To Tesla, or To Not Tesla…
Which PESTEL factors are the most salient for Tesla’s industry?What are the main opportunities and threats that may affect the industry?
The founding of Tesla was characterized by many mistakes, with early production marred by missed deadlines and post-manufacture failure.
Per ordinary business doctrine, such circumstances would exude illiquidity — especially within the auto manufacturing industry.
However, in Tesla’s case, many fail to consider a significant caveat: Tesla Inc was founded as a technology company, rather than an auto manufacturer — therein affording the organization particular marketplace protections otherwise not realized with domestic auto-makers.
For instance, Tesla’s survival per the aforementioned production errs (at times) was only possible due to investors’ excess liquidity and exuberant spending — a commonality within the tech sector. Tesla, much like early day Amazon, sells ideas rather than products. Therefore Tesla does not necessarily need to make money to remain liquidable, because promoting technological disruption in itself makes money.
Thereby investors weigh US auto-manufacturers, such as Ford Motor Co., at a much grander scale — wherein the afornoted production calamities, could perhaps exude illuqiuidty. The misforgiven investor attitude differentiates US auto manufactures and Tesla Inc. For example, Tesla’s much-needed liquidity — driven by retail investors — during production crunches would not be available to Ford Motor Co., given varying and coexistent expectations.
Tesla is a technology company expected to disrupt the auto industry; whereas, Ford Motor Co. is an auto-manufacturing company, expected to produce and sell traditional vehicles.
Tesla survived as an unprofitable company, (Circa 10’-2020) for one reason:
‘The organization did not need to produce shareholder equity in terms of revenues and profits.’
This somewhat anomalous condition is only possible by investor sentiment, wherein the proliferation of successful disruption pervades traditional investing doctrine. Investors now find the idea of disruption more appealing than line-items on an organization’s balance sheet. Accordingly, investors have inadvertently juxtaposition a unique dichotomy: one that contrasts domestic auto manufacturers to other technology companies, wherein Tesla’s exisistance blurs the premise as to what may be defined as true ‘industry specific competition.’ More specifically, there is much ambiguity in defining the industry to which Tesla Inc competes, in.
To address the concern of Tesla’s position within the market: Tesla is an anomaly for the auto industry when considering its early balance sheet — however, such circumstance is almost ordain when promising investors technological disruption. The promise of technological disruption is largely absent from the auto industry yet a commonality amongst the tech — a caveat also seemingly priced in to Tesla’s Inc’s shareholder’s equity. Therefore, it is safe to conjecture:
Tesla Inc is a technology company first, bound by marketplace protections afforded to other promisors to disruption (such as pre-AWS Amazon.), then it is an auto-manufacturer.
American Auto manufacturers are expected to produce revenues by manufacturing and selling vehicles. Whereas Tesla is expected to deliver technological goods that disrupt an industry, otherwise bound by principals dating Henry Ford. This oddity has afforded Tesla Inc opportunity otherwise not realized within the American auto industry.
Data is king. It is more valuable than oil. .. perhaps Tesla may be better positioned the coming years, given EV success is predicated algorithmic learning; and computers require loads of pre-existing data to learn. Elon should leverage all data collected today for tomorrow. Hopefully Tesla’s early marketplace advantage translates to a long-term competitive advantage. Only time will tell.
Threat (& why?)
Opportunity (& why?)