Tesla’s recent breakout market performance is proving some of its skeptics wrong. By mid-January, Tesla’s market capitalization had reached $107 billion, and it surged past the giant German automaker Volkswagen to become the world’s second most valuable auto company behind Toyota. Tesla’s valuation now exceeds that of Ford and GM combined.The Wall Street doubters may be in shock, but I’m not. Full disclosure, I own two Teslas and I own stock in the company. But it’s my experience as a three-time software company CEO that makes it increasingly clear to me that the company’s innovative business model represents an existential threat to the auto industry as a whole.How so?“Software is eating the world,” Marc Andreessen, co-founder and general partner of venture capital firm Andreessen Horowitz, wrote in a memorable 2011 essay. And software is a big part of Tesla’s advantage.
How Tesla Sets Itself Apart
It’s ushering in the age of the software car.
February 28, 2020
Summary.
Tesla and its flamboyant, and sometimes erratic, innovator Elon Musk have turned the more than a century old industry upside down in a mere 16 years. Traditional automakers are ill prepared to compete in today’s software-centered world. Unlike nimble Tesla, they are big, bureaucratic, slow to respond to customers, dependent on providing customer financing for unit sales growth, and culturally different from a software company. Tesla’s speed in innovation in the market for high-end vehicles is more like a Google or an Amazon than an automaker. And its soaring market valuation is a clear sign to all automakers that they’ll need to develop more innovative, Tesla-like business models in order to survive.
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How to develop a winning strategy—and put it to work.