Tesla Motors is like Apple
To understand what exactly is happening in the market right now, it’s worth revisiting the story of Nokia’s rise and fall in the cellphone industry a decade ago. Back until 2007, the cellphone market was widely dominated by Nokia with 440 million units shipped annually, followed by Motorola with 164 million units. Apple released the first iphone that year, however, it sold shipped than 4 million units.
Analysts at the time dismissed Apple as a minor player. Of course, what most analysts missed was that the cellphone industry was about to change. The good, old-fashioned cellphones were now overthrown by the iphone and a new wave of Android-based smartphones.
Nokia executives were not the least bit bothered.
They didn’t have the iphone OS, but they had plenty of high-profile engineers and strong partnerships with mobile network operators from around the globe. They expected they’d be able to launch a better smartphone OS and still remain a major player in the smartphone business.
Delivering an iphonequality smartphone proved to be difficult than they had expected. Attempts to create its own software backfired, and a lucrative NokiaMicrosoft partnership failed to gain momentum. Once the world’s largest mobile phone company, Nokia was forced to sell its mobile phone unit to Microsoft in 2014 – a humiliating end to Nokia’s 14-year lead.
We do not know if something like this in in the cards for Volkswagen, GM and Ford, but it would be one alternative theory to explain why Tesla has such high market capitalization in comparison. Executives in major car companies think they can easily transition to making electric, Ai-driven vehicles, just as Nokia thought it would find its feet in the smartphone world.
Generally, profits in tech industry are more askew than market share. Today, Cupertino giant Apple delivers fewer than 20 percent of the world’s smartphones. Yet, its greatest competitive advantage is its fluid ecosystem – the company makes both the hardware and software to push sales of high-end devices at high margins. Despite the iphone’s seeing smaller crowds, Apple’s quarterly profits often dwarf the profits of all other smartphone makers combined.
Like Apple, Tesla roadsters
have their fans who follow the carmakers every move and are overly-enthusiastic to buy its new products.
Last year, Tesla opened their Gigafactory in Nevada, which is the biggest factory in the world. Tesla is designing batteries capable of storing power from rooftop solar panels. One of Gigafactory’s most promising products is the Powerwall and the Powerpack, rechargeable lithiumion batteries for energy storage. The batteries are intended to be used for home energy storage and store power for solar self-consumption, backup as well as offthe-grid use. The Wall Street calls it a gamechanger for the energy market.
Tesla CEO Elon Musk is hoping that the Gigafactory will give him a head start over centenarian automakers. As other car manufacturers call for electric vehicles push, they’ll find out there aren’t enough batteries, making it difficult to expand electric car production on a scale as massive as Tesla’s.