Update: Elon Musk has added some of his own thoughts on this topic in response to this article. We are adding the tweets to the bottom of the article.
Forbes published an article this past week titled, “How Did Tesla Become The Most Valuable Car Company In The World?” I thought I would not only answer that question but also share a few highlights from the article. The article led with Tesla’s stock price breaking the $1,000 mark per share, which happened around the time Tesla [TSLA] rose to the #1 spot. Tesla, which has been around for 16 years, has completely taken over the auto industry, an industry that the article noted has “decades more history.”
Tesla is now officially the most valuable automaker of all the world!! Congrats!! 🎉🎉🚀 @elonmusk @tesla pic.twitter.com/BSovZVTGJ3
— Elon's DogeWorld🐕 (@ElonsWorld) June 10, 2020
The article notes that Tesla “almost single-handedly changed the nature of the car industry forever.” The author shared his theories as to why Tesla’s share price hit the $1,000 mark, and one of those is the million-mile battery that many, including myself, suspect will be announced on Battery Day.
Another highlight from the article is that it’s widely presumed battery prices need to drop past the $100 per kWh barrier for electric cars to become broadly “as competitive as” gasoline cars. One major cost in batteries is the cost of cobalt. One solution, which Tesla has been pursuing, is to cut out the cobalt, and CATL has done this for battery cells that will be used in Tesla vehicles. In China, Tesla just got approval to build its Model 3 with lithium-iron-phosphate batteries (LFP) that don’t use cobalt.
The article also highlighted that Tesla caught the automakers asleep. While they were focused only on their next gasoline/diesel vehicles, Tesla, like Apple, was reinventing the entire thing. Forbes noted that here in America, the Model 3 outsold every model BMW sells put together in Q2 of 2019. Tesla became the most valuable car company in the world — and, in my opinion, the best is yet to come for Tesla. The author noted that Tesla made an early bet on EVs and continues to lead the market by innovating. I agree. However, I want to add more to this.
How Tesla Became The Most Valuable Automaker
Tesla started out as a way to solve an existential problem: too much carbon. The idea was to create a vehicle that wouldn’t need fossil fuels to work, and would push the whole industry to follow. This was during a time where many thought it was impossible and improbable that Tesla would have any real success at all.
Master Plans, Solar, & Batteries
The plan was simple: create a low-volume car that would be expensive (the first Roadster). The funds from sales of that car would be used to develop a medium-volume car at a lower price (Model S/X). And then the funds from those sales would go to create an affordable, yet high-volume car (Model 3).
An updated version, Part Deux, introduced new technology and a completely new product into the Tesla family. The new product was solar roofs — totally unrelated to car manufacturing, yet, reasonable for Tesla in its goal to accelerated the world’s adoption of sustainable energy. It was a risk, but one that made sense. Alongside that was batteries, which linked the cars and the solar.
When I worked for a social media marketer a few years ago, he would always say to find a niche and stay there. You can’t do jewelry and, say, for example, graphic design. The two are completely unrelated and if you try to focus on both, one will fail while the other succeeds. In the case of Tesla, these two seemingly great industries were so far apart from one another that having a link to connect them is what really enhanced Tesla. That link being the batteries. The batteries are indeed core to Tesla’s leadership position in both industries.
In 2013, Elon Musk first mentioned the idea of Autopilot, saying, “Autopilot is a good thing to have in planes, and we should have it in cars.”
All Tesla vehicles that were manufactured starting September 2014 had Autopilot hardware, and starting in October 2016 all new Tesla cars had hardware that could support eventual “full self driving.” The hardware evolved significantly again a few years later, and now Tesla is at Hardware 3 and Autopilot is just the preview of a more advanced species of cars: Full Self-Driving cars. No other automakers have this. Tesla has been at the forefront of this field for years.
While speaking at an Nividia conference in 2015, Elon said, “I don’t think we have to worry about autonomous cars because it’s a sort of a narrow form of AI. It’s not something I think is very difficult. To do autonomous driving that is to a degree much safer than a person is much easier than people think.”
The Supercharger Network
One of the many issues that people see with EVs is how to keep them charged. Many people live in apartments and can’t really install their own wall charger. With the Supercharger network that Tesla is continuously expanding and growing, Tesla has solved that problem.
Not only that, Tesla road trips are a big thing because this network encourages road trips and makes them super easy without the guilt or price of using gasoline. The Supercharger network is yet again something that has placed Tesla ahead of other EV makers for years and continues to be a significant advantage. Other EV makers don’t have their own charging stations and have to rely on less integrated, more expensive charging options from a variety of different networks.
Another thing that makes Tesla more loveable is the experience. This is often called the “Tesla experience” and it gives one a sense of being in a high-tech vehicle from the future. The cars can also do fun and silly things like make farting noises, something that may not appeal to everyone, but it inspires silliness and is a fan favorite of others. One can play video games while parked, practice “caraoke,” or even make their own music.
These ideas were often tweeted to Elon Musk, who incorporated them into the products. This is another thing that makes Tesla valuable — its CEO listens and cares about what his customers want and need. In fact, before Tesla developed the Cybertruck, Elon took to Twitter to ask what people they would love a Tesla truck to have. He took in thousands of responses and incorporated some of the ideas.
What would you love to see in a Tesla pickup truck? I have a few things in mind, but what do you think are small, but important nuances & what would be seriously next level?
— Elon Musk (@elonmusk) June 26, 2018
How many American companies have their own factory in China? I mean, their own factory — they manage it, call the shots, and completely 100% own the factory. And how many American companies managed to secure their own factory in China during a trade war with the United States (one that our own president started simply because he was throwing a tantrum)?
There’s only one, and it’s Tesla. During the initial building of its Shanghai Gigafactory, critics pointed to an empty mud field and said this would never happen. It was impossible. They touted the impossibilities and threw the words “fraud,” “vaporware,” and “not going to happen” around like they were tennis balls. Tesla delivered, in astonishingly fast time. It demonstrated for both fans and critics that Tesla could be a leader in manufacturing as well as cleantech products.
Since its entire existence, Tesla has been hailed as a company that won’t meet its goals. Up until 2018, a Tesla was just a car that was meant for the wealthy, and most were yet to catch on to the fact that Teslas are now affordable and that Tesla doesn’t just make cars.
Along those lines, Tesla stock was one of the most shorted stocks ever and had (still has) hardcore, loyal critics — not loyal to Tesla, but loyal to the idea of Tesla failing. They are literally betting billions on Tesla’s failure. This is how sure they are Tesla will fail.
Despite all of this opposition stacked against one company, Tesla has not only overcome its many challenges, but has done so with grace, enthusiasm, and innovation. What the critics fail to see is that Tesla, in order to become number one, had to change an entire industry — multiple industries, even. By taking on solar, energy storage, and battery technology, Tesla has challenged the energy industry (think gas, oil, and electric) as well as the battery industry and auto industry. By integrating AI in its autonomous driving software, Tesla has sharpened its edge to the point that it is cutting away the old ways of doing things.
The stock topping $1,000 is only a preview of what is to come. Tesla is still a bit volatile — meaning it is a roller coaster ride — but it is supported by many customers, fans, and large institutional investors as well.
Many people aren’t as passionate about their favorite brands as Tesla owners and fans are about Tesla. Sure, Adidas is a great shoemaker, but if I didn’t have a Robinhood or Acorns account (yes, I have both), I wouldn’t even consider investing in the company unless they do something that aligns with my values or something to connect with me emotionally.
Tesla and Elon Musk have done this with millions around the world — and this is why Tesla has become the most valuable automaker in the world.
Tesla should really be thought of as roughly a dozen technology startups, many of which have little to no correlation with traditional automotive companies
— Elon Musk (@elonmusk) June 21, 2020
The was not to outcompete other companies, but rather to maximize usefulness & rate of progress in the absolute
— Elon Musk (@elonmusk) June 21, 2020
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