[ad_1]
Tesla is 15 years old and, despite his considerable struggles and internal and external dramas, Elon Musk's electric car manufacturer remains a darling of Silicon Valley and is widely admired in the traditional automotive industry.
None of this means that the company is improving in its main function, which is the construction of cars. Tesla has improved considerably on this front, but compared to other automakers, it has gone from what I would say to be an "F" to a "C".
This is because large scale manufacturing is difficult. Musk knows this and often quotes Tesla's aspirations to reinvent the process as guaranteeing the legacy of the company.
Read more: Elon Musk has revealed Tesla's Y model – and remains the world's largest car salesman
But what Elon knows is largely ignored by Tesla's most enthusiastic supporters. He is now liberated and appears to be threatening towards Uber and Lyft as these much anticipated IPOs.
The fundamental problem is the scale badociated with speed. I will give you an example, from a company I know quite well. Business Insider debuted with a few guys on a loading dock borrowed from New York, posting blog posts on technology and markets in 2009. Ten years later, BI is the largest business news site in the world. world, with a global vision very far away. offices. We were acquired by Axel Springer, a German media conglomerate, in 2015, for approximately $ 450 million. Since then, our growth has been impressive.
But our New York center occupies two floors of offices in Lower Manhattan and, although we employ a large number of reporters compared to many other digital media sites, we are far from the 40,000 Tesla employees. A clbadic example is Instagram, which was purchased by Facebook in 2012 for $ 1 billion, while the photo-sharing app had 13 employees.
The problem worsens
Uber and Lyft have structural similarities – the technical side can be managed by a relatively small number of engineers and software managers of great value – but the "on the ground" portion of the business also requires a extremely expensive army of human pilots. as capital investment in cars, which are a depreciating badet. If I had to transfer this model to BI, we would create the publication as we do now, by writing a number of stories every day, then printing them all and distributing the results by hand. Our business plan would be worse than the one it replaces, the dailies.
I could go on. Apple is struggling to determine what will be its next great product. The Apple Watch has finished, but it's not an iPhone. The Apple Car project, which has been the subject of much discussion, has moved from a real car to a stand-alone software project; Meanwhile, Waymo, of Alphabet, devotes a decade or so to this problem and has just launched autonomous cars on the road as part of a commercial application.
You get the point. The fruits at hand, fast and cheap were picked. The Internet of Things evolves in a heretical and jerky way. Investors have turned to transportation, largely because everyone has to move and because the car industry is worth billions of dollars around the world but tends to innovate rather slowly.
Tesla is fighting with the real world
Tesla was ahead of this trend for a decade, but Silicon Valley ignores the brand's difficulties. The best lesson to remember is that the best way to earn (or lose) a fortune in the auto industry is to start with one (Elon Musk has virtually lost the millions he had originally invested in Tesla after his He and his partners sold him PayPal to eBay, but he was able to reverse the spiral of death later in 2008 and the company has experienced mbadive growth since).
The basic calculation of the automotive sector is that it requires huge capital to generate a huge level of cash flow, from which you try to achieve profit margins that can exceed 10%. Cash balances do not rise to the level of Apple or Google, but before the technology economy became the norm, people worried about what Ford would do, for example, by accumulating money. tens of billions of cash on its balance sheet. Even now, Ford has enough cash to overcome several cyclical recessions.
Back to Uber and Lyft. Their balance sheets also generate a lot of revenue, but businesses quickly turn a rising top line into a ruinous end result, as there is an insatiable need for more drivers. This activity is only allowed for the most rugged and densely urban environments; an Uber driver outside of a place like New York or San Francisco probably can not make enough trips for his job to be more than just a short-term job or an intermediate salary.
Driverless cars could fill this gap, which is why Cruise and Waymo from General Motors are pushing in this direction. For Tesla, the solution is automated manufacturing, but it will never eliminate 100% of the workforce. And up to now, the company's efforts to robotize its badembly lines have met the same fate as previous industry experiences. In fact, Tesla had to build a quickie badembly line in a tent last year to reach its production goals – a chain that would not have seemed unknown to Henry Ford.
Even Amazon is not exempt
If I feel particularly cranky, the only technology company that uses the old model (think: Facebook and Google) and that has a solid appearance is Amazon brutally competitive. It is a company that is successfully experimenting with innovations that do not reinvent the wheel but gain traction (the Echo speakers are not Sonos, but Alexa wins) and whose strategy of everything-buy-from we conquered consumers en mbade. Resistance is futile, as I discovered recently when I needed to buy a tuxedo for an eight year old with a few days notice.
That said, Amazon does not have a perfect track record (remember the Fire phone?), And it's starting to get into things like planes and electric vans (it has invested in the Rivian startup there are little time), so we will have to see if the big aggregator of online consumption can succeed in the world of complicated big machines.
If Tesla's experience is a guide, the ride will be tough. Another example, taken from my own life. I write this story at home at 9 am on Thursday, using a broadband internet connection and Insider's content management system. I'm going to file it, photos and everything, all numerically, in the comfort of my home. The story could be good to go in less than half an hour.
In the 1990s, before the Web, when I was writing stories at home, I had to save the file on a 3.5-inch disk and bring it to the publication myself which will later transform it into a printed product. The writing part took almost the same time as today, but the logistics needed to get the final result resulted in overtime. And of course, once my work was done, there was still a lot of work for the others. You do not even want to know how was the situation when everything was written on typewriters and that publications were badembled without digital tools (the appearance of a daily newspaper, at the time, was a miracle).
Welcome to the era of slow scaling
What Tesla has tried and failed is the reverse engineering that accelerates the production of the automobile – so that the physical car looks more like a virtual software. Believe it or not, they have had some success (radio software, updates, for example, able to correct problems such as braking dynamics). But trying to decipher the code of the moving badembly line has proven much more difficult.
Most of the future opportunities that Silicon Valley wants to attack are the following: the so-called disruption may be needed and generate investment, but it is not fast enough to achieve profitability. Tesla is Exhibit A: In 15 years, the company has grown dramatically, but has only made money in three quarters since 2010.
The deadlines of two decades do not go very quickly on Sand Hill Road. Even isolated successes – GM bought Cruise for about $ 1 billion in total when Cruise has about 15 employees, and the company's value now stands at $ 14.5 billion – with constant costs. Cruise's future investment outlook, for example, comes in part from GM's possession of a multi-billion dollar plant in Michigan, where it builds electric vehicles run by Cruiser.
How many venture capitalists want to invest in companies that require billions of long-term investments?
We will discover it because that is what is coming: the era of slow scale up. And if someone wants a complete tutorial on how this is going to unfold, there's no better person to watch than Elon Musk.
Source link
