Why Tesla is still in business

BusinessInsider.com

“It’s easy to overlook how unlikely Tesla’s success is,” said Matthew DeBord. In the exceedingly competitive auto industry, upstarts tend to be eliminated swiftly, especially unprofitable ones like Tesla. Yet buoyed by founder Elon Musk’s charisma and an increasingly successful branding strategy, the company is thriving, with a $60 billion market cap and no shortage of headlines. So why has Big Auto not leveraged its financial and political clout “to beat back or eliminate” it? “The answer is simple: Tesla isn’t seen as a threat.” The 500,000 advance orders for the Model 3 were impressive, but “Tesla’s Achilles’ heel is production.” Its well-documented manufacturing issues will

be a significant cap on its growth, and “a potentially ruinous burden,” given its backlog of orders. That’s not to say the auto industry does not widely admire Tesla’s innovation; it compels them to improve their own design and engineering. What’s more, Tesla is “front-running” much of the risk on electric cars. Its investors fund advances in electric technology, underwriting a kind of innovation lab the entire auto industry will eventually benefit from. GM, Ford, VW, and Toyota don’t have “to spend a dime to have Tesla do all the heavy lifting.” Considering that, “the auto industry would be crazy to get rid one of the best things that’s ever happened to the business.”