Does It Matter If Tesla Is A Car Company Or A Technology Company?

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This month Tesla became the world’s most valuable car company, as its share price hit $1,000 for the first time. That’s more than the sum worth of Ford, General Motors, Honda, and Fiat Chrysler Automobiles. Buzz about Tesla is talk-of-the-videochats because the all-electric car company looks to the future with research and development focused on extensive technology transformations, and it’s pretty exciting.

Is Tesla a car company or a technology company? That’s the question a recent Business Insider article posed, tracing the innovations of the 20th century and comparing Tesla to, say, the rise of transatlantic travel, railroads, nuclear power, and jet flight. It was a strange, primarily pictorial narrative, but the article did get me thinking: does it matter if Tesla’s claim to fame is automotive or technological?

Isn’t it really more important that Tesla’s charging infrastructure, battery capacity, over-the-air software updates, automated driving systems, and — oh, yeah — all-electric mobility has made sustainable transportation mainstream?

Tesla’s business model encompasses what’s been called the Energy Triumvirate: transportation, home solar, and battery storage. The 3-way renewable energy system provides security against rising energy costs, connected software, and solar production for energy independence. And that reciprocity is just one reason to look at Tesla as much more than either a car company or a technology company.

The Argument for Tesla as a Car Company — Albeit, a Very Clever One

It can be said that, because Tesla depends on the same capital-intensive production system as legacy carmakers, it should be categorized as another car company. Others add unequivocally to the argument that the company’s disruption of the way automakers do business, with direct-to-consumer sales, is “a source of inspiration” for traditional auto manufacturers. Sure, they exclaim, Tesla’s products are sleek and futuristic and run on advanced software — but it’s still a car company with associated high fixed costs, lack of typical high software profits, and seasonal business cycles.

But there’s more to Tesla’s success than restructuring traditional car manufacturing. Tesla’s vertical integration has given it an advantage in the industry, although that approach was more borne out of necessity than due to a company mandate to be more profitable, innovative, or distinct from other car companies. Many of the required parts, systems, and services that Tesla needed early on simply didn’t exist, so, instead of training a supplier, Tesla filled in the vacuum itself.

Then Again, There’s Tesla Technology that Leaves Other Auto Manufacturers Baffled

Was it just 2 years ago that Tesla commented that the company goal “is to become the best manufacturer in the automotive industry and having cutting edge robotic expertise in-house is at the core of that goal?” Every quarter it seems that Tesla’s distinctions in technology surpass legacy automakers — the all-electric car company continually leads the industry in battery technology, artificial intelligence, and data collection.

For example, the energy sector has been transformed by Tesla’s battery pack emphasis, to the point that lithium-ion batteries could become another profit generator for the company as more and more businesses transition from carbon. Tesla’s enormous battery factory — about 5.5 million square feet — in Nevada, called Gigafactory 1, is oft cited as the key to Tesla’s future.

And, of course, Tesla’s Supercharging network paved the way for the electric vehicle revolution. The location of all active Superchargers are built into the navigation system, and the car uses its current state of charge and the distance of the trip, among other variables, to determine if a charging stop is needed.

Tesla zooms ahead of other automakers in many ways, including accentuating driver focus and safety through its Autopilot feature. With 8 external cameras, a radar, 12 ultrasonic sensors, and a powerful onboard computer, Autopilot’s suite of driver assistance features is partly the result of a neural network that has accumulated billions of miles of driver experience. Tesla’s accumulated autonomy data set is truly unique, and it has some automakers worried that they’re so far behind Tesla in R&D that catching up is going to be a long, strenuous, and possibly futile race.

Final Thoughts

Tesla is a car company and a technology company — it couldn’t survive exclusively in either camp. CEO Elon Musk created a business model that disrupted the slow-changing auto industry by streamlining design, manufacturing, and distribution processes, and, in doing so, created a technologically savvy and very loyal brand following.

In the not-too-distant future, we’ll see the transformer-like Tesla Cybertruck — the Tesla Semi and mega-chargers — Tesla robotaxis that activate a self-driving computer chip installed in each vehicle, with both owner and Tesla sharing profits.

And lots of individuals and countries want a piece of Tesla’s future action.

The stories in the Tesla narrative just keep emerging. Today Tesla CEO Elon Musk replied to a tweet with the exclamation, “Giga Berlin is gonna rock!” The trains are arriving in Germany, filled with pillars, beams, and second-floor elements for the next Tesla Gigafactory.

It’s another chapter in a very exciting narrative about a combined car-and-technology venture that foreshadows the future of electrification and transportation.

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Carolyn Fortuna

Carolyn Fortuna, PhD, is a writer, researcher, and educator with a lifelong dedication to ecojustice. Carolyn has won awards from the Anti-Defamation League, The International Literacy Association, and The Leavey Foundation. Carolyn is a small-time investor in Tesla and an owner of a 2022 Tesla Model Y as well as a 2017 Chevy Bolt. Please follow Carolyn on Substack:

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