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?
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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