This is one reason why Tesla is on the road to nowhere. They still don’t know how to manufacture quality products. And all of their competition does. A lot of first time Tesla buyers who weren’t part of the fan group, bought a Tesla to see what all of the fuss was about. They won’t be back for another.
I’ve been a manufacturing financial analyst for over 25 years. If there is one trait more than any other which I’ve seen that either foreshadows amazing success or impending doom, it is this. Quality. Lack of it will kill you. Or a reputation for high quality will make you.
Anyone who compares Tesla to Apple is insane. Because Apple got to their 40% gross margins specifically by avoiding the philosophy of “Move fast and break things”. Whereas this seems to be Tesla’s mission statement. Tesla moves fast, and their cars break. This isn’t a recipe for long-term success.
I’m not impressed by Tesla’s current level of sales in the United States. If you added up the Muscle Car niche, the Camaro, Mustang, Challenger, and Charger. You would have annual sales roughly around 300K units per year. That’s right about where Tesla’s US sales are.
There are 300 thousand people in the United States that want to buy a rear wheel drive front engined car. Do they get worse gas mileage? Yes. Are they harder to get in and out of? Yes? Do they have smaller trunks? Yes. Do they look cool and impress your friends? Yes. Hence, they’ve carved out a nice niche.
Tesla is just a niche. This is where all the Tesla bulls really misunderstand the car market. Tesla fans are not generally from the car crowd. They misunderstand the industry. They mistake the fast creation of a niche market as Tesla is taking over the automotive world.
We’ve seen the peaks and valleys of niche markets before. And one thing that we’ve learned is that they are capped by a certain ceiling depending on how many drawbacks exist to owning that particular kind of car. What this means is that it’s a zero-sum game. Meaning that as more automakers jump into your niche, that potential unit volume gets divided by all the players.
Tesla as a growth story is dead. Sales in the US and Europe are either stalled or shrinking.
Sure, Tesla has their core group of hard-core fans. But this is just another niche like Camaro or Mustang fans. There is nothing special here. And just like the Camaro and Mustang, the general public will never buy Tesla’s due to perceived drawbacks compared to other mass market cars.
If you’re investing in Tesla because you misinterpreted the fast growth of a niche for an automotive revolution than you have a hard lesson coming. Because the Tesla train is already slowing down. And that niche is about to get divided up among more players. With the world heading into a recession, the Tesla train is headed for a brick wall.
Anyone who compares Tesla to Apple is insane. Because Apple got to their 40% gross margins specifically by avoiding the philosophy of “Move fast and break things”. Whereas this seems to be Tesla’s mission statement. Tesla moves fast, and their cars break. This isn’t a recipe for long-term success.
I’m not impressed by Tesla’s current level of sales in the United States. If you added up the Muscle Car niche, the Camaro, Mustang, Challenger, and Charger. You would have annual sales roughly around 300K units per year. That’s right about where Tesla’s US sales are.
There are 300 thousand people in the United States that want to buy a rear wheel drive front engined car. Do they get worse gas mileage? Yes. Are they harder to get in and out of? Yes? Do they have smaller trunks? Yes. Do they look cool and impress your friends? Yes. Hence, they’ve carved out a nice niche.
Tesla is just a niche. This is where all the Tesla bulls really misunderstand the car market. Tesla fans are not generally from the car crowd. They misunderstand the industry. They mistake the fast creation of a niche market as Tesla is taking over the automotive world.
We’ve seen the peaks and valleys of niche markets before. And one thing that we’ve learned is that they are capped by a certain ceiling depending on how many drawbacks exist to owning that particular kind of car. What this means is that it’s a zero-sum game. Meaning that as more automakers jump into your niche, that potential unit volume gets divided by all the players.
Tesla as a growth story is dead. Sales in the US and Europe are either stalled or shrinking.
Sure, Tesla has their core group of hard-core fans. But this is just another niche like Camaro or Mustang fans. There is nothing special here. And just like the Camaro and Mustang, the general public will never buy Tesla’s due to perceived drawbacks compared to other mass market cars.
If you’re investing in Tesla because you misinterpreted the fast growth of a niche for an automotive revolution than you have a hard lesson coming. Because the Tesla train is already slowing down. And that niche is about to get divided up among more players. With the world heading into a recession, the Tesla train is headed for a brick wall.
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