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The Case for Tesla

What is Tesla moat? Moat is define by what is the core strength of company(Tesla) that prevent other players to compete with it and as such unable to provide value to the market.

Scale Effects:
Tesla has been ramping up their car production up to 6000/week, they have been learning the hard way to ramp up their production hell season.

The gigafactory: They have investing a lot in their gigafactory for their battery technology and according to Ark Invest and Mark Munro (on youtube) their battery technology is superior (about 3 years advance than others) plus the fact they own their own factory. The battery is the ICE world is like the engine part. While BMW, Mercedez and other cars company seems to just outsource their battery technology to third party instead of making on their own.

So, there are 2 points here: one is the battery technology is superior, and two is Tesla control the battery availability and they make sure the supply is there. The first point probably is kind of debatable if that is a good thing or not. The second point i think is very much a strength for the company. Looking at the EV demand seems to be in the tipping point of high growth, especially in China and other parts of the world plus the fact that Tesla just opened their gigafactory in China.

Technology:
I have already mentioned about their battery technology.

The other would be their autonomous vehicle technology, this is related to how many billions of miles data point have they accumulated to make their AV software smart.

Elon also said they will be developing their AI chip that will be 100x faster than the nvidia chip they are using for the inference of autonomous vehicle.

Distribution and Sales:
I want to mentioned their battery charging station distribution around the world + US is another moat that other car company is lacking. They also just been introducing the fast charging v3 that could charge very fast.

Brand:
Tesla brand has been like an Apple on a wheel. People are crazy about the brand, probably like a cult :)

Rate of Innovation:
I have never seen a rate innovation like this on a car company

Elon Musk
Elon Musk himself is kind of 'worship' probably by his followers, kind of like Steve Jobs.

Other business:
The SolarX has a great synergy with Tesla, it is basically an energy company that uses battery
SpaceX probably not so much, their employee can get a discount buying Tesla cars?

what other moat that i miss?

The one thing I would like to emphasize is the autonomous vehicle part, if Tesla somehow could do this for the public road and be the first in the US then the implication will be huge. It will change they way we think about what car is. For some people owning a car does not make sense, it is more convenient just to hail it. If Tesla could make this happen, it will make an impact in the ride hailing industry like Uber, Lift. They could make their own hailing company, or even sell their technology to other company? Nevertheless the world is going to be so much more interesting in the next 2-10 years. I would give another 1 or 2 more years to see the autonomous vehicle is going to start rolling out in our streets and the beginning of mainstream adoption.

Other point I would like to make is demand vs supply. I have heard from many VCs that many of the startup that fails is because of many factors. But one of the most important factors and probably underestimated is Why now? in other words timing is everything, is the market ready for it?

It seems very clear that Tesla timing is on its side, this is demonstrated by the number of preorder that Tesla made from the public even though the product is not out yet. The problem is the supply. Now with the experience of going through production hell last season, we will see if Tesla could keep with the demand.

The other manufacturer could also introduce EV cars, but would people want to buy it? Not so sure with that.

One last point, is their energy business. Energy is fundamental to the economy of the world, without energy nothing will move. If you think about it, country who dominates and manage to creatively use the energy and turns it into something valuable for the market, wins.

The future of energy seems to be going from oil to battery/solar, and it seems Tesla is leading the charge here. we will see how this thing will play out in the future.


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