheapest model (Model Y). Unless Tesla forge deep partnership in exchange of technology scale-up will be harder. Large economies have many early adopters who are attracted to mid to high premium cars but it is also susceptible to establish brands who are looking to launch lucrative models in the market. They might be 3–5 year behind Tesla but they know how to make cars for decades and few companies for a century. Their distribution and production capacity alone will pose problems to scale.

What made Tesla the leader

Tesla, for that matter has nailed the branding and placement of its brand among enthusiastic car buyers. Elon knows how to market products with zero ad spends. Twitter alone for him does the job let alone Product Launch and savvy media outlets tracking him. Tesla is killing NPS scores — Youtube, Podcast, Twitter they are everywhere. However it should not let its customers down who wait for deliveries patiently. Tesla’s performance and charging network is doing wonders mixed with its early entrant advantage in the market. Automotive industry is ruled by behemoth and hence constant innovation on products (read new launches in popular consumer segment) is the key. From Roadster to Model Y and from Semi to Tesla Cyber-truck keeps the engagement level of market high.

Tesla’s success is also partly funded by slow reaction by world’s leading automakers which is surprising. They are still trying to understand the market. Electric and sustainable energy production is the future. Oil is heavy for emerging economies and its repercussions are far and wide. The future is in front of us and people who are slow to react will pay heavily licensing a IP from market leader itself. Tesla’s momentum and fan base only makes them market leader.

Competition who may catch-up

Electric vehicle will be a commodity in next 7–10 years. Penetration for public transport will convince people to buy electric and it will further accelerate if Governments can fund with tax waiver and subsidies. However, this will make sure bigger automaker will be forced to launch vehicles — from BMW, Volvo to Toyota and Honda.

But the real competition of Tesla could be Chinese automakers. They can replicate any technology faster than anyone else in the world. Don’t think about Rivian too much(could be great but targeted to a niche premium segment) but think about NIO, XPENG and BYD. While US and China relationship could dent Chinese companies to launch and service their vehicles in the US coupled with Anti-china sentiment after the COVID-19 pandemic but those are outcome of large Geo-politics which may go away in 3–5 year timeline. This will leave the market wide open for disruption without any external restriction to provide cushion to certain automakers.

Bonus tip: Software companies will also make a killing in autonomous driving spree. Google, Apple and Amazon — and other big Tech will jump this sector to sell services while you own a car. Tesla need to understand and unbundle the market. Services make more money then the product itself.

Companies would take a note from companies like Gillette and Apple. Sell a product and then sell the entire ecosystem — over and over again. The key to monetization requires them to follow the customer.

Future is now?

Whomsoever the market belongs to but ultimate beneficiary would be consumers and our planet. While disposing batteries and solar cells would be certainly a nightmare. Instead of smaller countries become the dumping yard — future should belong to recycling and sharing economy not just manufacturing scale-up.
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['Self Driving Cars', 'Sustainability', 'Elon Musk', 'Technology', 'Tesla']