It's June 2018 and things are not looking good for Tesla.
High expenses, not enough revenues to make a profit, not able to meet production goals.
And yet, the Tesla will win.
In Ocean's 11 Brad Pitt asks George Clooney: "why do it"? Why try to rob the casino? Clooney responds:
Because the house always wins. Play long enough, you never change the stakes, the house takes you. Unless, when that perfect hand comes along, you bet big, and then you take the house.
So what is Tesla's perfect hand?
In normal circumstances starting a car company would be foolish. The last successful US car company was Chrysler, started in 1925. There were over 100 car companies in early days that failed.
If you never change the stakes, the house takes you.
Established car companies had too many insurmountable advantages: established brands that sell millions of cars per year, factories that would take decades and billions to replicate, dealership network for distribution, marketing budget measured in billions.
Electrification is a once-in-a-century technological change that creates an opening for a new company.
Elon Musk took that opening and made it into a perfect hand.
Making an EV car is not enough to create a lasting advantage which is why Tesla also had to bet big.
They are not just making a car, they are re-making every aspect of car business:
- investing into battery production
- investing in a world-wide network of chargers
- replacing dealership system with Tesla owned showrooms inspired by Apple Store strategy
- reinventing repair and maintenance support in form of mobile network
- taking design bets on controversial features like spartan interior without physical knobs and controlling a car via a screen
- writing all their software (including infotainment, web browser, mapping, directions) in house
- writing self-driving software
Traditional car industry has a hard time responding to those strategic moves.
They don't have the stomach for risky, multi-billion dollar investments in battery technology.
They don't have the stomach to spend lots of money on ambitious car charging network..
They can't break up with dealerships and start selling directly to users because the law doesn't allow for that.
They could build their own repair network but that would piss off dealerships and they don't seem to think it's a big advantage.
Their electric cars are worse than their ICE cars. So far no attempts at radical reinvention.
Traditionally car companies would outsource the user facing software. There's no indication that it changed. But even if they did decide to write their own infotainment software and their own mapping and routing software, it would take a couple of years, at least as much time it took Tesla to do the same.