And not just for things related to BEVs. This is a major source of the discontent in our country.
But our constitution gives their voice significant impact.
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Yes, this is the Jack “Manager of the Century” Welch style of management. Tons of success stories of corporations who manage people like this. Instead of hiring and developing the best, you simply periodically fire an arbitrary percentage in order to keep everyone in fear and maximize azz-kissing and then give the CEO record setting compensation. Boeing, GE, Chrysler, et. al. have experienced outstanding results following this strategy. And who can forget Bob “Little Jack” Nardelli’s track record at Home Depot?
Tesla shareholders should be proud that Elon is bravely following this course of maximizing shareholder value and executive compensation. The nay sayers can suck it. Tesla’s GE-like results this year is total validation of Elon’s courage to follow this strategy.
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Just spotted this in my news feed…
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But single companies do often dominate product lines that require a software operating system and that just happens to be the direction the auto industry is moving toward.
Or Tesla and BYD in BEVs will end up being like Apple and Samsung in smart phones.
The problem with subsidies and incentives is that they distort the market. They accelerate sales when they are around then depress them for awhile when they are removed. We happen to be in a period where incentives are being reduced. Fortunately for those who care about climate change, price parity between EVs and ICE/hybrids is coming soon, and then we’ll see. There is a reason why the EU and US are working so hard to keep price competitive Chinese BEVs out. They know that ICE/hybrids can’t compete without a significant price advantage.
Why not? BYD clearing out the competition through an aggressive price war that is weeding out companies that cannot make a profitable BEV. That includes most every other Chinese company and every Western company not named Tesla. Tesla will hang in and when the dust clears I suspect China’s auto market will resemble the US one in the 1960s with the Big 3 (GM, Ford, Chrysler). I think Tesla will be one of the Chinese Big 3 equivalents.
This will be another example of the Rule of Three and Four.
A stable competitive market never has more than three significant competitors, the largest of which has no more than four times the market share of the smallest. The Rule of Three and Four.
You say mediocre, yet year after year Tesla dominates all brand loyalty metrics. People who buy a Tesla like the experience enough that the next car they buy is usually another Tesla.
Rural America was late to getting electricity, high speed internet, and cellular service. This did not delay much the adoption of the light bulb, movie streaming, or smart phones. Regions with a lot of people generally have greater impact than those with few people.
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Sure. The combined sales of Model 3 plus Model Y beat the Corolla by about 100,000 units. Of course across all market segments, Toyota sold more than 5 times as many cars as Tesla and earned 3 times the profit ($44 B vs. $15 B for Tesla over the preceding four quarters).
intercst
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It’s not only the Unintended Acceleration. The Cybertruck frunk has a hinge that can sever a finger.
https://www.fastcompany.com/91073608/this-cybertruck-design-flaw-could-chop-off-your-fingers
intercst
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If it ever is, we are in trouble! The problem with this thread is the unwillingness to look at anything beyond cars. Apple is just PCs. Amazon is just books. Microsoft is just Windoze. Google is just search. Nvidia is just games.
Take the blinders off!
Tamhas answered that.
Which elicited a Jack Welch reply.
Between trusting a Fool vs. a Tesla ex-employee I must assume the ex-employee is more knowledgeable on the subject.
Those populations matter once all other markets are saturated. Time to exit the stock.
Or using the wrong tires?
o o o o o o o o o o o o o o o o o o
I look at Tesla as a software technology company, a.k.a. an Increasing Returns business. The technology is Neural Network based AI delivered via FSD, Robo-taxis, and Humanoid Robots for now.
The three unmistakable features of Neural Network based AI are size related:
- Large powerful data centers
- Unimaginably larger amounts of data
- Billions of dollars to pay for it
Andrej Karpathy attested to the first two saying that results track size. Number 3 is self evident although prices should eventually come down.
Nvidia is seen as a major AI competitor but their main line of business is chips, not delivering AI based products and services. One area where they supposedly surpass Tesla is in simulation and that is likely true. The argument that simulation can replace real world data collection is flawed for the same reason that heuristics failed to provide “real” AI. The problem is edge cases, the things that humans are not able to imagine but which happen in real life, like CyberTruck pedals getting stuck. Or some CyberTruck sharp edges.
Reminds me of my boss at NCR. During a weekly sales meeting a sales rep brought up an ‘objection.’ A cash register prospect argued that he had 20 years of experience to which Sr. Tulio Hansen suggested, “One year experience repeated 20 times?”
It’s the edge cases, stupid! 
The Captain
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A good reply, btresist - but it again just illustrates Goofy’s point. Yes, there are counterarguments to the reasons I enumerated - but none that make the reasons disappear.
For example, the auto industry doesn’t follow the Rule of Three or Four (and there are lots of markets that don’t, so I don’t know why that person thinks it’s a “Rule”). There are some software products that do, of course. But the reasons that the auto market is fragmented don’t go away if it becomes more software oriented. The global auto industry is fragmented in a way that other industries are not, in part, because autos are frequently targeted by national industrial policy, are isolated for special tariff treatment, and are so expensive and so heavy that they are more difficult to serve with global supply networks than an electronic device that costs a tenth as much and weighs 9 ounces.
Sure, it’s possible that the mere fact that autos are moving towards software will cause national industrial policies around the globe to change - but it’s not especially likely. So, as Goofy pointed out, the bull case for assuming that Tesla will dominate its industry rests on rejecting a number of very plausible alternative scenarios. Like the scenario that the EV auto market will look very much like the ICE auto market, with no dominant companies and market share divided among far more than three or four significant competitors, regardless of how good the better companies are.
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I was talking about the Chinese auto market (not the global one) and your claim that Tesla has failed in that market. In 1900 there were about a hundred private car makers in the US. By 1920 there was the Big 3. I think China will follow the same pathway, but much faster.
Here is a 2012 defense of the Rule of Three and Four based on empirical data. https://www.bcg.com/publications/2012/business-unit-strategy-the-rule-of-three-and-four-bcg-classics-revisited
“…we divided companies into two categories: those with market shares of more than 10 percent (“generalists”) and those with shares of 10 percent or less. The prevalence of industries with no more than three generalists (the “three” part of Henderson’s rule) was striking. From 1976 through 2009, industries with one, two, or three generalists ranged from 72 percent to 85 percent and averaged 78 percent. The most common industry structure throughout the period was the three-generalist configuration, which prevailed in 13 of those 34 years and was the second-most common in 20 out of 34 years.”
It is not always the case, but it seems to happen often enough to make it worth considering when assessing the future of an emerging market sector or a traditional market sector that is undergoing disruptive change.
No, the bull case (with respect to BEVs) is based on the narrative that Tesla makes a superior BEV, is technologically years ahead of its major competitors, and can produce their products at a lower cost that allows consistent profitability and pricing flexibility. As long as Tesla executes along this narrative, there is no reason to believe Tesla will not be a dominant player in the future auto market.
In short, if BEVs are the future then as long as Tesla executes it will be a dominant player in that future.
A possible example of this execution is that Tesla has spent the last couple of years negotiating with India to relax auto import restrictions/tariffs. They slowed production in Berlin to reconfigure part of the plant to make right-hand cars for export. They are now looking for showroom and service center spaces in New Delhi and Mumbai. It looks like Tesla may be about to enter what will likely be the fastest growing auto market in the next decade. https://www.reuters.com/business/autos-transportation/tesla-scouts-its-first-india-showroom-locations-sources-say-2024-04-15/
They have also reportedly partnered with TATA Electronics for automobile semiconductors, consolidating their Indian supply chain while also diversifying their sources for computer chips that are rapidly becoming the most important hardware in the car. Tesla Quietly Signed Deal With India's Tata Electronics To Source Chips: Report
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Again, this assumes: i) that there can be a “dominant player” in the auto industry; ii) being a dominant player depends on the technology or pricing of the products; and iii) companies that have the advantages on technology and pricing today will continue to have those advantages in the future. Possible, but far from certain. I think assumption i) is flat-out wrong, of course. I think ii) is wrong as well, since sometimes you can have a technologically awesome product at a lower cost for that product and still be a niche player - Tesla’s weakness is the lack of diversity in its product line, not whether any individual product is awesome or not.
And of course, iii) is always in doubt as an industry matures. Being “years ahead” in technology is very valuable if the technology of a few years from now is much more advanced than current tech. But as the industry matures, and advancements move from “groundbreaking” (the first mass-produced EV batteries) to “incremental” (these EV batteries are 4% better than the last ones), being a few years ahead becomes less valuable. Eventually, a lot of the market commoditizes, best practices are learned by all, and your moat gets narrowed to the things that you have absolute monopolies on (like your brand and design and stuff).
That’s why Tesla thought it would be making its own solar materials, but ended up outsourcing that all to China and using the Buffalo plant for other stuff. That’s why Tesla isn’t having any more Battery Days (remember Battery Day?) and is, perhaps, cutting that program out (bye Drew Baglino). Sometimes, an area where having a few years’ headstart is a point of differentiation today stops being a point of technological advantage once the field matures.
Again, maybe Tesla does do everything you say. But there’s always a decent reason to suspect that the companies that dominate a nascent and emerging field won’t be the dominant players once the field is mature.^^
^^This is especially true (though speculative, of course) for Tesla because of the outsized role of Elon Musk. He doesn’t strike me as the sort of person who is interested in mature markets, but only in the nascent and emerging ones where there’s an opportunity to change the world. Tesla lost interest in developing solar once it became clear that Tesla didn’t have much of a chance to be world-changing in that field, and I suspect that once EV’s become mainstream and conventional that Musk is not going to find the idea of developing a second or third SUV model to fill out their product line an exciting or interesting challenge.
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That was the major reason my wife passed on getting an EV and is instead looking to get a hybrid - the one or two car vacation trips we take a year.
I am having to twist her arm to reconsider by offering to rent an ICE for those one to two trips.
Roughly 80% of Tesla profit and revenue comes from vehicle sales.
Compare that to the percentage of profit and revenue Amazon and gets from their book sales (hint, about 10%)
Not unwillingness - we just happen to be talking about Tesla’s car business right now. If Tesla manages to make a ton of money selling humanoid robots (or solar roofs, for that matter), that would certainly be a hugely important factor in the company’s fortunes.
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Or is it really from the sale of those carbon offset credits to other companies? If that revenue source “goes away”, what happens to revenue and profit?
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If you provide a time machine I would be happy to check Amazon’s profit and revenue at this stage of their development. That would be a fair comparison.
The Captain
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You don’t need a time machine, just Google.
Tesla’s about 20 years old. At around the same stage in its development (Amazon was founded in 1994, so around 2014), Amazon derived about 7% of its annual revenue from book sales:
$5.25 billion : Amazon’s current annual revenue from book sales, according to one of Packer’s sources. That means books account for 7% of the company’s $75 billion in total yearly revenue.
By that time, Amazon Web Services had grown to almost the same size as the book business - just under $5 billion in revenue:
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This is a very difficult question to answer. If the revenue from carbon credits “goes away” then it means that most of the other automakers are selling a lot more EVs (“clean” vehicles, but EVs move the numbers the most per unit by far). And if most of the other automakers are selling a lot more EVs, that means that the EV business is going gangbusters. And if the EV business is going gangbusters, and Tesla still makes good EVs (very likely), then Tesla’s business is doing VERY well. And that would likely mean that Tesla auto revenue and profit are rising.
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Now, but not once upon a time. Not that he said PCs for Apple, Windows only for Microsoft, and games for Nvidia. Once upon a time that was true, but look at them now!
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Uh, no.
If the carbon credits go away, it is because they have been removed from the market by Congress. Why? They are no longer needed. If they were still needed, then they would still be allowed to be accumulated and sold.
Or the politics around subsidies change.
DB2