I am intrigued by this car because it represents a whole new way of thinking about what a car actually is…. This is the most relaxing thing I have ever driven,” motoring commentator Jeremy Clarkson recently said while reviewing the self-driving Tesla Model X. Perhaps petrolhead Clarkson will never buy an electric car because he simply likes “the sound of a V8” but the latest review marks a change in attitude that in 2011 had ended in a legal trial with Tesla taking on team Top Gear in a long-drawn libel battle (Clarkson won) over a 2008 review of the Tesla Roadster.
That’s water under the bridge and what matters is that Clarkson has faith in electric cars at the moment, a category that Tesla not only leads, it is a company now worth $1 trillion. Company founder and CEO Elon Musk has struck gold as Tesla’s stock market capitalisation reached $1.03 trillion earlier this week. Only three years ago, Apple became the first trillion-dollar company by market cap. Next it was the turn of Microsoft, Amazon and Alphabet (parent of Google). And Tesla is a special member of this club as its market cap now exceeds that of the next nine largest auto makers combined (despite selling a fraction of the volume of cars that they do).
Setting the agenda
The figure becomes symbolic when one looks at what it means for car making in general. Tesla is not just about literally hitting the iron when it’s hot to mould it. Musk’s team integrates software and hardware, they continue to invest heavily in battery-related R&D, the folks at the Palo Alto-HQed company (soon it will shift to Texas) deal in carbon credits… it’s unlike what its long-established competitors are used to. Not just battery, there is the matter of custom AI chip and the ginormous amount of data it collects from connected Tesla cars to make the future of automated motoring safe.
During the pandemic, the company has enjoyed unusual success. The global auto industry was down, down badly, by almost 20 per cent, the Financial Times reports that the company’s third quarter sales surged by 73 per. And Morgan Stanley forecasts that Tesla’s production capacity will increase from 1.3m cars this year to 8.1m in 2030.
Tech on wheels
Frankly, Tesla’s approach is not very different from that of Apple. Musk is in full control of Tesla’s manufacturing chain and like Apple, it always puts customer experience before anything else. If Apple taught the tech world to think differently, Tesla is doing the same for cars through innovations, which ultimately creates investor interest. Taking a leaf out of the Apple playbook, Tesla cars are also aspirational and exclusive.
Both companies combine hardware and software seamlessly enough to make the non-tech user feel comfortable. In fact, some even wonder whether Tesla is a tech company making cars. In March, Musk changed his official designation at Tesla to ‘Technoking’.
If Apple loves its lightning connectors, Tesla is head over heels with its unique charging connector. Musk’s company has the world’s largest fast-charging network, consisting of more than 25,000 Superchargers and, like on iPhones, software updates are delivered over-the-air across its user base at the same time.
A strong leader
Elon Musk has the final say in every department at Tesla. If he thinks a new steering wheel shape is required, it will be delivered, like on the Model S cars. The man has a clear vision of where his company should be in the next few years.
“When you own the company, you can do whatever you want. Some people love it and some people hate it, but that’s why all other cars look alike. Because everything else has to be designed by committee,” lifelong car enthusiast Jay Leno recently pointed out.
What he now needs to work on is a plan for India. Boosted by his popularity, Tesla is largely seen as a prestigious brand in China while in India, the brand has an excellent recall value. Recently, Union minister Nitin Gadkari had asked the electric vehicle manufacturer to not sell China-manufactured cars in India and also urged Musk’s company to export its cars manufactured in India. For Musk, one of the issues that remains contentious is import duty on cars.
If Tesla looks at Apple’s game, some sort of a working deal should help. Last week, Apple announced that strong iPhone and iPad demand led the company to double its market share in India this year. Look at how far Apple has come. Look at the consumer base Tesla is missing out on. Most carmakers are too caught up their residual combustion engine units. Tesla doesn’t come with that baggage. And that’s what has made it a $1 trillion company.
File picture of Jay Leno with Elon Musk
Apple CEO Tim Cook
Revenue generated each hour
Amazon: $51.3 million per hour
Apple: $38.6 million per hour
Google: $30.1 million per hour
Microsoft: $20.9 million per hour
Facebook: $13.4 million per hour
Tesla: $6.4 million per hour
Netflix: $3.5 million per hour
Time it took to reach a $900b valuation
Tesla: 18 years, 3 months
Google: 21 years, 2 months
Amazon: 24 years, 0.5 months
Apple: 41 years, 7 months
Microsoft: 43 years, 11 months
Source: Jon Erlichman
