[donogh]

Tesla is the Apple of the auto industry. They are getting stellar customer satisfaction ratings, which is translating into brand loyalty[1]. They've built an ecosystem between their above-average EV hardware, industry-leading software (with frequent improvements), and a top-notch charging network.

I can see some automakers matching them on hardware, but they have a huge lead in software. Traditional car manufacturers update software at a glacial pace and, aside from Mercedes' recent voice control system, I haven't seen anything come close.

Also, Musk is right: no one else has even come close to matching the 2012 Model S. Tesla's lead is starting to look unassailable (in the medium term).

Not to mention their foothold in China, which can only get stronger with the introduction of a Chinese-designed model.

[1] https://cleantechnica.com/2019/01/09/tesla-has-the-highest-c...

[charliemil4]

On the surface, 'user experience' is a good starting point to align Tesla with Apple. However, I look at the underlying product / service being offered to see if their trajectories should strongly correlate, and when analyzing this way they have significant differences in addressing their core product - which means the Apple - Tesla narrative should not be the defacto response.

Here's what I mean: Apple has always been about bringing computing to the masses. What happens with one person and one computer is Transformational (was never done before, changes society), Platformable (random people build on top of your core product: raw computation, frameworks, etc.), and Valuable to the end user (I now can communicate high bitrate, FaceTime, and low bit rate, twitter, messages real-time, all the time).

Placing Tesla in that same bin doesn't necessarily check the boxes. Tesla's product is personal transportation, and when you look at the three categories above, Tesla is not in the Apple echelon. Tansformational: the Model T was the first and we now have a 5 day work week because of it. Platformable: you can't build directly on top of the driving experience, only entertainment purposes. Consolation: Robotaxi's could allow such platformable-like characteristics - however, the robotaxi platform is discounted as it is not mass platformable as having a Mac, learning Swift, then publishing to millions. Valuable: Tesla's value is in 'a faster horse'... except we call it a 'self-driving car'. Transportation time will not significantly decrease just because the car drives itself. Sure, a faster horse would have been really loved because it was faster (i.e. I no longer have the stress of driving), but when it comes down to it... the core value of transportation is A-B.

The iPhone level change to me is coming with Flying Taxis. The platform side is still out - but as far as transformational and valuable - I see no greater impact on the 2020's than these flying machines.

[devtul]

Self-driving cars wouldn't be a faster horse, but a carriage for everyone type deal. At least if we manage to overcome the limitation of needing the driver to be paying attention to the road, even when the car is in auto.

[jfengel]

Self-driving cars have the possibility to be transformational rather than evolutionary.

Self-driving cars mean you can get rid of on-street parking, freeing up a lot of travel lanes. They will speed up driving, since they have better reaction times and can communicate with each other to travel more closely. The time you do spend in a car can be more productive, effectively opening up whole new hours of your life. You can use them to move children around without having to drive them, opening up new educational opportunities. Ultimately tens of thousands of lives per year will be saved: humans are terrible drivers.

I don't really know what it will be like: transformational change is always unpredictable. Our entire physical infrastructure is built around driving, both in the cities and elsewhere, and changing the way we relate to our cars can radically alter the way we construct our lives. Maybe nothing will happen, but it's worth considering that this is a real technology that is getting very close and has enormous potential far beyond the "faster horse".

[ecommerceguy]

I've read somewhere that Cadillac's Super Cruise is vastly superior compared to Tesla's autopilot. I'm not sure the software gap is as wide as you think.

[cptskippy]

Cadillac's Super Cruise and Tesla's autopilot are very different systems. Super Cruise relies on detailed Lidar maps, cameras, and radar to function and will only function on scanned limited access highways. It's like operating a slot car on a closed track.

From a software and sophistication perspective, Autopilot is a more advanced system that improves over time. It uses Machine Learning and other advanced techniques to read the road and comprehend it in a way that Super Cruise does not. It does not have the operational limitations that Super Cruise does.

Functionally Super Cruise works well, it's debatable if it performs better. Most reviews I've read of the two systems, from 2 years ago, found them to be functionally comparable at the time. The primary difference is that it Super Cruise is more akin to a flip phone with fixed functionality that won't grow over time, AutoPilot is more like a smartphone that is updated overtime to expand it's capability.

[6gvONxR4sf7o]

That doesn't seem entirely accurate. Super cruise only works in supported areas, and it gets updates at a dealership instead of over the air. Both will improve over time and both appear to use ML.

[cptskippy]

> That doesn't seem entirely accurate.

How so?

Super Cruise requires that the car's forward collision avoidance, and adaptive cruise control technologies be enabled. It utilizes pre-scanned high precision LIDAR and GPS derived maps that limit where it can travel, and is 100% reliant on GPS to maintain it's lane.

It cannot change lanes or steer around navigate traffic. It won't function in exit lanes. It won't function in tunnels. It can't navigate exchanges. It doesn't work in adverse weather conditions where GPS is spotty.

The built-in safety technologies keep it from colliding with other vehicles, and the GPS/Maps keep it in it's lane. It functions like a slot car and can't deviate from it's slot. It's not a sophisticated AND that's not necessarily a bad thing.

> it gets updates at a dealership instead of over the air.

That might be true of the software but Super Cruise receives updated Map data at least quarterly via OTA updates from the On-Star system.

> both appear to use ML.

The most sophisticated part of the system is the camera that monitors the driver to determine if they're paying attention. I suppose that could be using ML but that's arguably the least important part of the system.

In comparison, Tesla's Autopilot is sophisticated. It can function without GPS. It can suggest lane changes by observing traffic. It can navigate interchanges and construction. It recognizes and classifies objects then reacts accordingly.

Does all of that sophistication in Tesla's system perform better? Eh... it's debatable. But it's definitely more sophisticated and is absolutely doing more advanced things than Super Cruise.

[6gvONxR4sf7o]

>Does all of that sophistication in Tesla's system perform better? Eh... it's debatable. But it's definitely more sophisticated and is absolutely doing more advanced things...

I think you have a different definition of advanced and sophisticated than I do. If I do fizzbuzz with a neural network is it really more advanced and sophisticated?

[cptskippy]

> I think you have a different definition of advanced and sophisticated than I do.

What are your definitions of advanced and sophisticated?

Advanced : being beyond the elementary or introductory - https://www.merriam-webster.com/dictionary/advanced

Sophisticated : highly complicated or developed - https://www.merriam-webster.com/dictionary/sophisticated

> If I do fizzbuzz with a neural network is it really more advanced and sophisticated?

Yes but that doesn't mean it's better.

[_ea1k]

That is a fair point. Mobileye will offer competitive products to all makes at reasonable prices in the very near future. I don't think Autopilot will be a major differentiator for long.

[ksec]

>Tesla is the Apple of the auto industry.

As far as I am aware, none of the Tesla, even in perfect form, are as well built as any of the state of the art luxury cars. Compared to Apple, despite all its criticism and flaws, still has some of the best built Smartphones, Laptops, Desktops and Tablet in the industry.

Not entirely sure about Software, If it is internal uses, I would argue the biggest competitor to the Software system isn't from car manufacturers, but from either Google or Apple's CarPlay.

For something like Autopilot? Other Cars manufacturers have had similar system that is on par with Tesla if not better.

So apart from Charging station, which so far no government nor its competitors has managed to built any decent alternative. Tesla doesn't seems anything Apple like, it doesn't have a moat around it.

[xedeon]

> As far as I am aware, none of the Tesla, even in perfect form, are as well built as any of the state of the art luxury cars.

Are you just regurgitating stuff you read/watched, or have you actually owned other "state of the art luxury cars." and a Model S or 3 for example. To do a fair and objective comparison?

Also, Tesla is more positioned and priced at the Premium segment. Sure a Model S is not as luxurious as a Mercedes S-Class for example. But it lags in driver assist and safety functions by a long shot.

[ec109685]

One thing Tesla doesn’t have is the lock in that Apple has. If you are using iPhoto, iWatch and iMessage, switching to another manufacturer is hugely disruptive.

I totally agree that Tesla’s software chops are light years ahead.

[bearcobra]

SuperCharging seems to be the play to build up some lock in. Not sure how successful it will be, but I can definitely see it encouraging repeat purchases

[cptskippy]

I would disagree. Tesla's Supercharger originated years before the industry settled on the CCS Connectors and well before CCS Combo connectors came about. At it's inception it was technically superior to anything available.

When the EU settled on Combo 2, Tesla started shipping Model 3s with it as well as updating Superchargers.

The US market is a very different environment than Europe and still hasn't adopted a common standard. The 2020 Nissan Leaf ships with J1772 and CHAdeMO options which are incompatible with the CCS Combo 1 other automakers are shipping. That means a charging station needs to have at least 2 different connectors, 3 if it wants to offer the fastest possible charging because while J1772 chargers are compatible with CCS equipped cars, CCS Chargers are not backward compatible with J1772 vehicles.

Tesla owners are not locked into Superchargers and are able to charge at other chargers via adapters. All Teslas in the US come with a J1772 adapter, and you can purchase a CHAdeMO adapter.

Superchargers are also generally located along highways to facilitate long road trips, something most other EVs are incapable of even if the infrastructure existed.

Tesla sold more EVs in the US in 2019 than all other auto manufacturers combined. The next two best selling EVs (Leaf and Bolt) don't even share a common connector. Building out a charging network that's compatible with other EVs would only serve to benefit their competition. As it stands the Supercharger is a nonbinding value add for any Tesla owner.

[notJim]

I think SuperCharger is the biggest lock-in right now, but the future is surely public fast charger networks, so I'm not sure how long this will last.

[onlyrealcuzzo]

The important thing Tesla doesn't have that Apple does have is a 70% gross margin.

[SpicyLemonZest]

Where'd you get that number from? The sources I can find say Apple's gross margin is a bit under 40%. (Tesla's by comparison hovers around 20%.)

[onlyrealcuzzo]

Most of Apple's profits -- as of a few years ago -- came from iPhone sales. I'm pretty sure this is still true. In ~2015, the iPhone had a 63% margin.

It looks like the company as a whole averages a ~40% gross margin [1]. Tesla's appears to be closer to ~15%, with many highly negative quarters [2].

Of course, net income to revenue is probably more important to look at in this case. Apple's is consistently above ~20%. Tesla's has mostly been negative, and the highest it's ever been is around ~2%.

Tesla would need to sell roughly 10 times as many cars at the same margin to meet Toyota/Volkswagen/GM valuations. If Tesla were based on it's current financials, it would be valued at $5-$10Bn. It wouldn't be valued at $100Bn now if people thought it could be reasonably valued at $100Bn in the future. People must think it could reasonably be valued at $1T in 10 years.

For that to be true, Tesla would need to be selling 200% of cars on the planet. A lot of people think car sales have peaked. It's possible in 10 years there will be less cars sold. It's highly improbable there will be twice as many cars sold, and that all of them will belong to Tesla.

[1] https://ycharts.com/companies/AAPL/gross_profit_margin

[2] https://ycharts.com/companies/TSLA/gross_profit_margin

[SpicyLemonZest]

I don’t follow. Why must people think that Tesla will be worth 10 times its current value? The pro-Tesla argument I’ve typically seen is that they’ve already demonstrated they’re better than other manufacturers and it’s just a matter of cleaning up their production pipeline. Have you seen anyone in particular argue that Tesla will be valued at $1T in 2030?

[onlyrealcuzzo]

I have seen several "bulls" peering into their magic eight balls and predicting trillion dollars valuations for Tesla (and SpaceX) on CNBC.

Here's one: https://www.cnbc.com/video/2018/10/02/ron-baron-tesla-could-...

Google "Tesla Trillion Dollar Company" and you can find dozens of predictions.

[akiselev]

The gross margin for hardware is calculated as revenue minus COGS - literally the parts, assembly, packaging, and distribution. Software is considered an R&D expense.

A 30% COGS is a benchmark for most hardware products and how much you can invest in software depends on how expensive your product is and how many you sell. Since Apple sells a lot at a premium price point, they've got a lot more room in their budget for software R&D. Capital equipment like cars, machinery, power plants, etc are a whole different beast however.

[_ea1k]

Yeah, Apple has targetted 40% for a long time and tends to stay pretty close to it. Tesla has often said that their target is 25%, but they've rarely been able to hit it.

OTOH, if they were able to get margins back to 25%, these valuations would start to look a lot less crazy.

[RinTohsaka]

Don't know if everyone sees it this way, but imo this makes the brand attraction stronger.

[extrapickles]

Their charging infrastructure is pretty good lock in, especially if you install one of their chargers in your house.

[_ph_]

At least here in Europe, they are using the same plug for charging as everyone else, so any other car can charge at a Tesla wallbox (and you can buy your wallbox by any supplier).

[notJim]

Once your house is wired for the charger, how hard/expensive is it really to swap it for a different one?

[extrapickles]

If you can do basic electrical wiring, you may still need to get a permit and have the change inspected. What exactly is needed is highly jurisdiction dependent.

If you are not handy, it requires hiring an electrician to make the change (~$100-500)

[notJim]

Spending $500 on an electrician for a $50–80k car doesn't sound like lock-in to me…

[chris11]

That's a decent amount of money, but it's not that much compared to the cost of an electric vehicle.

[Reedx]

That's a good point, though this may still happen between superchargers and Telsa apps/games - which could leverage your historical driving data.

[ethbro]

> Telsa apps/games

This is the only thing that remotely justifies their current valuation.

If you expect them to crush it in China + monetize their install base via creating an app platform for 3rd party apps + get to self-driving.

People forget that EVs are going to likely be on the road a lot longer than ICEVs, due to lower wear-and-tear. Past battery capacity degradation, there isn't much to break.

[notJim]

> People forget that EVs are going to likely be on the road a lot longer than ICEVs, due to lower wear-and-tear. Past battery capacity degradation, there isn't much to break.

People always say this, but I'm a bit skeptical. I own a 13 year-old Toyota with 200k+ miles on it, and the things that break are more like suspension parts, wheel bearings, etc. I think drivetrains are pretty reliable at this point.

[ctdonath]

That's my wife's current objection to buying an EV: after a quarter-million miles, a Tesla will still be running fine with no reason to replace it (vs an ICE trying to self-destruct).

[Psyonic]

She objects to EV's because they keep working longer?

[ctdonath]

Yup. And not an uncommon opinion.

At a quarter-million miles, most people want something different. "It's falling apart" is an acceptable excuse. "It's running just fine, another three-quarter-million miles to go" not so much.

[mlyle]

App stores are lucrative and all, but there's just not that many cars compared to iPhones / Android phones to sell apps to.

[ethbro]

I'd say the counterargument would be: what other channel can guarantee attention while a person is moving around?

Seems to map fairly well to monetization, which is essentially what drove mobile.

Ad targeting when you break a geofence? $$$

[nicoburns]

Do most apple hardware users use those apps? I'd imagine at least as many if not more use google photos + whatsapp or facebook messenger.

[TomVDB]

WhatsApp is pretty popular, but Google Photos?

The vast majority of people take a picture with the standard camera app and never look at the pictures again. You don’t need a non-native app for that.

[londons_explore]

Iphone doesn't let you search photos really - try searching for "photos of me skiing" or "igloo picture" and you'll soon find google photos is way ahead.

[TomVDB]

I just tried "igloo" in photos and it immediately showed the only picture of a snow fortress that I built with my kids 7 years ago. "skiing" also worked fine, as expected, but "Tom skiing" did not.

Since the first level implementation works fine, you're talking about a second level detail. Do you think this would nudge enough people towards using Google Photo to actually matter?

I very much doubt it.

[rhlsthrm]

Everyone uses iMessage in the US unless they are talking to people overseas. My friends group gets upset anytime someone isn't on iOS because the messages turn green.

[sixQuarks]

ummm, what about the fart app? No other manufacturer offers that. But seriously, there are things that you get with a Tesla that you can't get anywhere else and that list keeps growing. For example, Dog Mode is such an important feature to me, my next car will again be a Tesla.

[gazumping]

Would Tesla's supercharger charging network fill that role of "lock-in"?

[shmerl]

Which is good. Lock-in is disgusting and is a huge reason not to use Apple.

[stephencanon]

> Also, Musk is right: no one else has even come close to matching the 2012 Model S. Tesla's lead is starting to look unassailable (in the medium term).

This is kinda sorta true, if you ignore non-performance factors, but also no one actually needs what Model S provides. In the classic setup for disruption Tesla isn't the disruptor, it's the established "high quality use" getting disrupted. It is not very unreasonable to expect the growing "good enough" products in China to claim much of the world's car market.

[gonehome]

This still sounds like the iPhone to me.

A lot of other competitors will make android devices that are similar and eventually get a large market share, but the iPhone still dominates the higher end with better margins.

[_ea1k]

Indeed... its already happened with the Bolt. It beats the Model 3 on several objective practicality metrics.

It is also slower and perceived as less attractive. Due to poor marketing, I suspect most perceive it to be much slower, rather than just somewhat slower.

It sells really poorly. Most of these other competitors are going to run into the same fate for years.

[davidgould]

I'm curious about "beats the Model 3 on several objective practicality metrics". Please elaborate, I'd like to know.

I considered the Bolt to replace my Honda Fit. I was on my second (first leased, second purchased) Chevy Spark EV. I'm committed to electric driving and I like small hatchbacks and have had a great experience with the Spark EV. The looks didn't bother me and I didn't want to spend a lot on a car either. I'm basically the perfect Bolt customer.

And yet, I every time I drive past a Bolt in my Model 3, I glad that I didn't make that mistake.

[gonehome]

Yeah I'd also be curious - the Model 3 seems to be categorically better in every way?

I'd even go so far as to say the Model 3 is the best car Tesla makes, I think it's a lot better than the X (I think the falcon wing doors are actually a pain in practice and the bucket seat arrangement in the back doesn't leave much space for practical use).

The S is nice, but pretty large and I prefer the interior (and door handles) of the 3. I think the 3 also drives more like a sports car because of its smaller size. I don't think there is anything on the market at any price point that I'd prefer day to day.

[Zenbit_UX]

Chevys reputation is dogshit and compared against Tesla for quality innovation/brand the contrast is night and day.

They also ran those absurd car commercials for the last decade or so about "real people, not actors" which were spoofed so well on YouTube that I think they actually damaged their brand.

[stephencanon]

Absolutely.

But if we assume that, the question for investors is "will it dominate the high end with better margins like iPhone does, or will it dominate the high end with better margins like Porsche does?" Only one of those outcomes justifies a $100B valuation.

[ibarea277]

You can create much higher margins for products and services at the Apple price point. For Autos, people are very price sensitive. Even if Tesla slowly takes over the industry, not sure they can justify this valuation.

[bananaowl]

The Mercedes voice control system can't understand anything I'm asking for.

[gowld]

> no one else has even come close to matching the 2012 Model S

Model S will always be a tiny market. How close are competitors to Model 3?

What happens when Tesla employees burn out on Tesla corp and go working for competitors?

[ctdonath]

Competitors are deeply locked in to their system & network, so not sure why a Tesla employee (of which there are relatively very few) would particularly want to go elsewhere.

I worked at Kodak at a critical point, and watched (from inside) the dynamics of why the photography juggernaut was utterly unable to pivot from "chemical consumables" to "computing capital" as primary products. A major barrier was the absolute dependency on third parties for distribution (drugstores being primary retail sales, leveraging the "buy film, return film, get prints" model for their own sales); Kodak could not perform the pivot without alienating those necessary to fund the pivot ("don't go digital, or we'll stop selling your products"). Result: small agile digital camera companies outmaneuvered the juggernaut.

Similar with EVs. Major ICE companies can't pivot to EVs in time, because third parties involved in ICE cash flow will cut off vital funding before the pivot completes. Tesla even offered Supercharger Network access to major ICE manufacturers, who said no - meaning the latter are still beholden to the gasoline infrastructure, there being no viable rapid-charge network in place where Tesla has already completed majority coverage. (I'm not sure quite how the economics will play out, but they will.)

[ctdonath]

Closest thing I see at a glance is the not-yet-available Ford Mustang-E. At bottom end, comparable to a Tesla 3 but $3885 more without autopilot, and ~1s slower (0-60) acceleration. For about same price, can get 72 miles more range, or majority of extra price for full self-drive.

[mschuster91]

That doesn't help competitors very much. Tesla has figured out batteries - no other manufacturer is even close on the naked range of any Tesla model.

[bob33212]

Some of us are not buying TSLA today because we like where the company is today. We buying because they like where the company may be in 5 years.

[vinniejames]

This is the goal of every passive investor in any company..

[Zenbit_UX]

I think the GP is implying some of Teslas customers are buying Tesla vehicles for the same reasons.

I think I'd generally agree with that sentiment, there's certainly a fair amount of people who are buying into the zero emissions dream that Elon is selling and purchasing their vehicles (at least in part) to bring that dream closer to reality. I can't imagine many Ford customers buying into the "Ford future" but I see it with Tesla.