Why is Tesla ahead of the competition?

Many people love Tesla. There are also many people who hate Tesla, Elon Musk, and everything Elon Musk does. These people want Tesla to fail. However, wishful thinking is not reality. Frequently we hear that Tesla has no technological advantage over other car manufacturers. However, it’s not true. In this article, we’re going to discuss how Tesla’s technology is superior and far ahead of its competition.

Sometimes we also hear people say; competition is coming to Tesla. Once the competition comes, Tesla would go bankrupt. However, it did not happen for the last decade. While traditional car manufacturers are complacent and not innovating, Tesla is not wasting time. Let’s explore how Tesla is ahead of its competition.

No dealership:

We don’t know about you, but we hate car dealers. We don’t like them. They are dishonest and don’t work for their customer. They always try to upsell. Buying a new car should be a good experience, but the car dealers make it a nightmare. At this time, we are forced to buy a car from a dealer because it’s the law. US law does not allow a car company to sell its vehicles directly to consumers. As a result, these dealers have a monopoly business. It does not matter which dealer you go to; you will have some bad experience. 

However, Tesla is different. Tesla does not have a dealership system. They sell their cars directly to their customers. If anyone wants to buy a Tesla, they only need to visit tesla.com and place their vehicle’s order. Everything happens online. Upon successful paperwork completion, Tesla will deliver your car to the nearest Tesla delivery Center. You just have to pick up your vehicle from the delivery Center. Sometimes Tesla will deliver your car to your house. This is an entirely new type of experience.

A dealership is a bottleneck in a traditional car manufacturer system because the car manufacturer has to share its profit with the dealer. However, as Tesla sells their car directly to consumers, they don’t need to share its profit with a middleman. As a result, Tesla makes more profit per vehicle. 

Except for Tesla, traditional car manufacturers have to make the electric vehicle and sell it through a car dealer. These car dealers make most of their money through maintenance at their service centers. As we all know, electric cars last a long time without any problem. That’s why traditional car dealers are not interested in selling an electric vehicle. If the dealers are not interested in selling it, it’s a big problem for conventional car manufacturers such as GM, Ford, BMW. 

Full self-driving software:

Tesla has been developing its full self-driving software since 2016. Recent progress shows that Tesla’s self-driving software is far superior to its competitor Waymo. Every Tesla is equipped with all the hardware necessary for full self-driving. A customer only needs to buy the full self-driving software package to enable it. 

We own a Tesla Model 3. We regularly use the self-driving feature in our daily commute. No other car company currently ships a full self-driving software similar to Tesla. Even after 10 years of development, Waymo does not have a customer product. Moreover, Waymo is not available anywhere except Phoenix, Arizona. They are currently testing their software over there. Unfortunately, their technology is still not ready for consumers because they use LiDAR and other expensive hardware, which a consumer can’t afford. 

Cruise self-driving software is also years behind. Moreover, it does not work everywhere. It only works on the highway systems and those roads that are pre-mapped by Cruise.

On the other hand, Tesla self-driving software works on any road in this world. 

Except for Tesla, no other car manufacturers are developing their in-house self-driving software. Waymo, Cruise, Mobileye are all different companies. They’re not car manufacturers. Therefore a car manufacturer has to license the self-driving software from another company, for example, waymo, to include that technology into their vehicle. This will undoubtedly increase the vehicle’s cost. 

Moreover, all other companies are trying to solve the self-driving problem with LiDAR and HD Maps. However, to solve the self-driving problem, we have to solve vision. Other companies are not trying to solve Vision like Tesla. 

We all drive with our two eyes and a brain. If we can drive with two eyes then, of course, a car with 8 cameras and a powerful computer can drive itself. We only need to improve self-driving software. From day one, Tesla is trying to solve self-driving in this approach, and proof shows that Tesla is far ahead of its competitors. 

Tesla makes their electronics:

Tesla designs and makes its electronics, including artificial intelligence processors. No other car manufacturers develop their electronics. Most of the time, they outsource it to another company. This is a bottleneck for a traditional car manufacturer. This approach stifles innovation. For example, Tesla’s AI cheap is far superior, faster, and consumes less energy than its competitor Nvidia’s chip.

Other car manufacturers don’t design and make their chips. They have to rely on other chip manufacturers, for example, Nvidia. As we already have seen, Nvidia cheap is inferior to Tesla cheap. In no way a car from another manufacturer can outperform Tesla in compute performance.

Moreover, Nvidia only sells chips; they don’t have any software. Therefore, a car manufacturer either has to make its self-driving software or rely on other companies.  

If you go with Waymo, you have to buy LiDAR and other expensive Hardware from Google. It definitely will make the car super expensive. If you take Mobileye hardware and software, you have no control over your car’s data. It is why Tesla has dumped Mobileye in 2016 and built its hardware and software in house. 

Superchargers Network:

If you buy any other electric vehicle other than Tesla, it would be tough for you to make a long road trip with that vehicle. It is because only Tesla has an extended superchargers network throughout the world. Yes, we do know that there are other alternatives, for example, Electrify America. However, that Network does not give a similar experience similar to the Tesla supercharger network. We have seen numerous instances where Electrify America does not work and has a bad user experience. 

If you buy a Tesla, you not only can use the superchargers network but also use Electrify America and other charging Networks. However, if you buy an electric vehicle from another company, you have to rely on those third-party networks. You can’t use supercharger Network. 

This supercharging infrastructure is a moat for Tesla.

Other car manufacturers have to convince consumers that they will not face any recharging problem if they buy an electric vehicle. Moreover, those car companies do not have any control over those charging infrastructures. It’s a huge disadvantage.

Therefore, even in the charging network business, Tesla is way ahead of its competitors.

Tesla solar panel:

Tesla not only makes cars but also makes solar panels. Though currently, it’s a small business but Elon Musk predicts that it will be a huge business in the future. No other car companies have a solar panel business. Only Tesla has. 

Other car manufacturers’ income completely comes from selling cars, but Tesla also makes their profit by selling solar panels. It is also a huge revenue source for Tesla.

Tesla is vertically integrated:

Tesla is vertically integrated. Tesla designs its hardware, software, and it makes most of its hardware in house. No other car company is as vertically-integrated as Tesla. Because of this extreme vertical integration and direct sales model, Tesla saves a lot of money. That’s why Tesla has a profit margin of 20% to 25% on each vehicle than its competitor, where they have a maximum of 8% to 10% profit margin.

Energy storage solution:

Tesla also provides battery energy storage solutions for consumers. Tesla also works with big renewable energy companies. Tesla provides battery energy storage solutions for them. We know that we have a limited amount of oil and gas. We have to shift to renewable energy sources. Therefore, in the future, this business will grow rapidly. 

Big oil companies have two problems. One, they don’t have an unlimited supply of oil and gas. Therefore these oil companies will not survive 20 to 30 years later. Two, those car companies that are not making EV’s will become irrelevant after 20 to 30 years. It’s the spiral destruction of two industries.

Here, I want to point out one extra point. As you can see, after 20 to 30 years later, oil companies will face a huge existential threat. That’s why these oil companies are pushing hydrogen-electric vehicles. Because most of the hydrogen comes from methane gas, and these oil companies make this hydrogen gas. They know that electrolysis is not the best way to produce hydrogen. If they push hydrogen-electric vehicles, and it succeeds, those oil companies can survive. However, on numerous occasions, we have seen that a pure battery electric vehicle is superior and energy-efficient than a hydrogen electric vehicle.

Advanced infotainment system:

There are no other car companies that provide an infotainment system similar to Tesla. On the Tesla infotainment system, we have Netflix, Hulu, Disney plus, YouTube, web browser, arcade games, FM radio, Google maps, and other software. Tesla vehicles are a giant iPad on a wheel. No other car company has given this type of entertainment software ever.  

We say that the Tesla infotainment system is an iPhone, and other cars’ infotainment system is a feature phone. 

Tesla has Talented Engineers:

Numerous surveys have shown that young graduates want to work at either Tesla or SpaceX. Talent is essential for a company. Even if a car company wants to make an electric vehicle as good as Tesla, they will fail. It’s because to make an excellent electric vehicle, not only do you need a lot of money to do R&D but also you need a lot of talented engineers. Even if Ford, GM wants to make a compelling electric vehicle, they will never catch Tesla; it’s because all the talented Engineers want to work at Tesla. It is why we see that an electric car made by other car companies always fails to achieve efficiency similar to Tesla. It’s why a Tesla vehicle goes more miles than its competitors with the same amount of battery. 

Elon Musk frequently says that he wants to improve the rate of innovation at Tesla, but he is constrained by talented engineers. There’s a lot of Engineers, but not all of them are super talented. If Elon Musk can’t find enough talented engineers for Tesla, how can other car companies find talented engineers? Therefore, even if traditional car companies try their best, their car will never be similar to Tesla in performance.

Interconnected companies:

Elon Musk has a lot of other companies. SpaceX, Boring Company, Neuralink, Hyperloop, etc. All these companies are interconnected and share technologies. For example, SpaceX Mars rocket Starship uses Tesla motors and batteries to control its fins and other electronics. On the other hand, Tesla uses SpaceX steel to make its cybertruck. There are also various technologies which we are not aware of. Other car companies don’t have this type of advantage to share technologies with a rocket company.

Tesla insurance:

Insurance is a big business. Tesla has started the insurance business in California, and soon they’re going to expand it throughout the country. Many people don’t even know about Tesla insurance. When Tesla’s insurance becomes too big, it will disrupt Geico, Allstate, and other insurance businesses. 

Every time Elon Musk starts a company, everyone ignores it. Until it becomes a problem for other companies, the same thing will happen with Tesla insurance. 

Tesla VTOL:

Believe it or not, in the future, Tesla will make electric airplanes. In several interviews, Elon Musk said that to make a practical electric airplane, we need a 400 kilowatt-hours per kg energy density battery. Tesla battery currently at 350 kilowatt-hours per kg energy density. Therefore, we believe that when Tesla’s battery improves up to 400 kilowatt-hours per kg energy density, Tesla will announce an electric VTOL. 

No other car companies are even considering making an excellent electric vehicle, let alone an electric airplane. Other car companies don’t even have the right battery technology, a good battery management system, or software. Traditional car manufacturers can’t compete with Tesla. They even don’t realize that they can’t compete with Tesla. They’re doing profitable business today that does not mean they will be able to do profitable business 10 years later.

Conclusion:

From the discussion above, we can see that Tesla has an advantage in every sector over other car companies. Software, battery technology, vertical integration, supercharger network, Tesla insurance, direct sales model, etc., everywhere, Tesla is far ahead of its competitor. Other companies can’t beat Tesla’s business model. 

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