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How Tesla could dominate the auto industry




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A car of the Tesla Model 3 can be seen. (Photo by Chesnot / Getty Images)

One of the stronger arguments advanced by Tesla bears I expect big automakers such as Ford, Mercedes, Honda and Toyota will eventually release a "Tesla killer." Gorden Lam, one of my managers, does not see it that fast, there are good reasons why Tesla If this does not turn up soon, Tesla seems to dominate the auto industry in just a few years.

Where is the Competition?

Five years ago, Citron Research shorted Tesla for predicting the following:

By As this (Tesla) product approaches the market, there will be several other 200-mile plug-ins that have been on the market for years.

Earlier this week, when Citron undid its short position, they said unless "Tesla destroys di e competition ".

But what is the competition? Is it electric cars? Are they luxury cars? Are these cars?

From the above quote, it would seem as if Citron five years ago believed the competition would come from other 200-mile plug-ins. However, according to recent reports, it is clear that Tesla attracts customers throughout the luxury car market, not just in the all-electric luxury car market.

This is a good sign for the future of Tesla, not so much for companies that produce cars powered by internal combustion engines (ICE).

As Tesla's production increases and fixed costs are split among several cars, Tesla will be able to make a profit with lower-priced cars that can compete with ICE vehicles.

On Wednesday Elon Musk demanded that Tesla increase production from 5,000 to 7,000 cars a week without spending much money. Think about it! Tesla can produce 40% more cars without increasing fixed costs many times over.

Musk did not say that, but I think fixed costs per car are about 40% lower. If that happens, I think Tesla will be able to compete profitably with the buyers of mainstream automobiles.

How will the competitors react?

Like Citron Research, I'm surprised how ineffective the leading automotive companies were in developing a "Tesla" -killer.

Instead of competing with Tesla, Ford seems to be running away, and in April, Ford announced that they would topple traditional cars from their product line to focus on crossover and SUVs, which makes sense from an auditor's point of view Ford's Most Profitable Products

Since there is no reason why Tesla can not make an SUV, Ford's decision to focus on their high-margin products protects Tesla only for the time being.

Mercedes and Volvo have shown concept vehicles, which basically means they are still years away from production.

GM currently sells the Chevy Bolt, which looks like a competitor on paper, but Gorden Lam points out that sales of the Bolt declined 40% in September, while Tesla's Model 3 was the fifth-best car customers talked about, honestly looking at both cars Do you prefer to own?

The award-winning Chevy Bolt EV will be presented during the four-day auto show AutoMobility. (Photo by David McNew / Getty Images)

It's almost as if GM did not want to sell too many bolts. This would be useful if the Bolt is a loser and GM only sells it to get ZEV credits.

I do not know what GM thinks, but the Bolt is not a Tesla killer.

The Clock Is Ticking

If it turns out that customers prefer to fuel their cars at $ 1

a day instead of $ 50 a week, the current leaders in the automotive industry are extremely unprepared.

To compete, they must do this overcome two major hurdles.

First, they must find a battery source for their cars that is competitive with those of Tesla. Musk said in the last call that Tesla batteries have the lowest cost per kilowatt-hour. This could be an exaggeration, but the fact is that a competitor must reach the cost of Tesla per kilowatt-hour or give away a big advantage to Tesla.

Second, they must offer customers a way to charge their cars on long journeys. Otherwise, customers need a second car for long trips.

One reason the big car companies are not taking steps to effectively compete with Tesla is that it's cannibalizing their existing business.

It takes a strong leader to convince everyone involved in the business to make major investments to compete in a business where you have no advantage and can not undermine your existing profits.

I do not think the other car's CEOs can do this step. Musk was able to do that because Tesla had no ICE car profits in order to cannibalize.

We've already seen that

When Apple released the iPhone in 2007, many investors thought about Nokia, Motorola, Blackberry and Sony Ericsson. That would be done quickly by Apple.

Over time, mobile industry leaders have almost completely changed. The process took years to develop and generated a lot of wealth for those who saw it coming early.

The situation is now repeated with Tesla. There are a lot of people who are betting that the leaders of today's auto industry will reduce Tesla's threat. They have the resources, but they are not moving very fast.

Until we launch a serious model 3 competitor, I bet on Tesla.

If you want to be notified when Gorden Lam updates his views, click here.

If you want to be notified when I write about Tesla or other shares that you and I are both following, click here.

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A Tesla Model 3 automobile is on display. (Photo by Chesnot / Getty Images)

One of the stronger arguments advanced by Tesla bears is that they are major automakers such as Ford , Mercedes, Honda and Toyota finally want to release a "Tesla killer." Gorden Lam, one of my managers, does not see it that fast, there are good reasons why Tesla currently has no real competitors, if one does not show up soon

Five years Ago, Citron Research has short-circuited Tesla because they foresaw the following:

If this (Tesla) product even As the market approaches, there will be several other 200-mile plug-ins that have been on the market for years.

Earlier When Citron lifted its short position this week, they said it was "because Tesla is the competition destroyed. "

But what is the competition? Are they electric cars? Are they luxury cars? Are these cars?

From the above quote, it would seem as if Citron five years ago believed the competition would come from other 200-mile plug-ins. However, according to recent reports, it is clear that Tesla attracts customers throughout the luxury car market, not just in the all-electric luxury car market.

This is a good sign for the future of Tesla, not so much for companies that produce cars powered by internal combustion engines (ICE).

As Tesla's production increases and fixed costs are split among several cars, Tesla will be able to make a profit with lower-priced cars that can compete with ICE vehicles.

On Wednesday Elon Musk demanded that Tesla increase production from 5,000 to 7,000 cars a week without spending a lot of money. Think about it! Tesla can produce 40% more cars without increasing fixed costs many times over.

Musk did not say that, but I think fixed costs per car are about 40% lower. If that happens, I think Tesla will be able to compete profitably with the buyers of mainstream automobiles.

How will the competitors react?

Like Citron Research, I'm surprised how ineffective the leading automotive companies were in developing a "Tesla" -killer.

Instead of competing with Tesla, Ford seems to be running away, and in April, Ford announced that they would topple traditional cars from their product line to focus on crossover and SUVs, which makes sense from an auditor's point of view Ford's Most Profitable Products

Since there is no reason why Tesla can not make an SUV, Ford's decision to focus on their high-margin products protects Tesla only for the time being.

Mercedes and Volvo have shown concept vehicles, which basically means they are still years away from production.

GM currently sells the Chevy Bolt, which looks like a competitor on paper, but Gorden Lam points out that sales of the Bolt declined 40% in September, while Tesla's Model 3 was the fifth-best car customers talked about, honestly looking at both cars Do you prefer to own?

The award-winning Chevy Bolt EV will be showcased during AutoMobility, the four-day auto show. (Photo by David McNew / Getty Images)

It's almost as if GM did not want to sell too many bolts. This would be useful if the Bolt is a loser and GM only sells it to get ZEV credits.

I do not know what GM thinks, but the Bolt is not a Tesla killer.

The Clock Is Ticking

If it turns out that customers prefer to fuel their cars at $ 1 a day instead of $ 50 a week, the current leaders in the automotive industry are extremely unprepared.

To compete, they must do this overcome two major hurdles.

First, they must find a battery source for their cars that is competitive with those of Tesla. Musk said in the last call that Tesla batteries have the lowest cost per kilowatt-hour. This could be an exaggeration, but the fact is that a competitor must reach the cost of Tesla per kilowatt-hour or give away a big advantage to Tesla.

Second, they must offer customers a way to charge their cars on long journeys. Otherwise, customers need a second car for long trips.

One reason the big car companies are not taking steps to effectively compete with Tesla is that it's cannibalizing their existing business.

It takes a strong leader to convince everyone involved in the business to make major investments to compete in a business where you have no advantage and can not undermine your existing profits.

I do not think the other car's CEOs can do this step. Musk was able to do that because Tesla had no ICE car profits in order to cannibalize.

We've already seen that

When Apple released the iPhone in 2007, many investors thought about Nokia, Motorola, Blackberry and Sony Ericsson. That would be done quickly by Apple.

Over time, mobile industry leaders have almost completely changed. The process took years to develop and generated a lot of wealth for those who saw it coming early.

The situation is now repeated with Tesla. There are a lot of people who are betting that the leaders of today's auto industry will reduce Tesla's threat. They have the resources, but they are not moving very fast.

Until we launch a serious model 3 competitor, I bet on Tesla. [19659008] If you want to be notified when Gorden Lam updates his views, click here.

If you want to be notified when I write about Tesla or other stocks that you and I both follow, click here.


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