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Is Tesla doomed?

23 November 2017

EVs are going to be big.

Tesla knows that EVs are going to be big so they're investing huge sums to blaze a new trail into the future and become the preeminent manufacturer of EVs.

However, it seems that someone at Tesla hasn't done their homework and hasn't properly researched the perils of being such a trailblazer.

It is a sad fact that those who make the most money and become industry leaders are often not the trailblazers, but those who come after them.

You see, blazing trails is a difficult, expensive and risky business. Walking the trails blazed by someone else is much easier, cheaper and safer.

Those who blaze the trails often waste incredible amounts of money exploring different options, trying out different strategies, technologies and ideas -- before they finally come up with a viable commercial solution.

All the others who simply follow a short distance behind can learn from the mistakes of the guy up front and save themselves a fortune in capital and wasted time.

Sadly, Tesla is showing all the signs of being a trailblazer who will die of exhaustion before their sweaty corpse is trampled on by the army of more prudent players who have been watching and learning from a safe distance.

What are the give-away signs that Tesla is floundering?

Well first there is the lack of focus.

First we had the Tesla Roadster. This was a great move by Tesla because, more than any other EV before it, the Roadster showed the true potential of an EV.

Acceptable range, fantastic performance and an affordable (to some) price tag. What's more, it didn't look like it had been designed by a committee of packing-crate engineers. It was a desirable car!

Then came the Tesla EV for regular folks, the Model S.

Again, this car proved that using today's technology it is possible to build an EV that is practical in almost every respect. The reliability, performance and range of the Model S reinforced the perception of Tesla's EVs as "the future" of automotive technology.

Tesla even committed to building a gobsmackingly huge factory to build batteries for its EVs, it was so confident that it was going to become "the" EV manufacturer.

But now the wheels seem to be falling off the Tesla wagon a little.

The next announcement from Tesla was the Model 3. This is the company's VolksEV. Cheaper but still very capable, the Model 3 is a car that anyone could afford to own and indeed, pre-orders showed that the market was gagging for it.

So where is the Model 3?

Well apparently all manner of problems have plagued the development and pre-production of the Model 3 and it can ill-afford to delay its launch because right now they're burning cash at a rate of NZ$12,000 per minute.

Another worrying lack of focus was the roll-out of the new Tesla hypercar, an EV that simply blows the socks off every other hypercar on the market, even the incredibly complex and expensive Bugatti Chiron. Yes, for a tiny fraction of the Bugatti's price, the Tesla will outperform and probably outlast that icon of the hypercar marketplace.

Or will it?

Tesla is showing all the signs of a company in trouble right now.

A huge cash burn. A lack of focus on core product. A reliance on pre-orders to fund production (it's called crowdfunding elsewhere and look at how many crowd-funded projects never see the light of day, let alone deliver on their promises) and a propensity to roll out new ideas and concepts whenever more investment capital is required.

Tesla is doing all those things right now, in fact it's not even sure that it's an EV company at all, thanks to already "in trouble" involvement in things such as solar roof tiles.

Now while Tesla is busy wasting huge amounts of time, effort and money designing and building EV truck and hypercar prototypes, I'm pretty sure that the rest of the market are looking at what they're doing and quietly working on their own alternatives.

Large, established car makers in Japan and the USA already have the plant, knowledge, and other resources to punch out vehicle shells and they can pretty quickly get up to speed on the EV drive and control systems so watch for some very big announcements from them over the next 12 months or so.

By being a trailblazer, Tesla has to add sufficient margin to its vehicles that it can recoup the mind-blowingly large cost of setting up its manufacturing facilities -- the Fords, Toyotas, Hondas and others of the world have already paid for that gear many times over.

I find it ironic that despite all its hype, bluster and technology, Tesla aren't the most successful EV manufacturer in the world. That crown is taken by a Renault-Nissan alliance which has already sold 50% more vehicles than Mr Musk's outfit.

Yes, the little Nissan Leaf is blowing Tesla's vehicles out of the water when measured using the only metric that counts -- success in the marketplace.

How on earth did Nissan achieve this miracle?

Well they're not blazing trails, they're simply driving sedately along the trail that others have spent/wasted their fortunes creating.

Clever people at Nissan -- and they're just the start of what I'm sure will be a rapidly growing fleet of "trail followers" who'll do very nicely out of selling EVs.. while Tesla are busy selling dreams.

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