How Long Do We Keep Hearing About Competition For Tesla?

Sometimes things end up sounding like a broken record.

For the past 5 years, the rhetoric has been that Tesla is going to be in trouble because they are now facing competition. This has been the case for the last half decade.

FIVE YEARS?

How long do we keep beating the same drum?

It is true there are more EVs being offered. However, the traditional automakers seem to be lagging behind. Plus, they have a major disadvantage over the newer companies: most EVs sales will simply be cutting into their ICE vehicles.

This is something that Tesla does not need to worry about.

Also, when trying to play catch up with Tesla, good luck on that one.

Here is a quiz for you: who has the 5th most powerful computer on the planet? The US Department of Energy? The Chinese? The Japanese?

Nope. It is Tesla.

Competition

Who is the competition for Tesla? Most would point to companies like Volkswagon, Toyota, and General Motors. Why do people do that? It would seem sensible considering that they are automobile companies and that is what Tesla makes. So when looking at the competition, we look to the car companies.

Why do we do that?

How many car companies have this?

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This is their supercomputer. It was designed to run their AI system and train the software for the autonomous driving. Here we see pictures of the 5th most powerful computer in the world, according to Tesla's head of AI.

Highly powerful computers used to train AI? That is something that a Google or Microsoft would have, not a car company.

Of course, we have to keep in mind this is not the creme-de-la-creme of Tesla's supercomputing family. Last year Elon Musk talked about Dojo which is going to be an exascale computer. There is a chance that one will be the most powerful computer in the world.

It is actions like these that would make one think that Tesla is more like Google, Facebook, and Amazon. After all, those companies are investing heavily in developing AI.

Yet for 5 years, we heard that Tesla is going to be destroyed once the competition shows up.

I guess we need to decide which set.

Car Companies Are Cooked

Even focusing upon the automobile industry, we see how far ahead Tesla is putting themselves.

To start, if we are going to take a look at the total market share, we realize Tesla is a bit player on the global scene. Last year they did just shy of 500K vehicles. That is nothing compared to the abovementioned companies that delivered many millions globally.

Tesla has a large part of the EV market yet, as a percentage of overall sales, that is miniscule. This year, sales might account for a couple percent of the total. The key is that this number is likely to keep growing over the next decade.

Here is where many feel that Tesla is going to get crushed. After all, their competition has been building cars for 100 years. Once they decide to build EVs, it will be game over.

The challenge is that the automakers are still trying to suck all they can out of the ICE era. They know that each EV sale eats into their profitability. Not only do they make less money on each car, they lose the long term parts sales. Their dealers are also not keen on pushing them since they do not have the same service revenue potential.

Of course, this is all leading to stagnant EV sales from the traditional companies. Do you recall when the Porsche Taycon was going to be the end of Tesla? What happened? The car came out at twice the original expected price. Sales were rather lackluster.

The irony is that Tesla, a little over a week ago, released the Model S Plaid which carries a price tag of $130K and has specs that target the Taycon. Perhaps it is Tesla that is the predator and not the prey.

In short the traditional automakers, for the most part, are cooked. A few will make the transition but most are going to struggle. If autonomous driving takes hold, we are going to see the entire industry completely upended. That is a topic, however, that is outside the scope of this article.

Its The Batteries Stupid

At the end of the day, the winner in this game is going to be the one with the battery technology. For the moment, the ones who get the batteries are going to have a huge advantage.

One of Tesla's biggest problems has been batteries. The company simply cannot get enough of them. Between the automobile division and the energy storage, they cannot put their hands on enough to satisfy their needs. This has led to the delay in the release of the Semi, since it will take a lot more batteries than the company is willing to allocate at this moment.

Tesla improved their battery development by purchasing companies like Maxwell Technologies. This really improved their ability to design their own batteries and not depend upon 3rd parties.

Consistently, Tesla cars have the longest range. They keep improving the technology, often increasing the range through over the air updates. This is something that other automobile manufacturers are just starting (over the air updates).

Elon Musk has set a goal of 50% annual increase in deliveries over the next few years. Of course, this is viewed by many as a low ball number. Musk also mentioned that he believes the Model Y, once production is scaled up, will be the best selling vehicle (not EV) in the world.

That would put the target for that model at 1.5 million. Many feel this can be achieved in 2023, if not 2022. It was also recently announced by a number of different outlets that Tesla is basically sold out of the Model Y (long range) for the 3rd quarter.

In short, this is a company that is selling everything it can produce. With two more plants slated to come online either late in 2021 or early 2022, their production should kick up even more next year.

All the while, the competition is trying to figure out where to get batteries from (not to mention the chip shortage).

Alas, going into next year we will hear how Tesla is in so much trouble because of the competition about to heat up. It will be the 6th year we heard that one.


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Bang, I did it again... I just rehived your post!
Week 62 of my contest just started...you can now check the winners of the previous week!
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even Elon's tweets on twitter have an impact on the crypto market, is Elon the mecca of cryptocurenccy controllers? @taskmaster4450le

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Not in the least.

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So why did Elon's tweet last time affect the price, can you tell me @taskmaster4450le

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You are presuming Elon's tweet affect price. Why do you think that because many people say it does?

What about all those times when Bitcoin drops (or goes up) and Elon is not tweeting? What then?

Have you seen the articles about the manipulation in the futures market? How about the closing down of Bitcoin miners across China?

Do you think they had an impact on the price of things?

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Curiously enough, I've read some articles today saying that Tesla is doomed...

I don' know where those people get their news but I can tell you it's not from the same places as me...

Some experts say that competitors are, at best, 3 years behind them so I don't know who could overthrow them in the short term.

Time will tell, and a lot can happen, of course, but I think they are going to be in a good position in a few years.

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Curiously enough, I've read some articles today saying that Tesla is doomed...

I followed Tesla for a long time (a lot longer than I was an investor) and I can tell you that the FUD for that company rivals that of Bitcoin. Between the automobile manufacturers and the oil industry, both took aim at it.

You are right, the lead they have in many areas is astounding. They are working on a lot of different things right now but I have a feeling much of it will converge around the same time. IN 2-3 years, people will be astonished at the garbage they listened to.

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I think Tesla will do quite well outside of China given how the government wants to support their own EV companies. Its kind of crazy how many different chinese EV companies there are. As for whether or not it will be better than Tesla, I think its unlikely given the technology gap but anything can change over time.

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Many of the new companies will not survive. In fact, that might be the way that some of the legacy automakers remain relevant. They will have to buy out some of the EV companies to get the technology.

As for China, more FUD. Do not buy into it. The Chinese are having potentially the leading EV maker in the world with a huge plant in their country. They are not going to overlook that part. Yes they play their power games but Tesla is going to consume a lot more than the in country EVs will.

What happens when Tesla is the largest consumers of batteries in the world? Do you think China wants to be locked out of that. If Tesla said screw you and went solely with Panasonic and LG (along with its own), what would that do to China?

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I don't think China would want to be locked out and they would probably change their stance right away.

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Tesla is miles ahead when it comes to tech. They are developing and upgrading their systems fast as compared to other competitors and that's the edge they have over them. And I don't see this changing anytime soon.

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I agree with you, they are. That doesnt mean that the competition cant close the gap. However, it is going to keep getting harder as Tesla moves ahead.

Do not forget, in the technology realm, winner takes most.

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The biggest competition for Tesla will be the batteries being made by StoreDot and will be used by Nissan and Mercedes. Twice the distance plus a fraction of the time for recharging. I believe this will be the game changer as this company is so far ahead with all their patents others will struggle as they have a 10 year head start with over 1000 scientists working on this. Tesla tried to get in on the action earlier this year, but were very late to this party. The investors are not going to allow what they have just go to anyone especially with who is on board right now.

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This is a very different viewpoint from the traditional one, and it seems more accurate as you have taken into an account powerful forces like cannabilization of existing sales, reduction of future parts and repair income, which is a large part of current revenue and both battery and AI technology.

I think the ERA of the human driven car is slowly coming to an end. Self driving cars offer mobility and independence to a huge population of aging Americans and younger disabled ones, not to mention young and old environmentally conscious ones. We are in the early days, but I foresee an ever accelerating pace towards obsolescence for current vehicles and adoption of self driving electrics.

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