Hi! Welcome Back and Stay Tune! Tesla’s greatest weakness is also one of its key advantages - Mukah Pages : Media Marketing Make Easy With 24/7 Auto-Post System. Find Out How It Was Done!

Header Ads

Tesla’s greatest weakness is also one of its key advantages

elon musk

Justin Sullivan/Getty Images

X marks the hardest spot.

Tesla is now a bigger carmaker, by market capitalization, than General Motors, Ford, and Fiat Chrysler Automobiles.

It’s closing in on some huge global players, such as Toyota and Volkswagen. And a near-$60-billion valuation has come while constantly losing money and building a small number of expensive electric cars over 13 years of existence.

CEO Elon Musk doesn’t want anyone at Tesla to get cocky, so lately he’s taken to exhorting the company to remain lean and mean, painting Tesla as a little guy that’s under constant threat from far more well-established competitors.

Nothing could be farther from the truth. It’s convenient to call every new electric-car concept that comes out from a startup or a major automaker a “Tesla Killer,” but the car business isn’t particularly interested in killing Tesla. The reason is simple: For roughly the past five years, since Tesla rolled its Model S sedan, the company has served as risk-laboratory for the auto industry.

Musk makes all the grand, daring, wildly costly moves. Then the GMs and Toyotas of the world sit back and see how it goes. GM has already transformed this process into something that puts cars on the road. Prompted by Tesla, the colossal automaker rapidly developed and marketed its own long-range, affordable EV, the Chevy Bolt. It launched last fall, about a full year ahead of Tesla’s similar Model 3.

What Tesla hasn’t done

Tesla Detroit sales vs market cap

Andy Kiersz/Business Insider

Tesla could easily have matched that and put the Model 3 into owners’ driveways faster. The incentive was certainly there, as the vehicle racked up an unprecedented 400,000 per-orders when it was unveiled in early 2016. Any other carmaker would have seen that number and, if it didn’t have the capacity to build vehicles rapidly to satisfy demand, would have brought in a contract manufacturer to do the work.

Magna International is the biggest contract manufacturing in the world, assembling cars for the likes of BMW. Musk could have put in a call last spring and had Model 3s … well, maybe now. 

But that would have been too easy.

Tesla’s pattern is to never, ever push the easy button. Musk is a complicated thinker who likes to do everything the hard way. Humans have been mass-producing cars from over 100 years, and in the time have gotten quite good at it. But don’t tell that to Tesla. It’s cars are pretty superb, but their births are always fraught. 

The Model S suffered early production issues. The Model X SUV was three years overdue, and when it finally did arrive in late 2015, its design was so over-the-top that initial production and quality control were a disaster. Musk pitched a sleeping bag on the factory floor in Fremont, Calif. and endured six months of what he called “production hell,” admitting that the Model X was an example of “hubris.”

He pledge to keep it simple with the Model 3, but although the vehicle sounds as if it will be less difficult to build, Musk is taking some major risks with its introduction. The largest of these is skipping the assembly prototyping stage, when Tesla would normally determine if the production process for the Model 3 yields vehicles of satisfactory quality and can be run in an efficient manner.

Tesla semi truck

Tesla

And next up … a semi-truck and the Model Y!

More mistakes

Instead, Tesla will dive in headfirst with Model 3 assembly and hope for the best, like a tech firm releasing potentially buggy software that it can fix later. Except that software is a large machine that can effortlessly exceed the legal speed limit.

This could be a disaster. But there are other “do it the hard way” elements of the way Tesla is being run to point to. At an overarching level, trying to take what’s basically a car company and transform it into a battery manufacturer (with the $6-billion Gigafactory in Nevada), an energy storage company (through Tesla Energy), and a solar provider (by merging with SolarCity) makes Tesla’s business just flat-out difficult to understand or accurately value.

Moving down the levels, the company has decided to start talking about its semi-truck and its next vehicle, the Model Y compact crossover, when it ought to be laser focused in not screwing up the Model 3 launch because it’s decided to cut corners with the assembly line.

But there were both the semi and the Model Y, touted at Tesla’s most recent shareholder meeting. To make matters worse, Musk is now talking about using the Model Y as an experiment in reinventing manufacturing with a new, highly automated factory, constructing the Model Y on a different platform from the Model 3.

This is happening with the small SUV market booming — and Tesla having no small SUV to sell. By the time Musk’s magic becomes a hopeful reality, the market may have turned south, and with it sales and revenues that Tesla could be booking.

Why ya gotta be so hard?

Tesla CEO Elon Musk

Marcio Jose Sanchez/AP

Just trust me on this one!

So why is Tesla making everything so hard?

My sense is that it’s driven by a relentless craving for the Tesla Story. In this telling, Tesla must be a plucky Silicon Valley startup tilting at the massive global auto industry. And it must be under assault by that industry, despite the fact that nobody in the traditional industry has the slightest interest in Tesla failing. They don’t fear Musk — they admire him, and for good reason. He has done the nearly impossible by creating the first new American car company in decades.

Tesla must also be largely self-reliant, an automaking pioneer in the electric West. Vertical integration vanished from the car business in the 1980s, replaced by the Toyota-developed “lean manufacturing” model. But Musk wants to bring vertical integration back. However, a retro-vertical approach, at least until Tesla can unleash a thousand robots, will just slow down the company, at a time when it urgently needs to speed up.

There’s also been a subtle yet menacing shift in thinking about Tesla’s future by market optimists. With a sky-valuation built, for the moment, on almost nothing, Tesla has to be dominant in some future transportation paradigm. Otherwise, the predicted profits won’t materialize.

Tesla needs to be a monopoly. Creating a monopoly in the car business isn’t simply hard — it could be inconceivable. Over a dozen major automakers slice up the global pie and compete fiercely against each other. This is nothing like the state of affairs in the tech industry, where competition is the enemy. 

As a result, car buyers currently enjoy a massive amount of choice, while smartphone buyers are stuck with basically two operating system choices: Apple’s iOS and Android.

So the new idea for Tesla is so hard that, frankly, it defies analysis. But it’s Musk’s mission to prepare his troops for the battle. And he’s not backing down. 

Get the latest Tesla stock price here.

NOW WATCH: Buying Tesla stock is like buying a call option on Elon Musk

Please enable Javascript to watch this video

Read more stories on Business Insider, Malaysian edition of the world’s fastest-growing business and technology news website.



✍ Sumber Pautan : ☕ Business InsiderBusiness Insider

Kredit kepada pemilik laman asal dan sekira berminat untuk meneruskan bacaan sila klik link atau copy paste ke web server : http://ift.tt/2s8iS5F

(✿◠‿◠)✌ Mukah Pages : Pautan Viral Media Sensasi Tanpa Henti. Memuat-naik beraneka jenis artikel menarik setiap detik tanpa henti dari pelbagai sumber. Selamat membaca dan jangan lupa untuk 👍 Like & 💕 Share di media sosial anda!

No comments

Comments are welcome and encouraged on this site. Comments deemed to be spam or solely promotional will be deleted. Including link to relevant content is permitted, but comments should be relevant to the post topic.

Comments including profanity and containing language that could deemed offensive will also deleted. Please respectful toward other contributors. Thank you.