Tesla continues to take several dangers, as most OEMs play it safely


After years of record sales and big profits, legendary car manufacturers are preparing for slimmer times ahead. The American Big Three has killed most of their sedans to concentrate on trucks and SUVs. GM is anchoring and laying off workers and has withdrawn from Europe and Russia. Ford has also announced a significant restructuring of its European business.

* This article comes to our side with EVANNEX (which also makes aftermarket Tesla accessories). Posted by Charles Morris.

Above: Tesla Model 3 fleet in the parking lot (Image: InsideEVs)

At the same time, Tesla CEO Elon Musk participated in a groundbreaking ceremony for a new Gigafactory in Shanghai, where he hopes to produce cars within the year. Californians are also bringing Model 3 to Europe, pushing full speed forward on new projects, from Model Y to Tesla Semi to a jet-floating Roadster.

As Detroit's car manufacturer contract in its comfort zone, what does Tesla do? Takes even more risk (slightly hardened, but by recent work cuts). Matthew DeBord, who writes in Business Insider, noted the broken contrast between Musk's China plans and Big Auto's ongoing austerity announcements. However, he believes that both players just do what comes naturally to them.

"Prior to 2009, large car companies will rely on short recessions and robust recoveries, which reliably face difficult strategic decisions," but they no longer have the luxury of writing DeBord. "The arguments in favor of these [downsizing] traits are not complicated: when times are good and profits roll in, as they have been for many years, they make tough conversations. Then you slam down the hatches when the bad weather sets in, always do in the very cyclical car industry. "

Above: Some car manufacturers are moving away from sedans in favor of trucks and SUVs (Flickr: Tino Rossini) [19659005] There are frightening developments in the industry. The largest, says DeBord, is an economic downturn in China, which is now the world's largest market. Car manufacturers are also keeping a close eye on demographic trends that can lead to lower demand for cars and the large investments they will soon make in electrification.

Not only the big three, but also the Japanese, German and South Korean car manufacturers are all "wise risky", while Tesla does exactly what it should do: "Gobbling up risk, front-running it while the rest of the industry is happy to sit on the sidelines. "

Tesla is taking on considerable risk by building a new factory when the rest of the industry closes them, but Shanghai Gigafactory can signal an important turning point for the company. "Although Tesla makes some amazing vehicles, the real product is risk," DeBord writes. The older automotive industry avoids the risk whenever possible, and therefore Tesla has an incredible market value than GM. "For investors, the risk is equal to payout, and it applies to long and short sellers."

Above: Tesla brings the ground on its first foreign Gigafactory (Youtube: South China Morning Post)

While the rationale can claim that Tesla should consolidate its gains instead of commit to a new factory, "unfortunately Tesla cannot afford to wait for a downturn and postpone the expansion. If and when the China market begins to grow robustly, Tesla will be well established in the country."

Moreover, DeBord concludes, " Where would Tesla be without risk? You must be true to your principles – and the risk is what made Tesla the first successful new car company to come for decades. "


Posted by: Charles Morris; Source: Business Insider

* Editor's Note: EVANNEX, which also sells aftermarket equipment for Teslas, has allowed us to share some of the content with our readers for free. Our thanks go out to EVANNEX. Check out the page here.

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