August 30th, 2020

If you look at the advantages Tesla has over other companies:

  • Vertical Integration
  • Charging Network
  • FSD Hardware
  • FSD Software
  • OS
  • Body Casting/Wiring + other patents
  • Insurance business
  • Data (miles on autopilot)
  • Exponential Growth Rate
  • Factory Design
  • Battery Technology
  • Engineering/Other Top talent
  • Service Centres
  • Mobile Service
  • Sentry Mode/Fart Mode/*Mode*
  • Purchase via website
  • Social Media Following
  • Brand
  • Worldwide Logistics/Gigafactories
  • Supply Chain
  • Battery Partnerships (Panasonic/LG Chem/CATL)
  • Mega Packs
  • Solar Roofs
  • Grid Technolgy
  • SpaceX/Starlink benefits
  • Boring benefits
  • Lack of dividend expense
  • Lack of advertising expense
  • *Everything else

It doesn't make sense to chase Tesla. If you attempt to compete with that, you will fall short. Probably in range. And if range levels out, it will still be all those other things.

Any other company that would attempt to do all this would take time to grow economies of scale and therefore would be unable to compete at reasonable price points. They will have to come in at high end price points, but even then they will have to compete with the Model S.

Porsche spent so much money in an attempt to compete. And they made a great car. But the Tesla community is comparing the Taycan to the 3, S and future Roadster. The S and the Roadster will probably outdo the Taycan on the track. And the 3 costs 50%. And again, even if the performance lines up. That is one thing. Refer to the list above on how they lose everything else.

So car companies can spend billions to compete with Tesla on a single level and lose on every other front. It makes the value proposition from Tesla too compelling. They just won't be able to compete.

At least not with that strategy. The path of least resistance to winning is to do the absolute least amount you can do and utilize everything Tesla.

Look at it this way; I want to build some mapping software. It no longer makes sense to start by ordering satellites, launching them, creating programs that stitch the world together, and convert these images to vector maps. That would cost billions of dollars. And by the time you are done spending the money, you will still be way shittier than Google Maps. What makes the most sense is to get an API key from Google and immediately begin without spending anything.

Other auto companies need to adapt this idea as well. It no longer makes sense and likely never will to try to get where Tesla is. It makes far more sense to start where Tesla is and work backwards.

This means, GM/Ford/Toyota/VW, stop what you are doing and ask Tesla for an API key. Take everything about a Model S and sell it in a Lexus under the Lexus brand.

Start by swapping out the logo from Tesla to Lexus. Boom, you have the best Lexus in the world.

These are the agreements that need to be forged. The easiest and cheapest thing on the list above to do yourself is the brand. Other autos need to have Tesla take their vehicles 99% of the way and slap their badge on it. This is the path of least resistance.

However, this is probably unacceptable from the buyer's standpoint. There needs to be a reason somebody would buy a Lexus and not just a Tesla directly.

So, I expect the next least they can do thing would be to integrate the body design. Custom body and slap a Lexus badge on it and you still have the best Lexus.

I think this is what it will come down to. If other auto doesn't capitulate, they won't survive. Tesla will forever be too compelling.

Lastly, I want to put out a prediction that since I feel Fiat/Chrysler has the best relationship with Tesla they are most likely to be the first to do this IMO. This could be a massive opportunity for Chrysler. They can shift all their focus into a new amazing car design. Seek to lure people away from Franz's designs with something unique and awesome.

Posted In:

ABOUT THE AUTHOR:
I am TSLA Long. Model 3 Owner. Brother of a Model 3 owner. Son of a Model S owner. I have reservations for Slate Roof and Cybertruck. I am a Tesla speculator and fanboy. I am not a financial advisor. Investing in anything comes with inherent risk. Short NKLA (Aug 4 2020)