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Moats: Why Tesla Can Do What Other Car Companies Only Dream About

In modern business parlance, a moat is something that protects a business from competition or gives it an advantage. A moat could be a trade secret, patented product or process, or an asset that represents a significant capital investment. A moat could be a partnership, an exclusive license, a government granted limited-monopoly, or any barrier to a resource or market. The term was popularized by Warren Buffet. He covers moats in his book Buffett Beyond Value and says that he doesn’t invest in businesses unless they have one or more moats; otherwise, it’s a quick race to the bottom.

“In business, I look for economic castles protected by unbreachable moats.” ~Warren Buffett

This story is about Tesla’s moats, but I don’t mean to imply that Buffett would invest in Tesla. Tesla is far from the value investments of the Berkshire Hathaway portfolio. Rather, Buffett’s comments are to demonstrate the importance of moats. Morningstar even has a guide called Why Moats Matter. Understanding the moats a business employs is clearly important to understanding the business and its future.

In no particular order, here’s a list of Tesla’s moats: mall stores, direct sales, Supercharger network, brand loyalty, EV mindshare, mission-driven, Tesla Energy, Panasonic partnership, rockstar status CEO, electric motor technology & manufacturing, battery technology & manufacturing, software development, connected cars, AI, talent magnet, fleet learning, SpaceX, vertical integration, over-the-air updates, mobile ranger service, Gigafactory, investor expectations, first mover advantage.

These moats enable Tesla to do things that other automakers cannot even consider. Some of these moats are wider than others. Let’s group them and look at them in more detail. If you know of any Tesla moats missing from the list, let me know below.

Stores and Direct Sales

When you buy a Tesla product, you buy it from, well, Tesla. This might seem like a silly statement, but that is not how most car companies operate. Traditional automakers have dealerships. Dealerships are not owned by the manufacturer, they locally owned businesses. In most states, the automakers are legally forbidden from owning a dealership. Dealerships are middlemen. This means that when you pay for a car, you must pay a price that allows both the manufacturer and the dealership to make a profit on the sale.



Tesla has stores in shopping malls. This allows you see their cars in a familiar and comfortable place. The Tesla employees in the store are not commissioned salespeople. They are there to answer questions, not to “get you into a deal today”. There is no haggling, the cars have a Hobson’s Choice price; Take it, or leave it. You pay the same price that Elon Musk’s mom would pay, the same price that any Tesla board member would pay. This matches well with the online shopping model that Gen Y and younger are accustom to.

* Moats: Mall Stores, Direct Sales

Connected Cars and Over-the-Air Updates[/b]

All of Tesla’s cars have wireless service. The original cars had 3G, today they have 4G LTE, and when 5G is the standard they’ll come equipped with that (or maybe something better). This connectivity allows the navigation system to have up-to-date maps and real-time traffic. Every smartphone has had this feature for over a decade, but in cars, this is still a rarity. In other cars, maps could be years out date and/or cost hundreds of dollars to update.





The maps and traffic data is nice, but the real advantage of a connected car is software updates. Tesla is constantly improving their software (more on software later) and when they have a new version, you click a couple buttons on the screen, and your car is updated to the latest and greatest. This keeps the ownership experience exciting. You can recapture a bit of the new car smell when a new feature or easter egg is added.

* Moats: Connected Cars, OTA Updates, Refreshed SW keeps cars relevant

No Dealerships[/b]

A dealership’s agenda, might not be the same as the manufacturer’s and it is not likely the same as yours.





We just discussed over-the-air updates. These are an example where the dealership might have a different interest than you or the manufacturer. Over-the-air updates are convenient for owners, you just wake up to a vehicle with updated software. Well, dealerships in many states can prevent a manufacturer from implementing this feature in their cars. Why? Because that is considered “servicing the vehicle” and the dealership agreement guarantees that all manufacturer service is contracted to the dealership. The dealerships want you to bring your car in often so they have a chance to upsell you on service or to a newer car. If a manufacturer pushes updates over-the-air, they might find themselves in a lawsuit or two with the dealership associations as Tesla has been, albeit for different reasons.

Dealerships make most of their money from service. Anything that prevents a car from coming into the shop is a missed opportunity for them to profit from the customer. Electric vehicles already require far less maintenance than gas cars, allow wireless software updates too and there is even less of a reason for the car to visit the dealership on a regular basis.

With Tesla owning their own stores and service centers, Tesla is able to set their own direction without a complex web of multi-state dealership agreements. This gives them flexibility and allows them to define the ownership experience for their vehicles.

* Moat: Ownership of customer experience, No margin sharing

Panasonic Partnership[/b]

Tesla and Panasonic are partners in battery and solar technology and manufacturing.





Panasonic announced it would invest more than  $1.6B into the Tesla Gigafactory 1 battery plant. Gigafactory 1 supplies the battery cells for Tesla Models 3, Powerwall, and Powerpack products. Panasonic directly manufacturers the 18650 cells that are used in the Model S and X.

Panasonic is also a partner in Gigafactory 2 for solar roof production.

Tesla currently has a hot brand and they are shipping a lot of Panasonic technologies. Panasonic certainly is looking at Tesla as a growth area for their products. Many other automakers are using LG Chem batteries. This means that Panasonic has a vested interest in seeing Tesla survive and grow.

This could mean that Panasonic would be willing to invest more into Tesla if cash infusions are needed as Tesla hits bumps in the road getting to mass market production.



* Moats: Strong technology and financial partnership with a behemoth

EV Mindshare

It seems like nearly all headlines about an electric car (any electric car) mentions Tesla. The car being reviewed is either a “Tesla Killer” or “How Does Car X Compare To The Tesla …”  This was true for the new Leaf, the Jaguar iPace, the Porsche Mission E, and nearly any other new EV coming to market.

This is no different than hybrids and the Toyota Prius. Any new hybrid that comes out is compared to the Prius, because Prius is the benchmark of hybrids. Similarly, Tesla is the benchmark for electric cars. Over the next decade, many automakers will make EVs and they will all be compared to Tesla (range, price, styling, performance…).

As more automakers bring EVs to market, they will be playing the game on Tesla’s court.

* Moats: First Mover Advantage, home field advantage, defacto standard

Mission-Driven, Brand, and Rabid Fans

Tesla has a fanbase that other car companies dream about. They have Apple-like devotion with people lining up to buy their first affordable mass production vehicle. Why does Tesla have such devoted fans? There are as many reasons and every fan has their own reasons. However, I’ll suggest one important reason: Tesla is mission-driven. They are an uncompromised pure-play.

Tesla is not reluctantly making EVs just to meet a state mandate. They didn’t recall and crush EVs from the late 90s. They don’t have a 100-year history of making gas burning cars that have put thousands of pounds of CO2 into our atmosphere. They haven’t participated in a conspiracy to shut down public transportation. They were not caught cheating on emissions tests.

Tesla makes exciting cars that are fun to drive!

They make solar panels that can charge the car with energy from the giant fusion reactor in the sky known as the Sun. They make storage batteries so the stored solar energy can power your house after the sun goes down.

People are inspired by Tesla. Their many many fans of Tesla give them free advertising. They make fan ads, they write blogs, there are dozens of Tesla podcasts and YouTube channels. Tesla held a competition for the best fan ad and there were hundreds of submissions. One couple loves Tesla so much, they had a Tesla themed wedding. Few brands have such devotion.

* Moats: Devoted fan base, dedicated brand, free from historic stains, free fan-based marketing

SpaceX

SpaceX is not part of Tesla, but Elon Musk is at the helm of both companies and they have more cross-over than it may seem. Their direct cross-overs include aluminum fabrication and AutoPilot. There are some less direct connections too.

When they run into a tough engineering problem at Tesla, they can literally call rocket scientists. “That’s cross-fertilization of knowledge from the rocket and space industry to auto back and forth, as I think it’s really been quite valuable,” Musk said on a Tesla earnings call.

Aluminum Fabrication: When you are making rockets, you want them light and strong. Seems are generally weak points. SpaceX uses a specific friction stir welding that fuses the metal together without melting it. The end result is stronger and lighter than a traditional aluminum weld, with just 10% waste metal.

AutoPilot: SpaceX’s rockets have to operate autonomously for much of their flights, including landing on drone ships at sea. This is very different than navigating city streets, but both of them need to interpret the data from the sensors. Raw data from radar and sonar is very noisy and false positives are common. Decoding these signals is tricky and vitally important. Sharing learnings here improves both systems.

Marketing: SpaceX launched a Tesla Roadster into space. This was a huge marketing success. Most aerospace companies would have just used a dummy load for this type of test launch. So for just the small cost of a used Roadster and a mannequin, Tesla and SpaceX had the most talked about launch in the last decade. According to Reuters, Apple and Google’s corporate brands dropped in an annual survey while… Tesla’s rocketed higher after sending a red Roadster into space.

Starlink: Starlink is a satellite broadband communication project by SpaceX. It is to provide low-cost, high-performance satellite-based internet connectivity. SpaceX has just launched the first of the low-earth orbit satellites and plans to put nearly 12,000 of them into orbit by the mid-2020s. The first obvious customer for this service is Tesla’s cars. Today, Tesla has to pay for the LTE connection in each of their vehicles. After the Starlink is up and running, Tesla can use this network for all of their connected car activities. The service wouldn’t be free to Tesla, but it would be one of Musk’s companies paying another one of Musk’s companies.

Mapping is an important part of autonomous car tech. There are no publicly announced plans, but it’s possible that SpaceX satellites could help provide some of this information to Tesla.

* Moats: Access to SpaceX’s advanced materials scientists. Access to cross promotions. Possible highly affordable connected car internet service.

Recruiting Talent

If you were fresh out of school and wanted a job at a car company, would you rather work at one of the legacy car companies or at Tesla? Tesla is an innovative Silicon Valley company that makes sexy fast cars. If you want to work in battery tech, AI, automation, or many other fields, Tesla is the place that is treading new ground.

In March of 2018, Tesla was on LinkedIn’s list of top companies that American professionals want to work for, placing 5th and outranking Apple and Disney. Tesla is listed along with tech companies, not automakers. They are (and they are perceived as) a tech company that makes cars, rather than just a car company.

Over 500,000 people applied for jobs at Tesla in 2017. With this many candidates, Tesla is able to hire the cream of the crop. To do things that have never been done before, you have to hire highly skilled people.

* Moat: Desirable employer.

Vertical Integration

Most car companies today are mostly assembly and branding companies. Other than the internal combustion engine, they do very little of the engineering. Instead, they rely on their suppliers. In many cases, even the car designs are outsourced. This means legacy automakers are buying parts and buying their innovations. Cars generally have 15% or less margin at wholesale. Whereas the component suppliers may have 50% margins.

Tesla certainly has suppliers too, but they manufacture far more of their car’s components than other automakers. Tesla designs and manufactures their own electric motors and they have vastly improved upon the AC Propulsion motor they started with a decade ago. By controlling the manufacturing of their parts — especially batteries — from start to finish, Tesla could create a significant cost advantage.



* Moats: Vehicle design, vehicle engineering, product margin.

Software[/b]

Tesla’s cars are often described as “computers on wheels.” They are controlled by software. This allows new features to be added, upgrades, improved user interfaces, voice control, and more. The big screen is central to the car and not a de minimis afterthought. Tesla has a large in-house software team to deliver these features that are vital to the driving and ownership experience of Tesla.



Other automakers contract their software to outside firms for various tasks. This means that the look and feel of the navigation, for example, might be very different than the entertainment system.

* Moats: Talented in-house software engineering (see recruiting talent above)

Fleet Learning and AI

All of Tesla’s cars have their full AutoPilot sensor suite of cameras, radar, and sonar. As we discussed above, Tesla’s vehicles are connected cars. This means they can receive new software over-the-air. This allows Tesla can test their AutoPilot updates in shadow mode on hundreds of thousands of cars driving millions of miles before rolling it out to customers. Even cars that don’t have enhanced AutoPilot or self-driving features enabled are helping to contribute to Tesla’s validation efforts. Tesla has more than 300,000 cars on the road around the world gathering valuable feedback for their AI.

Compare this to the autonomous drive efforts of any other company. Other companies have a couple dozen cars with engineers or safety drivers behind the wheel. It takes a long time to get more than a million miles of validation. Then the software gets an update and the validation effort has to start all over.

* Moats: Massive fleet of fully instrumented cars

Supercharger Network

One of the drawbacks to EV driving is the difficulty of locating charging while on road trips. Tesla has solved this problem. In most regions where they sell the cars, there is a vast Supercharger network. You simply type the address in for your destination and the car will plot a route for you, showing you each stop that you’ll need to make along the way. You can drive from Seattle to Miami or LA to Portland, Maine and there are Superchargers all along the route to recharge your car.

Today, there is no other plug-in car that can make such a claim. CHAdeMO and CCS charging stations are clumped in urban areas on the coasts with a large charging wasteland betwixt and between.

Additionally, Tesla’s Supercharger network is reliable and easy to use. With other networks, you have to join and carry a card, fob, or app that you have to tap, scan, or activate. With Tesla’s network, you just plug in. The protocol for determining who you are and what, if any, fees happens automatically when the car is connected.

Reliability and availability are vital to a charging network. If you show up at a location near empty, expecting to charge, only to find the charging station broken down or occupied, this can ruin your trip. Tesla Supercharger stations generally have six or more charging stations. Most more than 10 and some have as many as 50 charging spots. So if a station or two are down for repair, there are still plenty of spots where you can charge. If you’re curious about a Tesla Supercharger location, you can click on it in the car and it will show you how many stations are there, how many are operational, and how many are occupied. Other networks generally only have one charging station per location. If it is not working, you’re out of luck.

Other automakers are generally not investing in charging networks. They see themselves as automakers, not fuel suppliers. Since their business is not dependent on selling EVs, they are content to let this remain as someone else’s problem.

Tesla, on the other hand, is growing a vast network of Superchargers around the globe where they will be able to sell energy at two to three times the local residential rate. Tesla has said that charging will not be a profit center for the company, but the revenue will certainly help to pay for expansions of the Supercharger network. Tesla has more than 1200 locations where you can fast charge with more location coming online every week.

* Moats: Building thousands of Supercharging locations is time and capital intensive. Network ease of use & reliability. Revenue stream from ‘fueling’ vehicles.

Workplace and Destination Charging

While we’re on the topic of charging, it is important to mention destination charging. There are hotels, bed & breakfasts, wineries, restaurants, ski lodges, malls, and other places that have Level 2 charging for Tesla vehicles. These are ofter a free amenity at these locations for patrons. These locations want well-heeled Tesla drivers visiting their establishment.

Tesla recently expanded this program and is now offering Level 2 chargers free to employers too.

Other car companies are far behind in providing charging support at this level.

* Moats: Vast network of workplace and destination charging stations

Gigafactory

Tesla has a giant battery factory in Nevada. By footprint, it is one of the largest buildings in the world. When it is in full operation, this one factory will make more batteries annually than all of the world’s combined factories made in 2013. Tesla has plans for similar factories in Asia and Europe as well.

These factories require a massive outlay of capital. They require a commitment to battery-powered cars as the next generation of personal transportation. Other automakers are only tepidly dabbling in EVs. They are making low volumes “compliance” cars and some are still working on fuel-cells or hail-marry internal combustion solutions.

* Moats: Biggest battery factory in the world, with more coming. Significant capital expenditure.

Investor Expectations 

Why is it that Tesla can spend billions of dollars on battery factories and global Supercharger networks? Whereas, if other automaker CEOs hemorrhaged cash at this rate, they’d be fired faster than a Ludicrous Tesla. The simple answer is the expectation of the board of directors and the shareholders. People that invested in legacy automakers bought into a stable business that pays regular dividends.

Tesla investors, on the other hand, bought into a growth company. They are not looking for Tesla to be profitable today, or anytime soon. Tesla’s investors are looking for top-line grow rather than bottom-line profits. Today, Tesla has about 20% of the luxury car market. If they can expand into affordable cars, semis, small crossovers, performance cars, pickup trucks, and who know what else with a similar market share, Tesla could be one of the most valuable companies in the world. And as we discussed above, due to direct sales and vertical integration, Tesla has the ability to sell cars with better profit margin than any other automaker. Or so goes the hope of people (like me) that are invested in Tesla.

Amazon is a good comparison. For years, Amazon sunk their revenue back into their growth rather than paying out dividends to investors. In May 1997, Amazon went public at $18 per share. As I write this, the stock is nearly $1500 per share. And that’s after 3 stock splits. Amazon investors were looking for growth, not profits and dividends. Today, Tesla investors have the same growth mentality. As market darlings, Tesla can raise capital by issuing shares, bonds, or taking loans. This allows them to pursue big efforts as long as they are delivering growth.

* Moats: Investor expectation of growth rather than quarterly profits

Rockstar CEO

Love him or hate him, Musk is by far the most widely known CEO of a car company since Henry Ford. This fame and fandom allows Musk to put out a message and have it echoed through his social media presence. When he tweets, it is news. The Boring Company has sold hats, flamethrowers, fire extinguishers, and now lifesize LEGO-like interlocking bricks made from tunneling rock. Fans have and will buy these because they are fans and want to signal their devotion to the Musk tribe.

This media attention can be a double-edged sword. When Tesla misses a deadline or a Tesla vehicle is in a crash, it gets as much media attention as Tesla’s successes. But for a company, the only thing worse than too much media attention… is *no* media attention.

Musk’s past accomplishments, circle of friends, and current status allows him to raise money. This is important until Tesla’s vehicle production is at a volume that would allow them to be consistently profitable (about 1 year from now by our estimation).

* Moats: Media attention, Ability to raise capital

Dreadnaught

In addition to trying to reinvent personal transportation, auto sales methods, and home energy, Tesla is also trying to reinvent the way that cars are manufactured. This is “the machine that builds the machine.”

In 2016, Tesla acquired German automation company, Grohmann Engineering. This was one step to reinvent the auto factory. Musk has said that their factory will look so radically different from traditional factories that it would seem like an alien dreadnaught. Staying true to Tesla’s Silicon Valley root Musk said, “It might look like a giant chip pick-and-place machine.”

Musk has said that if you look at the rate that cars come off the end of the line in today’s auto factories, that it’s slower than “grandma with a walker.” Musk would like his factory to move at least at a jogging pace. He wants the robots to be moving so fast that the air drag is a relevant factor.

Musk has even talked about selling their factory as a product.

Today, however, companies like GM, Ford, and Toyota are not impressed with the speed or quality of Tesla’s manufacturing and have no intention of trading in their factories for a Tesla Dreadnaught.

The results of the current version 0.5 Dreadnaught are not Earth-shattering, but that does not mean that it won’t eventually be revolutionary. For example, when Nicolaus Copernicus first introduced his heliocentric system, it was not well received. In fact, initially, it did a worse job at predicting the movements of the planets than the existing Earth-centric Ptolemaic system. That was because the Ptolemaic system had been refined for 1400 years and it had been finely tuned to account for all of the perturbations in the night sky.

Today Toyota’s Kaizen method is vastly superior to Tesla’s Dreadnaught. The modern car manufacturing process is a big improvement over the assembly line that Ford used, but it is an evolution of that same 100-year-old method. The question is, once refined, will Dreadnaught be the system that replaces it.

The modern assembly line was designed around people operating it. Robots have replaced many of the people on the line, but the robots are retrofitted into a system made for people. Dreadnaught, on the other hand, is a system that is designed around robots. This is not all that different from the clean slate design of Tesla’s cars. They are not gas cars retrofitted with batteries and motors. They were designed from the beginning to be electric.

Dreadnaught could be the system that allows manufacturing to make a leap forward, or it could be an expensive failed experiment. Time will tell.

* Moats: None yet, but maybe Dreadnaught 3.0 will make the manufacturing world take notice.

Summary

Tesla has looked at all the objections that someone may have to not buying an electric car and they have done their best to resolve them. They have made EVs that are cool, fast, & fun. They have made road trips possible. They have made home and destination charging convenient. They are working on battery and vehicle manufacturing to increase the volume and bring down the cost. They have allowed you to “drive on sunshine.” Tesla has created a compelling narrative that is far beyond just the vehicles they sell.

In the process of resolving all of these objections, Tesla has created a long list of moats. Tesla’s moats are not unbreachable, but some of them are so far outside of the culture of the traditional automakers or beyond the template that the investors impose upon them. Even the automakers that are making EVs are trying to compete with the car’s features or price. They don’t even know how to compete with the Tesla narrative. It seems Tesla will stand apart from the crowd for many years, even after the legacy automakers become fully committed to electric cars.

Disclosure: I’m long Tesla

TMC Member Patrick0101 is a solar and electric vehicle advocate who blogs at Cars With Cords

 
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Wish they would raise gas prices! Although I don't drive for a living. All the forces against Tesla might actually be part of the reason they've dropped in the past few years. I wouldn't put it past Congress.
I agree. I think it's actually "cool" to hate Tesla and Elon Musk. I am also so tired of these so-called investment experts who are continually saying that Tesla is going under or going bankrupt. It's almost like they take delight in it, which to me, is very weird. The haters need to get a life, for real.
 

SOULPEDL

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Jul 25, 2016
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Some are paid to drive down the stock, then they're the first to buy in because they know better. Others are feeling the short squeeze and it hurts a lot because there's no limit to their losses when it does hit 600. Some probably actually do hate Tesla because it's such a disruptive force to so many enterprises. Andy Grove would call this a "Strategic Inflection Point." It's cool to be alive to see it happen. Was hoping for time travel, or anti-gravity, we'll see.

I personally wouldn't call this hate "cool", more like sounds of a loosing battle and their biggest fears in one gulp. Not much different than the Plantain owners wanting to keep their slaves, and some are still pissed apparently. OK maybe too harsh, how about Steve Martin in "The Jerk" trying to hang on to his chair, his ashtray, Sh**head the dog... I feel sad for anyone that looses what they had, including their way of life, career, empires. But not so much when it's bad for the environment or rigged - that's just denial or selfish.

I'm pondering if I should treat them like Children - ignore the behavior or push back? What if they like the attention, fishing for things to mis-quote us on or spin? I'll tell you, it does help to understand the technology. I still think I'm a better driver than FSD, but know that will change. I'll gladly assist as needed until it's fully untethered. In fact, I've been wondering if Tesla want's drivers to get into radical situations for learning. I'm an expert in the snow and learned it using Rear Wheel Drive. I'm one of the few who doesn't like torque interfering with steering. I do like to accelerate, but a Dual in my hands and I'd probably hurt myself.

...and he's way off topic again. Sorry, just jazzed lately. Having visions of working at Tesla again... for free. Gotta finish SoulPedal(R) first.
 
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Good article. Very good. One other Moat: the #1 and #2 highest range production EVs in the world (I think that's right). This moat will disappear over time as other companies catch up (but that will reduce the other companies' comparative price advantage). Two of biggest psychological obstacles to giving up an ICE for an EV is range anxiety and time-to-recharge. No one else comes close to Tesla's elimination of range anxiety through their battery engineering and size.
 
Most of those items do not constitute a moat. I invest for a living based off of Morningstar’s most framework. Over the air updates & EV mindshare/brand are the only moaty factors.

1)Tesla is losing talent not gaining it
2) Panasonic produces batteries for everyone and cylindrical batteries are now not the preferred design
3) SpaceX???
4) the lack of a dealer network just means Tesla bares the costbof sales adding to costs and risk during a downturn cause they can’t lay off the risk to dealers. Why their SG&A is so much higher than other auto OEMs.
5) Supercharging network is being duplicated by a conglomerate of auto OEMs and even Utilities are installing their own networks
6) Tesla Autonomous driving is terrible and lags Waymo & Audi in capability
7) Their manufacturing process is flawed which is why the service centers are overwhelmed
8) First mover advantage is being eroded as other OEMs take share and Tesla has accrued over $20B in liabilities with zero Free cash flow

Real moats are companies like Google, Comcast, Amazon, Visa
 
I actually find these types of posts entertaining... if not a little sad for the blind loyalty.
"Elon is a visionary!!" "Tesla Motors is awesome!!" Yada yada yada.

As for the critics, it could just as easily be said that people here are pumping it up on these forums to drive their stock price up, just as it's said that critics complain just to drive the stock price down.

The real Nicola Tesla was a visionary. I don't see Musk that way. Musk just puts things together.
"A battery powered car? That's not practical!"
"Yeah? Lets do it and see what we can sell"
"Privatize rocket launches? That's crazy!"
"Yeah? Lets do it and see how it goes"

There is no comparison to the long list of revolutionary technology the real Tesla invented. And it might be worth noting that he died poor, and his companies failed. But that was due to his mismanagement of them. Don't think it'll happen with Musk...?

But has anyone been reading the posts about the defective deliveries and poor service? That's a real problem. Not a nebulous "market capitalization" thing. Chevy, Chrysler, and Ford all had poor quality through the 80's and 90's... Look what happened to them. What I see posted on these blogs are worse than those big three ever had.

If Tesla is gonna make it as a car company, they better that acting like one. Eventually they will run out of these blind sheep who buy anything based on the herd mentality. These quality and services issues will catch up, and Tesla will crater like the big three did.

All I read about now is Tesla shipping a lot of defective stuff, just to get those "delivery" numbers up. No one is subtracting the number of broken vehicles from the delivery number to see what they are really doing. Once it's out of the plant, it's a different VP's problem to address on his quarterly reports, namely the VP of service. For every one post about the issue, there may be only two that reply with "Mine was great!". It's not scientific, but it comes across as a 33% failure

Real car companies, like Toyota, Honda, BMW... don't deliver crap. Only car companies destined to crater. Musk doesn't seem to care, or he's built this into the business model. Either way, it's pretty disgusting to watch.

Yeah, I own a roadster. And later on I bought another car from Lexus. Because I'm not happy with the quality of my Roadster, and I'm scared of what I'd get if I bought an S, X or 3. I also know two people who cancelled their orders... for similar reasons.

-Scotty
 
Elon and the Tesla team has lead the world in developing automated manufacturing which I also believe is the most important product that Tesla has. Within a few years Tesla's will be coming off the manufacturing line faster than even Elon predicted. This efficiency of automation will allow all us humans to focus on other activities such as building rockets for Mars and starships to visit our friends in other galaxies and also developing new forms of art and other ways of expressing ourselves. However, we will need to find ways to smoothly transition the work force to the new activities that benefit us all and help us all come together as one world that is in peace and harmony and has common goals of reaching out to explore the universe and meet our new friends who are anxiously looking forward to meeting us all.

"I'll have what HE'S having"
 
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SOULPEDL

Active Member
Supporting Member
Jul 25, 2016
4,568
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Arizona
Most of those items do not constitute a moat. I invest for a living based off of Morningstar’s most framework. Over the air updates & EV mindshare/brand are the only moaty factors.

1)Tesla is losing talent not gaining it
2) Panasonic produces batteries for everyone and cylindrical batteries are now not the preferred design
3) SpaceX???
4) the lack of a dealer network just means Tesla bares the costbof sales adding to costs and risk during a downturn cause they can’t lay off the risk to dealers. Why their SG&A is so much higher than other auto OEMs.
5) Supercharging network is being duplicated by a conglomerate of auto OEMs and even Utilities are installing their own networks
6) Tesla Autonomous driving is terrible and lags Waymo & Audi in capability
7) Their manufacturing process is flawed which is why the service centers are overwhelmed
8) First mover advantage is being eroded as other OEMs take share and Tesla has accrued over $20B in liabilities with zero Free cash flow

Real moats are companies like Google, Comcast, Amazon, Visa
As a consumer, you like dealerships? I don't know anyone like you. I avoid the commissioned salespeople, and the ONLY time I've taken in my cars for repair was when it was free under warranty, maybe buy a rare part is all. You can't possibly be speaking as a consumer. Oh, the name says it all. Squeezed?
 
As a consumer, you like dealerships? I don't know anyone like you. I avoid the commissioned salespeople, and the ONLY time I've taken in my cars for repair was when it was free under warranty, maybe buy a rare part is all. You can't possibly be speaking as a consumer. Oh, the name says it all. Squeezed?

I never said I liked dealerships just pointing out a fact that Tesla bares the cost of a large retail network themselves. The economics work out to about the same as other OEMs that just sell at wholesale to dealers.
 
I never said I liked dealerships just pointing out a fact that Tesla bares the cost of a large retail network themselves. The economics work out to about the same as other OEMs that just sell at wholesale to dealers.
The economics might work out the same (or better), but the customer experience is so much better. And the people that work there are Tesla employees, not dealership employees. This means they are aligned to Tesla's goals. How many stories have we seen about dealerships resisting manufacturer's efforts; especially in the EV space with things like installing EV charging and carrying EV inventory? Tesla will never have to deal with that. It's an advantage in our modern internet age, dealerships were designed in/for another age.
 

SOULPEDL

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I never said I liked dealerships just pointing out a fact that Tesla bares the cost of a large retail network themselves. The economics work out to about the same as other OEMs that just sell at wholesale to dealers.
Intuitively, that can't be correct. Cut out a whole layer of commissions and 3rd party dealerships and the cost to us is the same? The analysis is suspect. State and Dealership pushback is strong because someone's going to loose money... like Cal Worthington and his dog Spot for one.
 
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I'll give Tesla points because their over all design/look it is just better then the Bolt. Nissan or the Fugly I3. This may not be so in a year or so, once BMW, VW, Audi and Mercedes hit the market. The one big advantage that Tesla will hold on to for three maybe four more years is supercharging. If the European car manufactures get together and build a supercharging network or if the standard range exceeds 500 miles per charge then even supercharging will lose it's importance.

My S60 now has 75,000 miles and at 90% will charge to 174 miles. I can live with that. MY QUESTION IS WILL TESLA SELL US
THE 100KW OR BIGGER BATTERY IN THE FUTURE and at what price.
 
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SOULPEDL

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I remember when Intel saw AMD outside of their moat. Craig Barrett gave the Quarterly BUM and showed us the castle. The threat was AMD at our heels with a lower-cost, older technology, and the moat was IP/Security, Brand etc...

Whatever the moat (or not as some argued), Tesla has that same lead in a very similar way. And last I checked, Intel's doing pretty well, especially with earnings. I started when they didn't have earnings either; the Factories were just warming up. Boy did we party at Zorba's in Santa Clara on their first millions.

Pays to be ahead, therefore you stay ahead. Strong case here for Tesla IP and the huge lead in just about every facet of the business. I was the one at Intel who challenged status quo and saw it as a duty of mine. P*ssed off a lot of left brain people who just love their outdated castles, but I had my own new castle going on and it was encouraged - even printed as a Value on the back of everyone's badge.
 
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SOULPEDL

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The one big advantage that Tesla will hold on to for three maybe four more years is supercharging. If the European car manufactures get together and build a supercharging network or if the standard range exceeds 500 miles per charge then even supercharging will lose it's importance.
Catching up with the Superchargers is good. It's why Elon offered to share the charging Patents (as I understood it) but nobody went for it. ICE is suffering which is the change we wanted, right? And the counter would be... then it's not a moat for long. I say bring it on and I'll get more charging options for a Win/win. What have they been waiting for I wonder. Only 100 KW today in Germany was it? And 25/50K everywhere else. They actually created that temporary moat by inaction for decades.
 
Such a well done article - one has to look hard for places to comment. But .... he says "Tesla, on the other hand, is growing a vast network of Superchargers around the globe where they will be able to sell energy at two to three times the local residential rate. Tesla has said that charging will not be a profit center for the company, but the revenue will certainly help to pay for expansions of the Supercharger network." I don't get where it is a good thing to make something that sells power at three times higher than the local. Something here does not click.

Well, it seems to me that if you can produce power LESS than the residential rate, you have a product you can sell for a profit. You can build electric generating systems - like for Puerto Rico, Kauai, South Australia - and sell them at a profit (also making a whole bunch of good-will). Add that business line to the Moat!!

And, because of this Solar/Battery expertise, I am expecting to see the cost to Tesla (from buying power from the grid) to operate its free superchargers - will be whittled to be less costly. And while making their supercharger less costly, make it even bigger and sell the excess power to that neighborhood. Add that business line to the Moat!!
 
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Good article. Very good. One other Moat: the #1 and #2 highest range production EVs in the world (I think that's right). This moat will disappear over time as other companies catch up (but that will reduce the other companies' comparative price advantage). Two of biggest psychological obstacles to giving up an ICE for an EV is range anxiety and time-to-recharge. No one else comes close to Tesla's elimination of range anxiety through their battery engineering and size.
How often does the average person drive OVER 200 miles in a day and EVER use a supercharger? How much more often are you in a hurry and "OH NO" I have to stop to get gas? WHICH IS WORSE and more frequent of a problem. The average Tesla driver almost NEVER has to think of recharging.
 
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Most of those items do not constitute a moat. I invest for a living based off of Morningstar’s most framework. Over the air updates & EV mindshare/brand are the only moaty factors.

1)Tesla is losing talent not gaining it
2) Panasonic produces batteries for everyone and cylindrical batteries are now not the preferred design
3) SpaceX???
4) the lack of a dealer network just means Tesla bares the costbof sales adding to costs and risk during a downturn cause they can’t lay off the risk to dealers. Why their SG&A is so much higher than other auto OEMs.
5) Supercharging network is being duplicated by a conglomerate of auto OEMs and even Utilities are installing their own networks
6) Tesla Autonomous driving is terrible and lags Waymo & Audi in capability
7) Their manufacturing process is flawed which is why the service centers are overwhelmed
8) First mover advantage is being eroded as other OEMs take share and Tesla has accrued over $20B in liabilities with zero Free cash flow
Most of those items do not constitute a moat. I invest for a living based off of Morningstar’s most framework. Over the air updates & EV mindshare/brand are the only moaty factors.

1)Tesla is losing talent not gaining it
2) Panasonic produces batteries for everyone and cylindrical batteries are now not the preferred design
3) SpaceX???
4) the lack of a dealer network just means Tesla bares the costbof sales adding to costs and risk during a downturn cause they can’t lay off the risk to dealers. Why their SG&A is so much higher than other auto OEMs.
5) Supercharging network is being duplicated by a conglomerate of auto OEMs and even Utilities are installing their own networks
6) Tesla Autonomous driving is terrible and lags Waymo & Audi in capability
7) Their manufacturing process is flawed which is why the service centers are overwhelmed
8) First mover advantage is being eroded as other OEMs take share and Tesla has accrued over $20B in liabilities with zero Free cash flow

Real moats are companies like Google, Comcast, Amazon, Visa
The super charging network is being duplicated IN THE FUTURE. All the Tesla killers are IN THE FUTURE. If you want to talk about Tesla killers in 2020 how about beating the NEW Tesla Roadster that goes 600 MILES on a charge and will reach speeds of 250 miles per hour.
 
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The super charging network is being duplicated IN THE FUTURE. All the Tesla killers are IN THE FUTURE. If you want to talk about Tesla killers in 2020 how about beating the NEW Tesla Roadster that goes 600 MILES on a charge and will reach speeds of 250 miles per hour.
The super charging network is being duplicated IN THE FUTURE. All the Tesla killers are IN THE FUTURE. If you want to talk about Tesla killers in 2020 how about beating the NEW Tesla Roadster that goes 600 MILES on a charge and will reach speeds of 250 miles per hour.
ALL other autonomous driving systems use LIDAR. Lidar is UGLY and EXPENSIVE. Would you pay $150,000 for a Tesla Model S that would have to have a revolving light on your roof? If you say a lie enough times it becomes the truth.
I live in the Bay Area and believe me EVERYBODY wants to work for Tesla. There are 37,000 people that work for Tesla. Every time somebody leaves the SHORTS have a field day.
 
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Warren Buffett likes moats. If companies don't have them he goes to the government and gets politicians to change the regulations to get his monopoly [isn't that the best moat?]. So when Warren Buffett buys Nevada Power he goes to state legislature and kills residential solar. Even Solar City had to close down in Nevada. The Casinos had/have the money to fight back. So they paid tens of millions to disconnect from Nevada Power and use solar to make their own electricity. Of course it had to be fought out in court. Lawyers. I see Warren Buffett as an evil speculator. Uses Insurance company regulations to avoid taxes.

Peter Thiel just another speculator only likes companies with monopoly status [facebook, Google, etc.]. When Elon on his honeymoon Pay Pal board got rid of Elon and sold out to cash in to eBay. Good for us as the money Elon got he was able to invest in Tesla and start SpaceX.

So Peter, I think, has about $3 billion working hard as a speculator. Musk actually builds things and has near $19 billion. Muak gets attacked while Buffet and Theil are praised. I don't get it and I really don't like it.
I think speculators and banksters are destroying our society and not improving it. Of course no one can better destroy than our Prison Industrial Complex, Military Industrial Complex, Security State nonsense. Endless wars, don't educate/invest in our youth, unaffordable healthcare, use debt to destroy all [Detroit the model and most every US city and even small towns will/are following - debt killing them all]

</rant>
 

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