Why Tesla is not ahead of its competitors GM, Waymo and automakers

In figures, Tesla is growing rapidly. The company is expected to deliver more than twice as many vehicles as last year and its financial results show a remarkable improvement as revenues reach unprecedented levels.

But, even in numbers, Tesla continues to weigh well beyond its weight in terms of actual physical presence in the global automotive industry. It has a partially completed car factory and battery plant in California and Nevada, respectively. Its total manufacturing capacity is about 500,000 a year, while the rest of the industry in the United States alone can produce 14 million. Its market capitalization is greater than that of Ford or Fiat Chrysler Automobiles.

This overwhelming sense of success has led many Tesla boosters to give the company a significant advantage as a first-mover, claiming that Tesla has a huge lead and that everyone will have to catch up.

This case poses two major problems. The first is that the electric vehicle market is currently rather small. Tesla has established itself as an asset in the automotive equivalent of the solid gold smoke notebook market. The solid gold bugles could become really, really big in the coming decades. But for now, well … these are sold gold bullets, and the auto industry is far from sure to build a real mass market in the near future.

Read more: I've tried the new Tesla autopilot feature that helps navigate while driving on highway to see if it's useful – here's the verdict

Second, Tesla will have some leeway to stay competitive. My point of view is that Tesla has the potential to play an important role in the middle of the US market in terms of sales. But to achieve this will require new plants and will have to be built at the price of the 21st century.

Accro to reinvent the wheel

Beyond that, Tesla and his CEO, Elon Musk, are somewhat addicted to reinventing the wheel. A massive investment in the automated assembly of its Fremont plant failed in 2017-2018. Meanwhile, GM upgraded its Orion plant in Michigan to build the Chevy Bolt electric car by strengthening an existing assembly line to handle the heavier weight of electric-battery vehicles and adding an entry point and battery installation process. That was just about everything. And the same line is still building cars with gas tanks.

Another factor to take into account is that the traditional automotive sector does not consider electrification as a major problem. Electric vehicles have existed in one form or another for a century. Tesla under Musk has renamed the electric car, making it sexy and fast rather than virtuous and underpowered. But exchanging gasoline engines for electric propulsion is not a heavy burden. Until now, the industry had avoided it because electric vehicles were much more expensive than gas-powered vehicles. It is difficult to achieve long-term autonomy with electric vehicles and charging infrastructure is reduced. In addition, consumer demand has been weak.

Regulatory pressures and the booming automotive market in China are forcing automakers to rethink electric vehicles, but economic data is far from settled. Nobody really knows if the net profit margins of electric vehicles will materialize, even though Tesla often boasts its 20% gross margins.

For this reason, two great pivots have occurred in the more futuristic field of automobility. The number one is the move to autonomous cars. It's the electric car of the moment, as convincing as electric vehicles ten years ago. Billions of dollars in value are now associated with serious self-help efforts from GM's Cruises division and the Alphabet Waymo.

Mobility-as-a-service is the engine of economic activity

Number two is mobility as a service. Much of the mergers and acquisitions activity in the industry now focuses on alternatives to the automobile and focuses on the highly urbanized environments of the future, which could be extremely hostile to the car. Ford has just bought a scooter startup in San Francisco, Spin, and has already purchased a carpool service in Chariot. GM has developed Maven, a trip sharing service. And various other auto companies are definitely considering using the huge amount of money they have accumulated to sell big SUVs over the last few years to make their own decisions.

Tesla is talking about a networked transport service, but he has nothing yet. In addition, its very traditional independent rental model for its cars is somewhat inconsistent with the idea that customers will want to allow foreigners to borrow vehicles ranging from $ 50,000 to $ 150,000. Nothing like recovering your model 3 with a back seat filled with In-N-Out Packers to prevent you from sharing.

Make no mistake, Tesla is an impressive automaker, the first new player to come forward in decades. But his business model is not infinitely flexible and if someone wants to catch up on mobility as a service, it will probably be Tesla. The company might not succeed. And guess what? It would not be a bad thing. Tesla has significantly improved its electric car game since 2014. That should be enough. It's just the flying attention of Silicon Valley that is endlessly exploring the all-new brilliant thing.