I think an important advantage is vertical integration. Similar to Apple and iPhone, Tesla controls most of the stack. They can do a lot more than their competitors.
6-years after the release of the Model S, Telsa has yet to turn a profit. And instead, is facing bankruptcy within the next two years unless it can roll over its debt or otherwise raise yet a few more billion $$$$.
Compare and contrast: the iPhone was released in 2007. The Tesla Model S was released in 2012. Steve Jobs died in 2011 (4-years after the iPhone). You can tell that that Apple was a successful company by the time Steve Jobs died.
Furthermore, Apple accomplished its iPhone launch during the 2007 to 2008 financial crisis. In contrast, Tesla's rampup is during the cheapest money ever to be seen in modern history: low interest rates and a grand bull market.
The political, environmental, and financial headwinds Apple faced during its time to create the iPhone were exponentially more difficult than Tesla's. And yet, Apple turned a profit and became a lasting company. The same cannot be said yet of Tesla.
I get that you might not be bullish on Tesla, but do you seriously believe this?
Major US banks were literally going bankrupt, credit dried up. There was almost no opportunity to borrow money, the stock market was crashing, no opportunity to IPO or perform a secondary offering.
Tesla is operating under one of the greatest, and longest, bull markets the US has ever seen. The great 2011 to 2018 (maybe longer??) boom. Tesla has been able to either secondary-offering, or borrow, roughly billion+ each year, every year, since its IPO.
During recent years, its borrowed or otherwise raised over $2 billion / year.
The iPhone actually launched in 2007, the same year in which Apple generated over $24B in revenue and was sitting on $15B in cash at the end of the fiscal year. In 2008, they did $37B in revenue and ended the fiscal year sitting on about $25B in cash.
The claim that Apple's financial challenges with launching a smartphone were "exponentially" greater than Tesla's, is laughable.
I'm not comparing Apple to Tesla. The parent article is. And I'm trying to point out how utterly silly the comparison is.
Quote the first paragraph:
> When Nokia people looked at the first iPhone, they saw a not-great phone with some cool features that they were going to build too, being produced at a small fraction of the volumes they were selling. They shrugged. “No 3G, and just look at the camera!”
> When many car company people look at a Tesla, they see a not-great car with some cool features that they’re going to build too, being produced at a small fraction of the volumes they’re selling. “Look at the fit and finish, and the panel gaps, and the tent!”
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This comparison is fundamentally insane, and shouldn't be the starting point of any serious discussion.
I brought attention to this and showed how ridiculous of an assertion it was.
And now you're saying: "I'm not comparing Apple to Tesla. The parent article is. And I'm trying to point out how utterly silly the comparison is."
The other quotes you've added are all irrelevant. You're all over the place. Give it a rest and come back when you have a properly thought out point to make with some evidence to support it.
Consumer confidence was at all time lows and disposable income saw the biggest drop since the great depression. People were more concerned about whether they'd still have a job and savings rates upticked dramatically while salaries fell.
All your talk about the economic environment during the recession is irrelevant because Apple had $25B cash in the bank and the iPhone was a hit, even though it was a luxury item being sold during the recession. The massive scale of their business and their overall success insulated them from the larger ramifications of the economic downturn. Tesla is operating in the opposite economic environment today, but they are not as financially surefooted as Apple was during the launch of the iPhone. So, to get back to the point, to claim that the financial challenges Apple faced bringing the iPhone to market were exponentially more difficult than Tesla's, just isn't true.
Nobody is saying Apple couldn't afford the R&D to build the physical phones.
Any way you look at it, launching the iPhone, given Apple's cash, marketing muscle, and hw/sw expertise, wasn't as challenging (even in a recession)as bringing an electric vehicle to market and it by no means was "exponentially more difficult" – in the words of the OP.
I don't have anything more to add to this discussion. I think it's clear that the OP's claim is incredibly uninformed and wildly inaccurate.
Come on. Its Mr. Musk's decision to make a company take advantage of debt markets instead of waiting for a few years for the Roadster or Model S to make some profits. Tesla's current financial situation is 100% the decision of Musk.
Musk chose debt and stock offerings because he wanted to take advantage of bull market conditions. He's received something on the order of ~$10 Billion from investors, either from the debt market or the stock market (IPOs or Secondary offerings).
If Tesla were to try its strategy of "IPO to get a ton of money each year, every year" during any other time in US history, it would have literally come across a recession and run out of money.
The Gigafactory was literally built on top of debt and stock offerings. Tesla never had that money to begin with.
Tesla has received $1+ BILLION a year over the past few years from the stock market, and roughly $3.8 Billion from the debt / bond market so far.
A lot of companies would be able to survive if the market magically came up with $2 Billion / year for that company to spend every year.
You might say that its Musk's advantage that he's cultivated the cult of personality. And you'd be correct about that. But I wouldn't call Tesla's financial situation to be "suffering", not by a long shot.
The correct description is "wasted". Musk WASTED the tons, and tons, and tons of money he received from investors. He's not cash flow positive, even after all of these billions of dollars have come in.
$0.813 Billion in 2013: https://www.thestreet.com/story/11924981/1/elon-musk-invests...
$2 Billion in 2014: https://www.ft.com/content/2f2387a0-a00a-11e3-9c65-00144feab...
$0.738 Billion in 2015: http://fortune.com/2015/08/20/tesla-stock-sale-cash/
$1.45 Billion in 2016: https://www.cnbc.com/2016/05/20/tesla-raises-146b-in-stock-s...
$262 Million Stocks + $850 Million Bonds in 2017: https://www.investopedia.com/news/what-market-thinks-about-t...
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Etc. Etc. The financial markets have been very, very kind to Tesla. Any failures on Tesla is 100% Musk's fault at this point. No other company raises billions of dollars every year under normal situations (where "normal" is defined as, any period outside of the 2011 to 2018 bull-run of the current market)
To be more specific, how about the words "Cash Flow Positive" ?? In any case, Tesla has only had ONE profitable quarter since its IPO, and has never had a profitable year.
Which is why the point about margins is so crucial. No one anticipated such great margins on an electric car. The tear down analysis demonstrates that the $35k standard-range Model 3 is not a unicorn, but will be profitable to make and sell once the production lines have any slack at all at the higher price points.
What definition of "long term" do we have here?
How many years did it take for Apple to become profitable from the iPod? The iPad? The iPhone? It was profitable throughout all of those years.
That's the very point of technology gadgets: they don't require huge upfront costs like Tesla. Apple does have innovations (see their custom ARM chip, which is consistently superior to Snapdragon in benchmarks every year). But even with the billions of dollars needed to custom-make an uncore from scratch, Apple remains profitable.
https://www.statista.com/statistics/267728/apples-net-income...
https://www.macrotrends.net/stocks/charts/TSLA/tesla/net-inc...
Since 2005 (and maybe earlier), Apple has made a profit every quarter. Since 2009 (before Tesla's IPO), Tesla has NEVER made a profit.
Its completely insane to compare these two companies. They're run completely differently, aside from both being California based.
Tesla cannot be compared to the 2000-era Apple company. There are simply too many differences.