RationalOptimist
Member
This is a beautiful summary of Tesla's advantage. It has created self-reinforcing SYSTEMS. Terrifying to compete against at this point. I suspect it's biggest competitor in 20 years time will not be any of the auto incumbents, but rather another company that is designed from the ground up for the 21st century....That's right, only with product innovation will Tesla continue to lead. But if you have been listening to Elon he has let us know the products are not the cars, they are the factories. Most people still don't get this. The factories are becoming ever more efficient and that means no one can match the prices Tesla is able to offer. This will guarantee that they can sell every car they can make because they will have more pricing power as far as the eye can see. A car is second only a house as the largest purchase most people make and people want value.
The factories are being optimized by people who love to figure out new, better ways to do things and work under a management that lets them try new things. Sure, GM could become desperate and tell their engineers to try to develop new ways of doing things that will save them money but they don't have a culture of real innovation. It's a place where bureaucracy has ruled for decades. Turning that around takes a herculean effort and many years. It requires new blood and if you are one of the most innovative graduates in your engineering school, who do you want to work for, the mythical Elon Musk or someone like Mary Barra who speaks highly of the corrupt UAW and pays lower wages and no stock options and might go out of business any day? So, the question is, how does an organization like that not only transform themself into something as lean and efficient as Teslaa but also, how does a troubled organization attract top management talent to make it happen? Because it's obvious Mary Barra doesn't have what it takes to make the big changes necessary. I don't see anyone that does.
The theory that other, hungrier, companies could catch up to Tesla in any reasonable timeframe because Tesla was basking in their successes doesn't hold water. Tesla is attracting the most talented people who have a dream of helping to change the world for the better and none of them have been fooled that the job is not long and hard or that it will be done when EV's reach 50% of sales. The job at hand and the threat of climate catastrophe will continue to drive them to make their products faster and for less money so they can spread to increasingly poorer countries. These are not the kind of people that bask in early success and say "Mission Accomplished". The culture is to invent and innovate better ways of doing things and the processes they develop will live on. It's a virtuous cycle. No one can catch up. Tesla has smartly positioned themselves at the leading edge of the age of technology and they know they are in control of their destiny, not VW, not Toyota, not Ford, not GM, they are irrelevant. Tesla's business model doesn't rely on cheap labor, it relies on innovation.
And to be clear, the big advantage is in making the products for less money. That is where Tesla focuses most of their innovation. Anyone can design a very nice car but how much does it cost them to build a million of them? Can they build a million of them at a price they can sell them for? If there's no profit in it, they don't want to do it.
Tesla doesn't have any real competition now and they don't need any in the future to keep them innovating. Their entire corporate culture demands that and corporate culture is a very powerful thing amongst those who are embedded in that world. Ford had great innovation in the 1910's and 1920's and then it slowly died out. They eventually had real competition but they didn't have a mission beyond making money and it took decades for the competition to become real. Tesla's secret weapon is that they have a mission more important than money. If you want to argue that their lead might dissipate in 20 years, in 2041, fine, I can't project that far ahead anyway and it's not really relevant now from an investment standpoint. But I think it's extremely short-sighted to think they need competition in the 2020's or even in the 2030's in order to effectively carry out their mission. Sure, bring on the competition, it's not even relevant and I don't think it will be relevant for a very long time. Because no one has explained how the laggards are going to suddenly become high efficiency manufacturing power-houses without the best talent, without a clear mission beyond saving the corporation from bankruptcy and beyond getting a promotion. The best they can do is try to emulate what Tesla was already working on 3-6 years previously. The only way they could become relevant competition is to match Tesla's corporate efficiency and their manufacturing efficiency. And no one has even presented a viable plan for achieving that. Tesla's competition will slowly die out with ICE vehicles.
Remember, it's all about the batteries and the 'competition' has battery plans that are woefully inadequate. Tesla's partners in carrying out the mission are other battery manufacturers and mining interests that supply raw materials for batteries and motors, not other auto manufacturers who want to continue producing ICE cars to keep shareholders happy and justify their corporate overhead. Success might eventually breed laziness but we are only into the second inning and there is still 6 1/2 innings to go. Team Tesla wants to humiliate all the other teams. And I'm only talking vehicles here. Considering that we are only in the first inning of the transition from the industrial age to the age of technology, my, oh, my!
Many thanks, StealthP3D, for taking the time to give all of us a wonderful Wednesday morning gift.
