Tesla is famous for its fast and technologically revolutionary car. But Tesla has other revenue sources, such as Tesla Solar, Insurance, and Energy storage business.
Tesla has no competition because of its vertical integration, excellent financials, advanced manufacturing plant, no dealership model, and industry-leading in-car software.
Tesla is in Great Financial Shape:
According to Yahoo Finance, as of December 2021,
- Tesla’s total debt is $8.87 Billion
- Ford’s total debt is $139.4 Billion
- GM’s total debt is $110.4 Billion
- Daimler’s total debt is $90 Billion
- BMW’s total debt is $104.5 Billion
Except for Tesla, the debt number for other companies is scary.
No other companies are making and selling electric vehicles similar to Tesla. Even though only 2% of the global vehicle fleet is electric today, this number will increase in the future.
The amount of money Tesla invests in R&D and factories; other manufacturers also need an almost similar amount of investment in their EV R&D, battery, and manufacturing plants. It’s because an EV and a gasoline vehicle look identical on the outside, but it’s entirely different inside. EV requires new R&D and manufacturing for the electric motor, battery, power train, control computer, and much more.
Therefore, new investment would surely add new debts to Ford, GM, Toyota, Honda, BMW’s balance sheet. These debts surely will break traditional OEMs.
Moreover, for over a decade, Tesla has been developing and improving its vehicles. They have more experience than other vehicle manufacturers.
Even the newest EV companies such as Lucid, Rivian failed to emulate Tesla’s business model. Lucid is clueless and making a vehicle manufacturing plant in Saudi Arabia, and Rivian recently realized they couldn’t produce their trucks at a reasonable price. Rivian and Lucid’s negative gross margins are staggeringly high for a company.
Therefore, compared to other companies, Tesla is in great financial shape.
Tesla has Advanced Manufacturing Plant:
Ford, GM, Toyota, BMW, etc. companies have been manufacturing their cars almost the same way for over 100 years. On the other hand, Tesla has invested heavily in modernizing its plant.
At the beginning of Model 3 production, Tesla tried to automate the manufacturing plant fully. Even though they failed at that time, they have progressed a lot since then. At this moment, Tesla has the most advanced car manufacturing plant globally.
The VW CEO praised Tesla several times for how fast it can produce a car. For comparison, VW takes 30 hours to assemble a vehicle, whereas Tesla takes less than 10 hours.
— VW Praises and BMW Pans Tesla as German Plant Nears Production by Bloomberg.
In 2021, Tesla produced 1 million EVs; and has a target to make 10 million in 2030. No other EV makers have a manufacturing capacity similar to Tesla.
Superior Self-Driving Technology:
Critics regularly claim that Tesla’s self-driving features are not genuine autonomy. It’s an SAE level 2 driver-assist system. Even Tesla claims their self-driving features are level 2 in California DMV filings. On the contrary, Waymo, BlueCruise is a level 5 full autonomy self-driving system.
However, a YouTube search with the term “FSD beta” would reveal thousands of Tesla owners’ videos where Tesla cars are driving autonomously both on city and highway. Though the Tesla FSD Beta isn’t perfect yet and not ready for mass rollout, these videos show Tesla is heading in the right direction.
Almost bi-weekly, Tesla releases an update for FSD beta, which always shows tremendous progress over the previous version.
From Maine to California, Tesla is testing their FSD beta software. They are designing it in such a way that a Tesla vehicle can drive itself anywhere in the US. FSD beta is a generalized solution for road driving.
Tesla FSD is entirely dependent on camera vision and a powerful computer. There’s no RADAR, LiDAR, HDMaps, or other sensors. Tesla is trying to mimic human driving behavior using computers. A human can drive on any surface road without prior knowledge; similarly, a Tesla vehicle can and will operate on any street in the US, Canada, and Europe.
On the contrary, Waymo, BlueCruise, and other companies are working to solve the self-driving problem differently.
These companies’ approach is to pre-map an area up to centimeter-level (HDMaps). Then they equip their car with expensive LiDAR, RADAR, precision GPS, Cameras, and a powerful computer to drive in that area. The primary problem with this solution is that it is cost-prohibitive and not scalable.
Waymo has been providing self-driving taxi service in Chandler, Arizona, for more than five years. Still, Waymo failed to expand its service area. On top of that, a Waymo vehicle avoids highways, complicated left turns, and can’t operate on a rainy or snowy day. Only recently, they started testing in Los Angeles, California. Even though Waymo proudly advertises its Level 5 full self-driving taxi, it still failed to expand except for a few cities in the last decade.
Even if Waymo succeeds at making scalable and cost-effective Self-driving products, they can’t and don’t produce vehicles. Except for BlueCruise, which Ford owns, all other Self-Driving companies, for example, MobilEye, don’t have any vehicle manufacturing plant.
Therefore Waymo, MobilEye can make money only if they partner with an OEM such as GM, BMW, Toyota, Honda, etc. Unlike the Android business model, the self-driving OEM partnership is bound to trouble.
Tesla is developing their Self-driving software in-house. Therefore, they don’t need to share the software profits with any other company. Therefore, no other company can make a profit like Tesla.
Nowadays, recharging an EV isn’t that problematic. Besides Tesla’s SuperCharger network, there are ElectrifyAmerica and numerous 3rd party EV charging networks.
However, no other charging network provides a seamless, easy-to-use user experience similar to the Tesla SuperCharger network. Furthermore, Tesla SuperChargers are better strategically placed than competitors.
Tesla has No Dealership:
For traditional car companies such as Ford, GM, BMW, Toyota, dealerships are a bottleneck. Due to federal law, these companies can’t sell their vehicles directly to consumers — however, it’s creating a problem for new EVs from these companies. For example, Ford dealers are adding insane markups for Mach E and electric F-150.
Even the Ford CEO Jim Farley praised Tesla for its dealer-less car selling model. It’s why Ford has spun its business into two companies.
— Ford CEO praises Tesla in internal meeting: ‘No one does electric better’ by Electrek.
As there’s no dealership, Tesla can sell its cars directly to consumers. Therefore, there’s no middle man to jack up the price. So, even if the manufacturing cost of EVs from Tesla and Ford are the same, Tesla can sell at a lower price than its competitor.
People Want Tesla:
Tesla made Electric vehicles famous again. In the early 2000s, GM’s EV One was very popular and had a cult following, but GM infamously shut down the EV One. Now, most people want not any EV but a Tesla. Similar to Apple, Tesla has a cool factor that other OEMs lack.