7: The Future of Tesla the Car Company

Tesla is more than a car company. It is an energy company.  But for the moment let's focus on the outlook of its car business.

I myself believe that Tesla will not only survive but might well do to the automotive sector what Apple has done to the telecommunications sector. I believe that it is very possible that Tesla will be buying up empty car factories for generations to come and putting them to use building exciting, beautiful and green vehicles for every buyer and every purpose.

I believe that some of the legacy car companies will survive and thrive in the new electric/autonomous vehicle era, but others won't.  I am in no position to judge who will win and who will lose, but the survivors will be the companies that combine solid business judgment and an ability to anticipate the market rather than follow it. 

Let's review what Tesla has already achieved.  First it produced a Roadster that was based on a Lotus platform.  Next, it leapt into production of a luxury electric sedan that went head to head in the most prestigious segment - right up against the Mercedes-Benz S-Class.  It then produced a large luxury SUV.  Now it has produced over 150,000 Model 3 cars, all sold in the US and Canada, with European and Chinese customers only now getting their first cars.

Already on the drawing board are a small SUV, a semi truck and a second Roadster with hypercar stats (or whatever is beyond hypercar!) 

What can prevent the company from becoming a dominant force in the industry?  Well, one is some kind of internal lack of discipline or market miscalculation.  Another is irresistible competition.  And both seem equally unlikely. 

Tesla has made mistakes.  Apparently the Model 3's body was poorly designed and its manufacturing process was overly reliant first on robots and then on labour.  But it is a company that learns its lessons.  It quickly added a third production line in a tent.  I am sure that its body design and manufacturing issues have already been addressed.  Tesla will not repeat its mistakes.  Count on it.

But what of competition?  The world's car manufacturers produce wonderfully efficient cars.  All the cars being produced are safer and more efficient than ever before.  But they are also all more alike than ever before.  At one time American cars were 20 foot long gas guzzlers with drum brakes.  Japanese cars were tiny and tinny.  European cars were novelties like the Mini or the Beetle or exotics like Ferraris and Maseratis.  There were no Chinese or Korean cars on the market.  Today you can't really tell a Kia from a Buick.   

Car design, production, technology and segmentation of the market have all become standardized.  The internal combustion engined car has been, in a sense, perfected, but in another sense we have come to the end of the innovation road. 

Along comes Tesla the disruptor.  How does the industry respond?