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Tesla Bulls & Elon’s Trillion-Dollar Competitive Moat (A CleanTech Update)

Tesla bulls have been proven right time and time again – at the trillion dollar mark, how does Tesla’s competitive advantage look now?

As Tesla’s market cap blasts past the trillion-dollar mark, Tesla bulls are overjoyed. They have every reason to be, too — the company they believed in has exploded in popularity, established itself as the major player in the electric vehicle space, and made the people who believed in it most gobs and gobs of money. As I type this, life is good for Teslanaires, and life is very, very good for Tesla Technoking Elon Musk, who is feeling confident enough in his top spot as the world’s wealthiest human that he’s revealed plans to send Jeff Bezos (himself worth a handy $200 billion) a silver medal, for second place.

That valuation makes Tesla the most valuable carmaker in the world, by the way. It’s worth noting, too, that Tesla’s not just the most valuable in terms of market cap, but the company is actually worth more than just about every other automaker combined. And, while a number of outlets have called out Tesla’s “insane” valuation in the past, some of Tesla’s rival EV automakers — and ICE automakers too, while we’re at it — are starting to take the existential threat posed by Tesla very, very seriously.

“There’s a recognition that Tesla is in a preeminent position in terms of EV technology,” said Peter Rawlinson, the chief executive officer of would-be Tesla rival Lucid Motors and one of the vehicle engineers behind the genre-defining Tesla Model S, in an interview during the BloombergNEF Summit in San Francisco last year. “They’re even further ahead than has been reported, and I think the gap is widening, not closing.”

Rawlinson isn’t the only automotive CEO who’s come around. According to the Detroit Free Press, Ford CEO Jim Farley had a lot to say about Tesla’s rise to prominence. “If Ford was a trillion-dollar company, our stock would be worth about $250 a share. Think about the value creation of Tesla right now. And they have resources, smart people, the Model 3 is now the bestselling vehicle in Europe. Not electric. Flat out. It was the bestselling vehicle in the UK. Most months, it’s the bestselling vehicle in California. Not just electric, but overall. If we’re going to succeed, we can’t ignore this competition anymore,” Farley reportedly told the 20,000 Ford employees on the call. “Tesla maximizes use of electrons in the vehicle. No one does it better than they do.”

If you’re a devoted Tesla bull looking for an excuse to double-down on your TSLA investment, the fact that Ford is taking Tesla seriously is big news — and the bulls are using that kind of news to drive TSLA stock prices ever higher. I don’t know about you, but it does seem crazy to me that a company like Tesla is valued many multiples higher than a company like Ford at $80-ish billion, a company which has been building cars and trucks profitably for more than a century.

Enough about me, though. I invite you to check out Johnna’s original 2019 article, below, and see how well you think it’s stood up to the market changes of the last two years — and Tesla’s trillion dollar reality. Then scroll on down to the comments section and let us know what you think the next two years might bring for Tesla bulls and Elon Musk’s True Believers. Enjoy!


By Johnna Crider, on November 8, 2019.

Tesla Bulls Talk Competitive Moat

Image courtesy Tesla.

A Tesla bull named David recently addressed Tesla’s competitive moat in a Medium article. He actually wrote the article for friends who seem to think Tesla is just an electric car company that will most likely fail, but then decided to share with the world. David makes several good points in his article and sums up the mentality that people, especially the shorts, have about Tesla, saying, “It seems like the dominant notion is that Tesla is just another car company in a tough market which is dominated by titans, and so Tesla may not survive.”

Tesla, however, has surrounded itself with a competitive moat that many can’t seem to swim across. Three things that David talks about in his article actually form Tesla’s competitive moat, and other companies — not just automakers — can learn from this. Several key points David covers in his article are:

  • The type of company Tesla really is
  • The location of Tesla
  • Tesla’s Advantage

Tesla, The Company

Tesla doesn’t just build cars, but also build the computers that run in cars. It builds software for the vehicles. Competing combustion cars can be seen as analog devices, while an electric Tesla is a digital (meaning connectable) device. David sums this up with, “What we end up with is an iPhone in an age of Nokia devices.”

Location, Location, Location

The US is the world leader in the computer software industry, and Silicon Valley is the epicenter of that leadership. Which is why Tesla’s location needed to be in Silicon Valley. “[A]t some point, ” writes David, “choosing a car with the right software will stop being an option. If you can’t call the car from your app, play video games while parked, get firmware updates overnight, see your dog while parked, get notifications on your mobile if someone gets close — you simply won’t consider it at all.”

Tesla’s Market Advantage

Tesla’s main advantage over new companies such as Rivian is that it has a head start. David mentions that the electrification of automobiles has flattened out the competition in the same way the internet did. Who uses phone books when you can just look it up on Google Maps? Tesla’s current status and advantages is just one wave in Tesla’s competitive moat.

Tesla’s focus on the software gives it that sharp edge that has legacy automakers reaching for bandaids. But it’s only going to get worse for them.

What we are seeing with Tesla are the results of over a decade’s worth of innovation, hard work, and creativity. This force, if you will, will continue to grow. The beautiful thing is that all of this brilliant engineering started out as a mere thought, an idea. Imagine what you could create if you really put your all into it!

 
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Written By

I've been involved in motorsports and tuning since 1997, and have been a part of the Important Media Network since 2008. You can find me here, working on my Volvo fansite, riding a motorcycle around Chicago, or chasing my kids around Oak Park.

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