[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.

[SpicyLemonZest]

Fair. That does seem overly optimistic.

[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.