TL;DR - The Tesla product and manufacturing innovation/efficiency lead continues to grow. My thoughts on why Tesla continues to extend its lead with every new 'competition' product launch.
All other things are a short term distraction for investors.
I've written this for the TMC investor thread community; not for public consumption as there is too much context for n00bs. Yeah, I'm a bull, but I feel I'm a very informed, tech engineer, turned product manager, first principles bull.
The best, most reliable, my 'go-to' sources for information on Tesla continue to be (I'm not associated with them, they are my heroes however):
- Dave Lee @ Dave Lee on Investing - amazing insights abound
- Rob @ Tesla Daily - all things financial
- Jordan @ The Limiting Factor - all things battery
- Sandy @ Munro Associates - *nearly* all things vehicle production (software, ECU, custom chips need some work, luv ya Sandy!)
- Zac and Jesse @ Now you Know - super informative, super funny
Much longer version below...
While most or maybe even all of us know that some EV competition is 'coming' (Rivian, Lucid, NIO...etc), we also know, most at at an arms length, that it is really hard to bring to mass production, taking years to ramp, needing the best engineers, visionary leadership and the capital to keep the gears turning. Any one of these things not fully onboard and or operating efficiently will most likely spell doom at worst or at best cause such a lag as to not be competitive when the product is announced to launched.
We also know, from even the most recent product launches of competition that there are marketing, pent up demand or 'fanboy' purchasing for a quarter or even longer if their are government incentives, then come the dealer incentives and once those run out, the product seemingly goes into life support.
You don't need to look any farther than Tesla's software lead, but when you do you see so much more. Many more insurmountable moats that continue to grow. Underneath software is firmware, then custom ECU's, then custom ASIC's or state of the art chips like the new graphics in the S (not industry standard). These power the entire car and enable to the engineering playground to quickly iterate and enable the most advanced features of any product (not exclusive to autos). Even with my time at Tesla and working on BIOS at Dell and XBOX, I'm absolutely floored that Cyberpunk 2077 at 60fps is playable and appears smooth on the S. It is such an amazing achievement and speaks volumes to their engineering prowess and vision. This is also the tip of the tech iceberg as Sandy continues to discover in his teardowns that Tesla has such a huge lead on HVAC innovations (Octovalve), IDRA gigpress chassis, structural batteries, BMS, motors, inverters, gearboxes...etc (the list is so long). For instance, how many OEM's make their own body controls ECU's? or even know how to swap out a bootloader in the field? (I'd guess none as none have ever demonstrated it or even talked about implementing features which would demonstrate it).
I've been an investor for over 10 years now, been through several valleys, seen some ATH mountaintops and never once thought that competition is at Tesla's doorstep. When the S launched in 2012 I thought OEM's would, out of sheer fear, start reverse engineering and then start production of their own EV optimized chassis and all the other necessary engineering to 'catch up'. This effectively didn't happen and was evident when Porsche released the Taycan. A great effort, but sorely lacking in so many areas that it is a testimonial to how a formerly leading OEM has been put to task and failed to deliver product/marketplace competition. Their product is beautiful, track worthy and that's where it ends as it is also less efficient, much more expensive and has serious issues at the software and firmware side (this is at a glance; so their might be more. I'll wait for the Sandy teardown if one such should happen).
My bias shows as I believe that all other competitors either in production or announced with specifications available are simply a feeble attempt at marketing hype. This includes the Lightning which I wish and hope will be better when launched, but I just don't see how a car with a huge mechanical button on it's beautiful, large LCD screen will have good, industry leading tech underneath it. Huge sigh. Rivian is so darn close, I hope they can find a niche, but that is all they will get is a tiny fraction and it looks like a great product, but lacks many specifications that are key. I'm very cautious to say it will compete.
Let's never forget that traditional OEM's have huge 'boat anchors' holding them back from even keeping up with Tesla's pace of innovation
- Tesla has no appreciable/material marketing, in any country, while selling every car it makes (low # of days of inventory).
- Tesla will effectively double it's manufacturing footprint next year
- Tesla innovates at every level of form, fit and function as well as the creation and production of these innovations
- Tesla attracts the best talent
- Tesla has no ties to dealerships
- Tesla has no ties to gas
- Tesla soon, maybe currently, will take to production, it's own batteries from scratch (4680 Kato outputs)
- Tesla has long term contracts for raw battery materials
To conclude, there have been 2 major events in the timeline of Tesla that have gone so underappreciated, or better to say, way over the heads of investors, that it is astounding.
- Tesla Autonomy day with custom inference and training chips
- Tesla Battery day with structural batteries and so much more that it makes my head spin
and on the horizon will be Tesla AI day. Which I'd bet will also be very hard to understand for the investor community. How many know about GPT3? How many know about BERT? Inception v3? We have yet to see any fruits of the Dojo labor and hopefully are on the cusp of experiencing FSD beta with 3D labeled training data.
It speaks volumes that not only does Tesla make the most performance minded, fastest accelerating cars on the market, but they are also the safest ever made, most tech advanced, consistently getting industry revolutionizing software updates OTA and are the cheapest to maintain/operate making them a seemingly brain-dead value decision when considering 5 year TCO. This has never happened in modern times or ever. Any why would it? No car company has ever had a vision like Tesla.
Would you rather have a Model 3 or Honda Civic or name any other car? Oh and the Civic (other car) is more money over 5 years (TCO). Hmm, lets see. Objectively, Tesla is materially better in all the ways that matter to consumers and they can only find out if they 'search it up' on the intertubes or ask around. This will reign true for years to come. Thanks for reading!
R - Legacy Automotive's dealership franchises keep them tied to ineffective advertising practices. Don't be like Legacy Auto.
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