Category Archives: Tech

Wall St. Still Doesn’t Grok Tesla

image_pdfimage_print

Wall St. still doesn’t fully understand yet that Tesla is not just a car company. Analysts and traders treat Tesla on traditional car company metrics like next-quarter units sales, while the big picture is largely ignored. The big picture is much more interesting (and profitable):

1) Tesla is as much a software company as anything else

The over-the-air updates have made numerous headlines, but look closer and you see it’s in Tesla’s DNA to think, hire, act, and iterate like a software company. For example, Tesla just hired ex-Googler Chris Evans as Head of Security. Here’s a snapshot of his linkedin profile (which, fittingly, he hasn’t updated recently):

Chris Evans LinkedIn

Pretty strong software cred. From writing vsftpd, a popular unix tool, to working on security at Google; this guy lives and breathes code; specfically software-security.

By contrast, let’s look at GM’s Chief Product Cybersecurity Officer:

Jeffrey Massimilla LinkedIn

Mr. Massimilla is a lifer in the car industry, and primarily an automotive engineer. This is a *very different* skillset than Mr. Evans’ above. It’s widely acknowledged, even in the traditional car sector that these machines are becoming computers on wheels. Which of the above skillsets looks more suitable for managing data-security over fleets of these things wirelessly connected to the internet at all times?

2) Tesla is a data company

Google has released striking numbers regarding the 1,000,000+ miles they’ve autonomously driven in the past few years, mostly in beautiful, Mountain View, California with its pot-hole free roads and perfect year-round weather:

Mountain View, CA
Castro St, Mountain View, California

By contrast, Tesla is collecting 1.5 million miles *per day* of real-world driving information from their fleet of computers-on-wheels. This includes places like…New Jersey:

NJTP
New Jersey Turnpike

…and the cars are already using these data to self-improve, just three weeks after the launch of Tesla’s “auto-pilot” feature. GM will release Super Cruise control in a couple years, maybe.

3) Tesla is not just about cars

On the hardware side, Tesla is as much about pioneering battery technology as it is driving experience. Their Lithium-Ion tech is unmatched at their price-point and scale, and Tesla’s under-construction giga-factory, which is ahead of schedule, will “produce more lithium ion batteries annually than were produced worldwide in 2013.

On the back of this battery prowess, they’re soon releasing Home and Utility-scale storage batteries that are already changing the calculus for traditional utilities. This line of business is shaping up to be critical in allowing renewables like solar and wind to be cost-competitive with traditional power in the short-term, and far cheaper in the long-term. $Trillions will be spent revamping global power systems in the next few decades, and battery technology is key.

A Wall St. analyst may look at the above as hype, and maybe it is. But if Tesla succeeds, the magnitude of their success will be shocking.

Edit: Here’s an excellent post by Chamath arguing that Tesla will become the first HaaS (Hardware As A Service) company at scale: HaaS and the Future of TSLA

Disclaimer: I own Tesla shares. How could I not given that I believe the above?