If you are well-read on Tesla Motors (NASDAQ: TSLA), you'll realize that they will do much more than make electric cars in the future. I will explain why and things that differentiate them from other automakers. Above all, many say that Tesla acts more like a technology company than a car company. First I want to mention their Gigafactory which Tesla last year decided, in collaboration with Panasonic to build and it will produce lithium-ion batteries for their electric cars. The Gigafactory will cost $5 billion to build, Tesla and Panasonic will invest approximately $2 billion each and the rest will industrial partners and the state of Nevada pay. With the help of the factory, is the cost of their car batteries gonna decrease by at least 30%.
Tesla does not only sell cars they also sell a brand...
However, the batteries will also function with other things, it's a very little difference between a lithium-ion battery used to power a car and one used to power a smartphone. Tesla will be able to sell lithium-ion batteries to automakers and other industries such as smartphones manufacturers. It feels safe knowing that the demand for lithium-ion batteries is high and that it could become a "side business" for Tesla.
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Tesla's goal is to save our environment, their accuracy in design, the desire to build the best performing cars with best quality, all this creates value (it's called goodwill). An added value that customers are willing to pay a premium for. Something that really shows that Tesla stands for quality is that they want to sell their cars themselves, not through dealers, they want to give customers the best experience in all situations. The experience is part of the strong ecosystem that Tesla has built up around their brand. The company is very similar to Apple (NASDAQ: AAPL) in this way, something comical is that the media claimed previously that Apple would acquire Tesla. I can say with some certainty that it will not happen, but it's fun to fantasize about it, something the media likes to do. I think that if Apple wanted to buy Tesla they would have done it a long time ago. Tesla has a very strong brand loyalty, and we can see that there are many "fanboys" just like Apple has. If you're interested in Apple can you read this post where I explain why you should invest in the company:
Tesla builds its cars as Apple builds its hardware...
A clear example of Tesla's brand loyalty is when several states prohibited Tesla to sell their cars directly to the customer. They believe that Tesla is a threat to the current car dealership model. Tesla's customers then sent a White House petition which would allow Tesla Motors to sell directly to consumers nationally, it got 138,469 signatures. Since Tesla do not use a dealership network they get closer to their customers (who acts very much like the old Apple fans in the 90s). Tesla builds its cars as Apple builds its hardware, it's fully instrumented and connected back to Tesla. This makes it easier to resolve any problems with the car, and if there is a major problem Tesla quickly send someone to repair it. With conventional car makers, you need to book an appointment and drive to the dealer.
There are also other things that differentiate Tesla from other automakers. For example, they have no marketing, the majority of their money it used for the production costs. Elon Musk has said that when production starts to exceed demand we will probably begin to see advertising from Tesla. The company also did something that surprised many, they released all of its patents. The argument for doing this went something like, if someone were to use their technology to build an electric car Tesla would not sue them because their goal is to replace all gasoline cars to electric cars. Musk believes that there will be a large market and it will be room for many automakers.
Tesla also has an entire infrastructure of superchargers that others will find difficult to compete with in the future.
Tesla also has an entire infrastructure of superchargers that others will find difficult to compete with in the future. I think their network of superchargers will give them a huge advantage in the future. They are building more and more in a very fast pace and all the superchargers will help Tesla to create a stronger brand. In addition, you get to charge your car completely free there. I will write a separate post about Tesla's valuation and why I believe their Supercharger network entitle their valuation. But as you notice, Tesla acts different from other automakers, and most importantly, they have established a premium brand that consumers are willing to pay more for. If you want to read more about Tesla, I have written an article about how they become so successful, you can read it here: Why Tesla Has Been So Successful
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