The big auto companies definitely aren't as nimble in adapting to technological change but that's because they are operating on a completely different scale. Tesla would be no different if was actually selling in more than a handful of countries.
Companies like Toyota have the money, clout and scale in which to absorb any risks and change in the future. Tesla doesn't.
If Tesla finds itself in dire financial straits, they'll be wrapped up and shut down. If GM finds itself in dire financial straits (again), they'll be bailed out (again) or merge, or something. They won't go away.
Which one is more likely to pay back your bond? The one with a virtual guarantee from the government that they'll stay in business, or the tiny startup with a bright future?
> competitive and technological displacement risks
> Which one is more likely to pay back your bond? The one with a virtual guarantee from the government that they'll stay in business, or the tiny startup with a bright future?
There's something I'm pretty sure you don't know. During the last bankruptcy and government bailout, GM bondholders got decimated to the tune of tens of billions (!) of dollars. If hey, there might be another bailout! is the thinking behind the credit rating, it ought not raise the rating.
http://www.factcheck.org/2011/09/ford-motor-co-does-u-turn-o...
You'll see that even the smallest on that list(BMW) has more than 50 times the revenue that Tesla has.
I think there must be something more than the inherent and apparent structural reality of big fish/little fish.
People don't upgrade to a new car every year so Tesla's quicker ability to adapt is somewhat meaningless.
Yep. They also have the government's backing, so if they fuck up in terrible ways and start to go under, the government will just bail them out with taxpayer money. Tesla doesn't have that sort of safety net.
On the other hand, one can argue that this is actually a competitive advantage for Tesla. They basically have no choice but to succeed. There are no well-greased politicians to come to the rescue if they fail.