As investors, it is important not to believe in magic. I read the posts on this board and I get the sense some of you think Tesla has magic powers. That if Tesla does X, that means X is right and every other decision is wrong. This is a total misunderstanding of the Tesla way. Tesla's success comes from rational decisions (and some luck), not from magic powers. Elon Musk and his company apply first principles thinking rather than copying past successful decisions. In addition, they believe in experimentation. They believe in making decisions quickly, with the understanding that those decisions may be wrong. Tesla tries lots of things, and many times they are wrong, many times they fail, but the company is built to recover and adapt quickly. Elon deliberately built a company that makes mistakes and recovers rather than trying to be right every time.
I largely agree with this but you fail to emphasize how first principle thinking guides what sorts of things to try. Back in history there were two famous successful technical people with very different styles: Edison and Tesla. Edison was famous for "trying a lot of things" while Tesla used a scientific methodology to guide what things to try. Today Tesla the company uses Musk's strategy which is more similar to Tesla's than Edison's. When you say "Tesla tries lots of things and many times they are wrong," it makes it sound like they take an Edison-like approach throwing everything (mostly randomly) against the wall and see what sticks type of approach. Tesla doesn't do that.
When I'm looking at Tesla competitors to invest in, I look for companies that mimic Tesla's first principles + experimentation mindset rather than companies that mimic Tesla's specific decisions. And I'm going to give two examples.
Example 1 is Lucid's charging network versus what Rivian is doing. Lucid is relying on ElectrifyAmerica while Rivian is copying Tesla and building out a proprietary charging network. But think a little deeper, and Lucid's strategy actually makes much more sense. The point of a fast charging network isn't to compete with other EVs, but to compete with gasoline cars. That's the reason Tesla build the superchargers, not to compete with other EVs but with gas cars. Partnering with EA lets Lucid put together a charging network competitive with gas cars much quicker than building out a proprietary network. Even though Rivian made the same decision as Tesla, Lucid's decision actually reflects closer to the Tesla way of thinking.
Here I completely disagree. If Electrify America (EA) had a track record of competency then it might have been a sensible strategy, but they don't so it wasn't. Lucid could have partnered with Tesla (as Tesla has expressed willingness to partner on charging from the start of the supercharger network). Tesla never set out to build a proprietary network - they set out to build an
effective charging network. It ended up proprietary only because all competitors actively worked to thwart Tesla at standards bodies to adopt inferior standards with hopes of sidelining Tesla. Still any competitor could have (and still can if they're serious about a real partnership) join the supercharger network.
I don't know what motivates Rivian's decision, but it could be that they think existing charging systems (including Tesla's) are technically inferior and only by building their own can they make a superior charging network that they believe is necessary/warranted. If so, that would be closer to Tesla's way than Lucid's.
The reality is probably that both Lucid's and Rivian's decisions are entirely business decisions. Lucid needs a network sooner than later but probably doesn't want to partner with a competitor and they don't have the desire or resources to make a charging network. I think that Rivian thinks it has such deep resources it can build a network to replace EA's but that is competently made and maintained and that they will use CCS so they can use EA until theirs is better and eventually other car makers will use their new network too. I don't believe they will make a proprietary network.
Tesla also makes plenty of business decisions and Musk is talented in this area too. He has a different view from most business leaders but I'm not sure you could call these first principles. They are Musk's principles but business isn't governed by the laws of physics (although it isn't exempt from them
) but instead the laws made by humans. Most accepted business wisdom is that monopolies, rent-seeking, advertising, and government favoritism are excellent strategies. That moats and locking in your customers are very beneficial. Sadly those are the accepted "first principles" of business. It's not clear that Musk's business principals are superior in the make-the-most-money sense but they are very effective when combined with the many advantages of the first-principle technical approach.
