jo.id = 'FJVoiceFeed'; The trend is towards a switch from petrol to electricity, and this switch requires batteries and software to permit the batteries to work in sync with motors. Again, there’s no sign that another electric car manufacturer has picked up on the importance of the Tesla Supercharger network, as none of them are implementing anything that genuinely compares. Bringing cell design and production in-house . Tesla currently has the advantage of holding 16% of market share in the global passenger electric vehicle market, it has been manufacturing electric vehicles at scale longer than any other company, and sells more of them than any other company - of the top ten U.S. plug-in cars sold in 2019, three of the ten were Tesla models. As all of these competitors begin to pour into the electric vehicle market, we must examine if Tesla has a competitive advantage and whether it can retain its dominance in the industry: First-mover advantage: Tesla has been around the EV industry a lot longer than its competitors. Being recognized as first in an industry builds customer loyalty and brand recognition, and Tesla has the competitors edge of being a leader in their category for the foreseeable future (Emongo, 2015). Volkswagen will spend €60 billion ($70.92 billion) on developing electric vehicles, hybrid vehicles and digital technologies by 2024. ValueWalk also contains archives of famous investors, and features many investor resource pages. Battery production will also aid Tesla's bottom line, not merely in sales but also in extending the firm's cost advantage. It’s hard to see any other manufacturers as being serious about electrification when they are so far behind Tesla on 1–3. These factors seem to augur well for Tesla's long-term prospects, as does the fact that it looks set to post a profitable year for the first time in its history. All of Tesla's competitors have been profitable for long stretches and have significant global reach - two qualities that Tesla cannot lay claim to. The lead they have in motors, batteries, EV charging, autonomous driving, and leadership is going to be extremely difficult for competitors to overtake. is the director of CleanTechnica, the most popular cleantech-focused website in the world, and Planetsave, a world-leading green and science news site. GM has announced the Chevy Bolt, which could theoretically compete with the Tesla Model 3 (on range and cost), but it is targeting ~30,000 sales a year rather than Tesla’s target of ~500,000. var jo = document.createElement('script'); The Tesla Advantage. For … After some updates, it also set the record for quickest production sedan in history, with a 0 to 60 (mph) acceleration that beats even some supercars. Does Tesla Have a Competitive Advantage? Tesla. In the future, we expect that advantage to widen. Multiple firms, such as AMETEK (AME), Johnson Electric (JELCF), and WEG (WEGZY) are making electric motors. 1) Supercharger Network . Tesla (TSLA) - Get Report is an interesting study in competitive advantage, as they are at once a luxury car and technology company. Tesla, specifically, would seem at first glance to be in pole position to benefit from this projected growth. If other manufacturers don’t quickly catch up by making some big (many would say risky… I wouldn’t) moves, they are going to end up 1) waiting a long time until they can catch up to Tesla in EV sales (assuming they ever can)… just looking at the supply side of the equation, 2) having to pay Tesla to use its Supercharger network, or simply offering inferior products year after year, and 3) offering inferior products year after year (and perhaps someday revolutionizing the software side of their business). And note that Tesla’s batteries are valuable far beyond electric vehicles, and it is doing quite well winning stationary energy storage contracts. Bloated dealerships are … By owning the sales channel, Tesla believes it can gain an advantage in the speed of its product development. After years of covering solar and EVs, he simply had a lot of faith in these companies and felt like they were good companies to invest in as a portion of his retirement strategy. Above are some of the tangible ways Tesla has set itself apart from the competition, but there are a couple of “intangible” strengths the company has developed as well. If I were to put my money on who most leads us to those computers on wheels, I’d put it on Tesla (oh wait, I have). The barriers and competitive advantages for Tesla Motors. ValueWalk.com is a highly regarded, non-partisan site – the website provides unique coverage on hedge funds, large asset managers, and value investing. Competitive Advantage Of Tesla 1129 Words | 5 Pages. Tesla’s battery-powered vehicles are significantly simpler than their internal combustion competitors. This is one area where Tesla has had a significant lead for some time. The traditional competitors, such as Volkswagen with its Electric ID.3, Toyota with its Prius Prime, Ford with its Focus Electric hatchback, General Motors with its Chevrolet Bolt EV, Nissan with its Nissan Leaf, are equally poised to carve a significant slice of the electric vehicle market going forward. Tesla has a very high rate of innovation, (not to forget the recent developments of world’s first fully electric semi truck and new sports car). All told, the diverse range of competitors that Tesla faces - all of whom are better placed financially and internationally - calls into question its ability to maintain its hold on pole position in the electric vehicle market. Competitive Advantage — cont. Or, they are simply far too slow-moving to compete in this new sector, which is no better for their businesses and shareholders, but at least lets them off the hook a bit morally. Figures collated from FinViz, Morningstar and TheStreet. (function () { From our Obsession. Funds and their managers have faced criticism over the past decade for failing to match the broader market's performance, despite their higher fees and the advantages they claimed to have over other market participants. Figures collated from most recent financial statements for each auto company. Tesla’s huge competitive advantages, imho, are: I thought it was obvious before, but it seems that many mainstream investors and analysts are just picking up on the fact that batteries = a big part of Tesla’s business advantage. In fact, Musk expects Tesla’s manufacturing prowess to give it an edge over other EV-makers. We find the company's perspective as an aftermarket supplier of Tesla accessories interesting and are happy to share its content free of charge. Juventus Takes to the Fields with Electrifying Jeep 4XE Performance, Electrified SUV Flagship Models: Presales of the New Touareg eHybrid & Touareg R Have Now Started, Hino Trucks Announces “Project Z” – Paving the Path to Zero Emissions, Pricing for Mazda’s 1st Battery Electric Vehicle, the Mazda MX-30 EV (UK next March), Jaguar’s Electrified F-PACE & BAFTA award-winning film director, Rob Whitworth, Mazda Enhances MX-30 First Edition with Free New Motion Wall Box Offer, Electrify America Launches New Enterprise Offering Customized Business-to-Business Charging Solutions, New Proterra EV Charging Solutions Enable Full Fleet Electrification for Commercial Vehicles. Toyota and Volkswagen figures converted by XE Currency Converter. If tesla keeps it up, it’s going to gain more and more brand loyalists, and I haven’t seen any sign that other automakers have figured out how to adjust their business approaches to compete in this “human” side of the equation. Why they huge disparity? Zach has long-term investments in TSLA, SCTY, FSLR, SPWR, SEDG, & ABB. Tesla's software is years ahead of the competition, giving it a huge advantage over legacy automakers, prominent VC says Tim Levin 2020-12-15T18:13:40Z Bloated dealerships are out of … And the final advantage that I’d call out is Elon himself. In fact, without Elon Musk, this co… Tesla Competitive Advantage 1074 Words | 5 Pages. Tesla bulls who point to Tesla's current pole position in the electric car market as a strong competitive advantage would do well to remember that of all car sales worldwide in August 2020, electric car sales accounted for only 3.8% of market share. Especially against ICE vehicles. Excluding the battery pack, the compact electric drive twin should make Tesla cheaper to mass produce, and functionally better than comparable ICEs. He is a contributor to Seeking Alpha where he has written on a wide variety of sectors. Subscribe to ValueWalk Newsletter. The corresponding intensive strategies support organizational growth based on increasing sales revenues from current markets where Tesla, Inc. operates. In a new interview on the podcast Sway, Elon Musk shared his thoughts about A.I. Figures collated from 10-K reports available on the SEC website and on Tesla's investor relations page. Daimler has forged a partnership with chip maker Nvidia (NVDA) to develop a chip-and-software program that would allow vehicles to drive themselves - a move designed to counter Tesla's own custom-designed chips. There is more competition, however, now … We believe Tesla has a competitive advantage in batteries that is under-appreciated by investors. Without him, Tesla would not be where they are today. Maybe THAT kind of insight makes it clear that ValueWalk Premium is worth another look. Tesla’s Competitive Advantage Under A Magnifying Glass — The Netherlands. The median weighting of the index is 0.08%, while Tesla… With these, it is positioning itself to also become the leading player in the energy industry and sharing economy. One of the major strengths of Tesla is its expertise in automotive engineering. The Cash-Centered Creep is a freelance writer on business, finance, and investment topics who champions a buy-and-hold, value investing approach. These are critical pieces of the electric vehicle future. In either case, though, it looks like Tesla dominates the future of automobiles. An early investor, after driving away in his hot new sports car (I think a top-of-the-line Porsche) following the test drive of a Roadster prototype called the Tesla crew to angrily complain to them about how they had just ruined his expensive new gasmobile toy for him. That's more or less answering Maartens question: the advantage of Tesla was being able to deliver and has very little to do with the specific want or need for a Tesla. That electric vehicles are the future has been known for some time, but it seems as though the auto industry in general is only now getting to grips with the reality of the situation. JeffreyR. I think it’s safe to say that cars of 2025 and 2035 will be very different animals than cars of 2015. While … Tesla’s brand image is one of its core sources of competitive advantage. SWOT Analysis of Tesla Inc. – Recommendations. PESTEL analysis provides great detail about operating challenges Tesla, Inc. will face in prevalent macro environment other than competitive forces. Therefore, the market trust and expects the company to develop competitive and profitable products which of course leads to substantial financial gains. He has further divided the last one into two … Michael E Porter has highlighted three generic strategies that can be used to generate competitive advantage. var r = Math.floor(Math.random() * (9999 - 0 + 1) + 0); Manufacturing issues plagued the initial … BY 2015, Tesla had sold more than 1,00,000 Model S types and has already got more than 1,00,000 advance… If you're into strategy and tech trends like I am, it's a short read. "We expect Tesla to highlight why its work in battery gives it a clear competitive advantage vs. other automakers," Credit Suisse said. For starters, the traditional carmakers - Toyota, Volkswagen, Ford (F), General Motors (GM), Honda (HMC), Nissan (NSANF) (NSANY), Daimler (DDAIF) (DMLRY) and BMW (BMWYY) are all long-established, well-capitalized firms which have the expertise and the production lines to transition to electric car production. Building on electricity as a sole source of energy for its cars, new and innovative forms of competitive advantage become natural extensions of Tesla’s strategy. Q3 2020 hedge fund letters, conferences and more However, over Read More. Its limited presence outside the U.S. will severely impact its ability to compete with the likes of Toyota, which enjoys a far greater international presence. That just further boosts its battery production scale and competitive advantage. Tesla Inc (NASDAQ: TSLA) recently broke the 400-mile battery charge threshold. All three firms have three advantages: the cheap Chinese labor force; the large Chinese domestic car market; and convenient access to prominent battery manufacturers such as BYD Company Limited (BYDDF) (BYDDY) and Contemporary Amperex Technology Limited, or CATL - the latter being the largest battery manufacturer in the world (and one which is a Tesla supplier). With this reputation for excellence, again, who’s going to buy an affordable Tesla competitor when a comparable Tesla is on the market? Please speak to a licensed financial professional before making any investment decisions. Unsubscribe at any time. If there is one thing I learned about this company, is that Elon Musk is literally a living god. … Tesla’s battery packs are routinely estimated to be a good tier cheaper than other EV batteries. (adsbygoogle = window.adsbygoogle || []).push({}); Another reason I’m (theoretically) choosing the Model 3 is because Tesla’s approach to software is a tier (or more) above the competition. He is also a book reviewer at the Online Book Club for Readers, focusing on works relating to business and finance. [Full disclosure: I’m long TSLA… for obvious reasons.]. Transcript: It is time to talk Tesla’s competitive advantages or who knows lack thereof however before doing that I would like to recall a story from the recent past in one of the first videos of this case study I compared Tesla and Apple so please allow me to provide a brief side note here … Continue reading Tesla competitive advantage (2020) : Why Tesla and Apple are so very similar → Tesla has many first mover advantages, but also a few sustainable competitive advantages. There was a time when manufacturing seemed to be Tesla's weakness. Tesla has been the poster boy image for alternative fueled vehicles, particularly electric. These strategies are cost leadership, differentiation and focus. Being recognized as first in an industry builds customer loyalty and brand recognition, and Tesla has the competitors edge of being a leader in their category for the foreseeable future (Emongo, 2015). Tesla's (NASDAQ:TSLA) biggest advantage over competing automakers today is how it has updated the auto business model. Toyota and Daimler that were early investors in Tesla realized that Tesla has started growing from a fancy upstart to a serious competitor. Tesla, according to Munster, is years ahead of its competitors in that regard, and his firm estimates that the EV maker will recognize billions in deferred software revenue through 2022. jo.type = 'text/javascript'; Tesla has shown several areas where they have a distinct and growing lead over legacy Internal Combustion Engine (ICE) competitors. This … Vitaliy Katsenelson's Contrarian Edge Opinion: Tesla’s first-mover advantage over rival car makers should only get bigger Published: Nov. 9, 2019 at 9:13 a.m. While Tesla's brand recognition is strong, Toyota, Daimler's Mercedes-Benz, and BMW all possess significantly stronger brand recognition. jo.src = 'https://www.financialjuice.com/widgets/voice-player.js?mode=inline&display=1&container=FJ-voice-news-player&info=valuewalk&r=' + r; Another important intangible is that Tesla has shown repeatedly that it cares more about providing the customer with good service, a good product, and honesty than making a little more money off of them. Furthermore, sales of the Tesla Model 3 outpaces its closest rival … Overall, the global electric vehicle battery is currently valued at $30.7 billion, and is estimated to reach $87 billion by 2027. Tesla's competitive advantage There was a time when manufacturing seemed to be Tesla's weakness. Check it out: What Is Tesla's Competitive Advantage? That premium is too high in light of the uncertainty surrounding Tesla's long-term prospects. Tesla's main sustainable competitive advantage at the moment over other auto manufacturers is that they have a fresh start and aren't constrained by what they already have in place. Transcript: It is time to talk Tesla’s competitive advantages or who knows lack thereof however before doing that I would like to recall a story from the recent past in one of the first videos of this case study I compared Tesla and Apple so please allow me to provide a brief side note here … Continue reading Tesla competitive advantage (2020) : Why Tesla and Apple are so very similar → Let's invest safe! In the future, cars are going to be computers on wheels, and Tesla is leading us there. How has Tesla become one of the main competitors in the automobile market? Tesla has managed to see success by focusing on high-status and premium electric vehicles (EVs). Generally, this is what drives investment and sales in the automotive industry. This is an analysis of the generic and intensive strategies that it has used to build sustainable competitive advantage and grow its market and brand presence. Tesla’s sky high valuation means a move in its stock price will have more of an impact on the S&P 500 than most companies. What is Tesla's competitive advantage? What the interaction between Musk and Diess does illustrate is that the traditional auto industry is finally getting serious about electric vehicles. })(); Check out our cornerstone topics which we update regularly by clicking below. Tesla broke out of the domain of existing auto manufacturers. Another thing that Tesla really “gets” that others haven’t demonstrated to understand is that electric car consumers want ubiquitous fast-charging stations. 1) Tesla’s Battery Supply Chain: Tesla currently produces 4 all-electric vehicles — the Tesla Models S, X, 3, and Y, all of which require significant battery capacity. Bottom line: Tesla’s lead in batteries is sustainable and other auto OEMs will struggle to gain measurable ground on the company’s 80% US EV market share. Its closest competitor is now 100 miles behind. “ValueWalk provides an invaluable service—bringing together the best and most important commentary in the world of value investing, all in one place.”. The historical overview and industry analysis point to several competitive advantages of Tesla Motors. Competition is not restricted to the traditional firms - Chinese firms such as Li Auto (LI), NIO Limited (NIO), and XPeng Inc. (XPEV) already are listed on the American exchanges (Li Auto on the NASDAQ, NIO and XPeng on the NYSE). To connect with Zach on some of your favorite social networks, go to ZacharyShahan.com and click on the relevant buttons. We won't send you spam. Ninety-one factories are expected to produce battery cells by 2028, and half of these are already producing now. • The stated goal of the company is to make and sell the very best automobile in the world that happens to be electric. Tesla - Get Report is an interesting study in competitive advantage, as they are at once a luxury car and technology company. Tesla Inc (NASDAQ: TSLA) recently broke the 400-mile battery charge threshold. Aside from his work on CleanTechnica and Planetsave, he's the founder and director of Solar Love, EV Obsession, and Bikocity. The M3 production should be fully automated. This uncertainty makes its current valuation untenable. Let's invest safe! Tesla has a few competitive advantages that should allow it to stand out as the EV market becomes more crowded. We respect your privacy. Based on this aspect of the SWOT analysis, Tesla must maintain competitive advantage to remain profitable despite aggressive competition from large automotive firms. There's no need to "keep factories running at full tilt". Tesla Competitive Advantage 1074 Words | 5 Pages. The larger firms are also able to commit cash to startups, last month General Motors announced its intention to acquire an 11% stake in electric-lorry company Nikola (NKLA), while Ford has invested in pickup manufacturer Rivian (RIVN). This makes it unwise to recommend Tesla as a prospective investment at this time, especially as it currently trades at a premium to both the transportation equipment manufacturing sub-sector and to the S&P 500 (SPY). It’s simply on another level. Manufacturing issues plagued the initial production ramp ups of Model S, Model X, and Model 3. Final thoughts ... and Tesla Advantage. With an electric car, the improvement capabilities that come from better software are beyond imagine. Will Tesla Finally Make its Way to India? Based on this aspect of the SWOT analysis, Tesla must maintain competitive advantage to remain profitable despite aggressive competition from large automotive firms. SWOT Analysis of Tesla Inc. – Recommendations. Perhaps it’s the battery supply chain…. Tesla benefits from the fact that its electric cars have the greatest range - the Model S, Model 3, and Model X can travel from 565-600 kilometers on a single battery charge, and are the top three ranked electric cars by range as of 2019. Is Tesla having an Amazon moment right now? Tesla ability to send out over-the-air system updates is years ahead of its competition, and gives it a major advantage. Tesla, Inc. has the strengths to remain successful in the business in the years to come. With long-term debt of $11.52 billion slightly off-setting a net worth of $11.34 billion, Tesla's long-term finances are not great, and its sales cannot compare with its competitors, who are making serious incursions onto its "turf.". US, Europe, & China Electric Car Sales In 2016, it is doing quite well winning stationary energy storage contracts, called the Tesla crew to angrily complain to them, Tesla's Competitive Advantages — 5 Big Ones, Nissan LEAF vs VW e-Golf + Other EVs (Owner Review), Rayvolt UK Turns Loop On to Power e-Bike Awareness, New Mokka-e Neatly Booking-Ending 117 year Tech of Vauxhall, First Vauxhall model. Save it to your desktop, read it on your tablet, or email to your colleagues, Q3 2020 hedge fund letters, conferences and more. Elon Musk Explains Tesla’s Vertical Integration vs.’Catalog Engineering’. Hi guys, this is a business analysis I wrote during my time as an MBA student and although I primarily write about pharmacy practice, clinical pharmacy, and the pharmaceutical industry, I ended up branching out and doing some research on Tesla. Since it went public in 2010, and according to figures going back to at least 2006, Tesla has reported consistently rising revenues in tandem with consistent net losses. While several auto brands are there in the industry, including those making EVs and hybrids, Tesla has acquired a very distinct image. Tesla's (NASDAQ:TSLA) biggest advantage over competing automakers today is how it has updated the auto business model. But more importantly, it also creates a better customer buying experience. And Tesla isn’t standing still. Tesla’s EV advantage is greater post-COVID-19, says analyst If the Chevy Bolt and the Tesla Model 3 come out at the same time with the same specs, I’m choosing the Model 3, in large part because of the Supercharger network. Tesla has huge competitive advantages over other automakers in the US. So while the electric vehicle market will unquestionably grow in the years ahead, Tesla's lead in that market is far from unquestionable. Furthermore, the electric car market itself was valued at $162.34 billion in 2019, and is projected to grow to $802.81 billion by 2027. One that will help make bigger, better decisions in the future. As if that wasn’t enough, Tesla produced the cheaper Model S sedan that ended up winning just about every big auto award. And software is a big part of Tesla’s advantage. Not only today, but for years to come. As all of these competitors begin to pour into the electric vehicle market, we must examine if Tesla has a competitive advantage and whether it can retain its dominance in the industry: First-mover advantage: Tesla has been around the EV industry a lot longer than its competitors. The coronavirus (COVID-19) pandemic has sidelined the Big Three and forced them to cut near-term expenses. April 2016 edited December 2019 in Model 3. He can be followed on Twitter at @CashCreep. That kind of reputation for integrity and morality is something long lacking in the automobile world, and there’s no doubt that customers have found it to be very refreshing and desirable. First, it possesses a reputation of a company actively involved in research and development and constantly achieving positive results. BATTERIES. In July it overtook Toyota (TM) as the most valuable carmaker by market capitalization, a reflection in investor confidence in the future of electric vehicles overall - and in the less-certain prospect that Tesla will continue to lead the pack. Excluding the 2 subjective points at the end, I’m not seeing another automaker offer something comparable for 1, 2, or 3, let alone 1, 2, and 3. They can impact individual firm’s competitive advantage or overall profitability levels of the Consumer Goods industry. EXECUTIVE SUMMARY by @GeorgeHawley "A company succeeds by profitably pursuing their mission.... Tesla has jumped the automobile market and has locked in their lead with:" • Great … He has been covering green news of various sorts since 2008, and he has been especially focused on solar energy, electric vehicles, and wind energy since 2009. Tesla’s generic competitive strategy is broad differentiation. Tesla has several big competitive advantages, imho. Because Tesla created the EV industry, it had the advantage of acting from first principles. Mission: Providing a framework to improve your investing PROCESS, while collecting newsworthy information about trends in business, politics and tech areas. The Tesla Roadster transformed the image of electric cars from small, slow vehicles to blindingly fast vehicles of desire. Engineering Expertise. This generic strategy builds competitive advantage based on the development of products that differentiate the company from other firms in the industry. Tesla’s huge competitive advantages, imho, are: 1) The battery supply chain it is building for itself (and maybe some friends) I thought it was obvious before, but it seems that many mainstream investors and analysts are just picking up on the fact that batteries = a big part of Tesla’s … Tesla’s Competitive Advantages. Tesla has built its own Supercharger network (or networks), and nothing else compares to it/them. There’s a first mover advantage that applies to all of those. The greater competitiveness within this space is not good news for Tesla (TSLA), which has long been touted by its supporters as the trailblazer in the electric vehicle sector. Let me count the ways. © 2020 VALUEWALK LLC. Its financial position does not suggest that it can effectively compete with either the established auto players or with the rising Chinese firms. Model X, and BMW all possess significantly stronger brand recognition is strong, Toyota, Daimler 's,! Disclosure: I ’ m long TSLA… for obvious reasons. ] furloughed workers and sliced their marketing.. Bmw all possess significantly stronger brand recognition decisions in the years to come there was a time manufacturing! Financial gains sidelined the big three and forced them to cut near-term expenses like I,... Combustion Engine ( tesla competitive advantage ) competitors of 2020, 2019 by Maarten Vinkhuyzen cars were big machines small. 2028, and functionally better than the competition will face in prevalent macro other! Important tesla competitive advantage is simply scale electric vehicle market will unquestionably grow in the future other.... … competitive advantage mover advantage that I ’ m long TSLA… for obvious.... 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