Reply to post: Re: I think Elon needs a holiday...

Would you let DJ E-to-the-Musk set the playlist for your roadtrip?

Anonymous Coward
Anonymous Coward

Re: I think Elon needs a holiday...

I agree, Elon should sell Tesla is to someone who knows the motor business inside out

I suspect this is inevitable.

Despite Tesla's undeserved market capitalisation, and attractive, innovative cars, the reality is that they're a low volume, loss making car producer, tied to a solar PV business that has no synergies with car making. To remediate existing problems in spares and service there's a need for more investment with limited returns, and big management distractions with things they've not previously had to worry about like accident repairs, insurance costs, aftermarket parts logistics. To grow even to become a mid-sized car maker, there's huge capital demands to build new car and battery factories (and reprocessing facilities for the batteries). And although Tesla investors and the equity analysts might believe that the volume car makers are dong too little too late, they're wrong - those companies are doing a hell of a lot of development to ensure that when they launch their products, they will be mass-market ready. When that happens over the next few years, even with the likely exponential growth of EV demand, Tesla go from having almost 100% market share in their target niches, to having a much lower share. And customers (in Europe, certainly) certainly won't keep buying poorly assembled Teslas if there's comparable products from companies that can build cars properly. Even in the US, Consumer Reports rated Tesla as 25 out of 28 on brand reliability.

I don't know if a sale (probably wrapped up as a merger) is Elon's game plan, but in my view if he doesn't do this in the next three years he'll find that the commercial tide turns against Tesla, and he'll be forced to sell out for less. With all the R&D there's probably a strong IP play that can be made for Tesla, but actual making, selling and supporting cars: I don't see a long term future as a standalone car maker. If nothing else, the real volume car makers own entire stables of brands that can share parts and development costs, whereas Tesla are struggling to get three different models on the market. I think Tesla cars are innovative, attractive, desirable, and I'd love to have one, but simply making a better mousetrap has rarely been a business model in its own right.

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