Transcript:
It is time to talk Tesla’s competitive advantages or who knows lack thereof however before doing that I would like to recall a story from the recent past in one of the first videos of this case study I compared Tesla and Apple so please allow me to provide a brief side note here Apple unveiled its first iPhone in 2007 more than 10 years ago ever since they have been one of the two most successful brands in the smartphone market the other one being Samsung without a doubt Apple became the most profitable smartphone producer in the world within this timeframe one would think that established players such as blackberry Nokia Sony Ericsson and even Samsung would have managed to catch up in the premium phone segment in ten years well they haven’t Apple has proven on a consistent basis that it is able to create a superior product and improve it with each new version appearing on the market moreover its customers love the brand and feel connected given that the company has a long history of innovation and was a first mover in the smartphone field the ecosystem Apple has created for iPhone users is amazing different applications synchronization with Mac computers as well as other Apple devices such as iPods and iPads software development continued to improve and Apple successfully overcame its initial production and shipment challenges this elevated Steve Jobs status as one of the most successful businessmen in history and formed a solid fan base of both Steve Jobs and Apple around the world all right why am I telling an Apple story in the lesson about Tesla’s competitive advantages well even though these are different companies operating in dissimilar industries there are several strong resemblances between Tesla and Apple in terms of competitive advantages let’s have a look at Tesla the company has a first mover advantage in the electric vehicles industry Tesla is the pioneer in the market has been involved in the Eevee field ever since it was founded people working at the firm have acquired valuable experience related to building electric cars and understand their peculiarities they have managed to build superb automobiles like the Model S and Model X from the ground up without relying on legacy technology used for fossil fuel vehicles Tesla’s models are optimized in terms of weight distribution battery performance and software capabilities this will make it hard for other players entering the field to catch up and build amazing electric vehicles from scratch however it is reasonable to believe this is not going to last decades especially because Elon Musk decided to make all of Tesla’s patents public nevertheless the fact that Tesla is a first mover gives it strong customer loyalty and a reliable fan base moving forward in addition it allows the company to win a strong market share over the next several years while traditional auto producers try to adapt their business another important advantage is the integrated vision Tesla operates with the company aims to offer clients a highly cohesive ecosystem installing solar roofs and solar panels installing power walls serving as batteries to store the energy that was generated by solar roofs and panels during the day selling electric automobiles that are environmentally friendly recharging these cars during night time with renewable energy while people are at home placing supercharger stations on the road none of the other auto producers intend to offer a combination of these services in 2014 Tesla released its autopilot feature for Model S and Model X all new vehicles the company sells can be equipped with this extra by adding the tech package option the amount of data collected since the launch of autopilot is another very important advantage that will help Tesla in the long run autopilot is based on machine learning algorithms fueled by huge amounts of data the more driving miles during which autopilot has been turned on the more reliable it becomes for customers the experience Tesla gained in this area over the last few years is a significant advantage over other auto producers who will likely have to partner with firms like Google to develop their own version of the service a lot has been said and written about Tesla’s production woes in 2018 yes the company struggled with production of Model 3 in late 2017 and for the first two quarters of 2018 but then it managed to ramp up production and achieve the target of 5,000 automobiles per week meeting its own deadline I am sure a lot was learned in the process maybe all these learnings were already known to traditional auto producers but there is also a slight chance they weren’t the Freemont Tesla factory in California is believed to be a state-of-the-art next generation production facility at some point it was reported that Tesla relied on too many robots to build the model 3 and this was the reason for production struggles well now that many of these issues have been resolved we can also think of the upside of robot automation can you imagine how big of an advantage this could be if Tesla becomes a superior manufacturer compared to the other players in the industry all right great we talked about 4 competitive advantages Tesla could potentially have against competitors let’s consider the fifth and probably most important one branding and outstanding marketing Tesla is a company with an ideal purpose its business credo is centered around sustainability and so to say the firm is in the business of doing good Tesla made all its valuable patents open source proving that its main goal is to help humanity build a more sustainable future such gestures helped Tesla earn the trust of people and build a solid fan base supporters who will likely become customers one day one of the principles that are deeply rooted in our psychology as humans is principle of reciprocity and whenever we as people feel that a person or a company cares deeply about our well-being and tries to build a better future we will be tempted to return the favor and become clients of that company it is very likely that Tesla will be able to sustain this competitive advantage if it keeps course and doesn’t drift away from its identity in addition Tesla’s CEO and major shareholder Elon Musk has become one of the most popular mainstream personalities in the world his track record of continued success Ashlee Vance’s biography book appearances on talk shows and conferences interesting tweets exciting initiatives and charismatic personality have helped him build a recognizable public image this can be another important asset for Tesla in the long run with his charismatic personality musk is able to win over the general public all while making fans feel a part of the journey by regularly sharing the company’s story the combination of great products and Elon Musk’s appeal as a successful entrepreneur are the reason why investment banking research analysts from Nomura said that Tesla has a brand following that is second only to apples okay this is great so let’s consider a few of the similarities between Apple back in the day and Tesla shall we first of all both companies had a rockstar CEO who was one of the most recognizable businesspeople of their generation and who managed to win over the public by telling the company’s story second both Tesla and Apple are two companies focusing on aesthetically pleasing products third besides amazing design the two Silicon Valley firms highly appreciate the importance of software in their devices from the very beginning both Apple and Tesla developed their software in-house and offer it as a part of an integrated system for the two companies offer products that were built from the ground up Apple constructed its phone in house and acquired the expertise to do that on its own the same is valid for Tesla and electric vehicles similarity number five the two firms had a first mover advantage in their respective industries the mobile device market and the electric car industry Apple and Tesla took on established players in their respective sectors number six each of the two firms came up with a product that was significantly better than existing solutions Apple’s first iPhone was years ahead of other phones in 2007 the same is valid for Tesla’s Model S and X vehicles compared to existing electric vehicles number seven of course and obvious but rather important similarity is that both Apple and Tesla are US companies headquartered in the Silicon Valley of the state of California this helps recruit some of the most talented electric and computer engineers in the world similarity number eight so far and probably in the future as well Tesla similarly to Apple will be able to charge premium prices for its vehicles additional services such as autopilot software add-ons the network of free supercharged stations along with a premium brand perception will help sustain that nine both Apple and Tesla operate their own chains of stores selling their products the two companies have a very common desire to control the entire value chain okay great just a few more similarities number 10 Apple’s reluctance to outsource its location app to Google is comparable to Tesla’s reluctance to outsource its autopilot functionality to Google most of Apple’s competitors use the Android platform but Apple resisted and built its own in-house solution right now it appears that Tesla has a similar approach and number eleven this one is quite important both companies have a loyal fan base which is something very rare in the consumer world of our age Tesla and Apple are able to move people the two fans create a connection by telling their stories and being transparent on what they are working on creating a high level of excitement among brand followers awesome some of the competitive advantages we expect will help Tesla in the future are also similar to the competitive advantages that helped Apple establish itself as the most valuable company in the world for an extended period of time whether such a scenario will actually materialize for Tesla remains to be seen and this is precisely why this is such an interesting case study
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