Tesla Dominance: what happens when customers realize there is a better way

It’s always amusing, the argument that Tesla is insignificant because annual sales and revenue are dwarfed by Ford, General Motors, Toyota, Volkswagen. Fair enough, under the premise that total sales or total revenue are the only or best or true metrics. Is perpetual growth in sales or revenue, sometimes at any cost including lying to the public, representative of healthy companies with attractive investment opportunities?

What happens when customers realize there is a better way? When customers realize that frequent trips to the gas station, regularly scheduled maintenance, unplanned repair bills for parts they couldn’t identify that do things they don’t understand, isn’t the only way?

Are there people who like this customer experience? Of course. Are there people who don’t recognize another way is possible? Definitely. Are there people who do know that better is here but will be reluctant to change until everyone else has done so? Yes.

What if the metrics for success in the auto industry no longer apply? Ford, General Motors, Toyota, Volkswagen make most of their money selling cars to dealers. Those dealers then separately make most of their money selling parts and service. The comparison makes little sense when there are no dealer sales and the parts and service money is almost completely different — tire rotations yes, but also over-the-air software upgrades in your own garage while you sleep. It makes even less sense when Tesla apparently owns the supply chain as a result of this difference.

The 2021 annual reports and earnings statements of the major auto manufacturers will undoubtedly provide a useful means of comparison based on traditional financial metrics. The traditionalists will still need to justify why it’s a fair to compare Tesla to the rest when the former makes and sells cars and service as well as the fuel while the latter just sells cars to dealers.