Thursday, February 2, 2023

Tesla is not Apple, Elon Musk is not Steve Jobs and his cars are not the next iPhone

Apple didn’t invent the smartphone and Tesla didn’t invent the electric car, but each has been able to take off and follow the peculiar visions of their top managers to become an integral part of their respective markets.

Over the years, Wall Street pundits like Gene Munster of Loup Ventures and Morgan Stanley have called Tesla the apple of the auto industry; Some analysts have even wondered whether Tesla will More Worth more than Apple in 2030.

Recently, however, the comparisons have begun to settle. Musk’s acquisition of Twitter and his behavior on the social network have spooked Tesla investors, as its shares plunged 65% in 2022.

What should worry investors most is that it’s becoming less clear how Tesla itself can stay competitive in a booming EV market that risks leaving the company behind.

That is, whereas Steve Jobs ran Apple with a steady and consistent (if admittedly imperfect) hand, Musk’s erratic leadership style and extremely public persona suggest that the two tech legends have little in common. And it’s a huge risk to Tesla’s car business, which has shown signs of the iPhone’s lack of staying power.

Tesla is not the next Apple

Apple and Tesla both had first-mover profits, another reason why many analysts like to draw parallels between the two brands. But there are important differences between them.

When Tesla released its first model, the Roadster, in 2008, it was one of the first electric vehicles to hit the market, but it still had years of battles in its production hell and some financial troubles ahead.

When Tesla introduced the best-selling electric cars, the Tesla Model Y and the Tesla Model 3, it had market share in North America.

But that lead was quickly eroded. In 2020, Tesla had 80% of the US electric vehicle market. In 2021, Tesla will have 71%. In 2022, the quota was reduced to 64%. As the US market finally starts to see real competition against Tesla, S&P Global Mobility estimates that its market share will drop to 20% by 2025.

Shrinking market share isn’t catastrophic for Tesla: Part of the reason Tesla’s market share is shrinking is that all automakers will be selling far more EVs. But many investors bet on Tesla stock because they saw the EV market as one where a single company like Tesla could control the majority of the market.

Apple, which debuted with the first mass-selling smartphone, was able to maintain its dominant market share in the United States even as cheaper competitors began to flood the market. It’s not very clear that even Tesla can do this.

On the one hand, the automotive industry is highly fragmented except for electric vehicles. The world’s largest automaker, Toyota, only had 10.5% market share in 2021, nothing to do with the 55% market share that Apple has in the United States.

car cannot be iphone

As Paul Krugman pointed out in his column last month new York TimesOne of the reasons iPhone resists competition is the advantage of network effects: “Everyone uses your products because everyone else uses your products.”

In his newsletter, economist Noah Smith cited an example of Apple’s network effect: developers build apps for iOS because there are a large number of app users. Customers buy iPhones because there is a large and dynamic ecosystem of applications.

It’s very difficult for Tesla to achieve the same type of symbiotic network effect with its cars.

As Smith explains, Tesla tried to build a nationwide network of Supercharger stations that offered much faster charging, but only to Tesla owners. However, the threat of government intervention (and the promise of public funds) was enough to persuade Musk to open Tesla Supercharger stations to all electric vehicle owners.

And while Tesla’s infotainment system has some specialized apps and offers automatic firmware updates, its software offering is unlikely to win over consumers in the same way that iPhone owners are reluctant to switch to Android.

At Tesla and SpaceX, Elon Musk was a jerk with a big vision; he’s just an idiot on twitter

Elon Musk

If not Elon then Steve Jobs

But what about Tesla’s transformational CEO?

Elon was compared to Jobs because after the death of Steve Jobs, the media needed a new CEO, a middle-aged white male and technology prophet. Musk seemed to have a fit, until she didn’t. Musk is more erratic, more distracted, and less willing to delegate than anyone anticipated at the time.

Jobs made decisions that protected his flagship product, the iPhone, which generates most of his revenue, even as competitors tried to regain its position as the top flagship phone.

At a time when Musk should be doing just that, he finds himself embroiled in a never-ending Twitter debacle, with a growing chorus of analysts shouting that Elon Musk’s Twitter obsession is hurting Tesla .

Meanwhile, Tesla has missed its production targets, is forced to offer deep discounts to sell cars, and sees its competitors coming out with newer models with better prices and better reviews.

Tesla may not have invented the iPhone, but the Blackberry did: a bold innovation that fundamentally changed the industry and created a passionate fan base, only to see that market share eroded away by the competition.

Nation World News Desk
Nation World News Deskhttps://nationworldnews.com
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