IMAGE: Norio Nakayama — CC — BY SA

Tesla: a surprise… who for?

Enrique Dans
Feb 27, 2020 · 3 min read

My last article on Tesla, in late December, discussed the disbelief of many at how the company was successfully carrying out its strategy and meeting its objectives, and was one of my most widely read pieces ever. That article, published before the company released its fourth-quarter 2019 results, was my response to Tesla’s shares passing $420, a figure that matched Elon Musk’s valuation when, frustrated by market behavior, he considered going private.

Just over a week after the article, on January 3, the company published its vehicle production and sales data for the fourth quarter of 2019, which exceeded its own and analysts’ estimates, and its share price soared. At the end of that same month, Tesla published its financial data, which showed not only that it had managed to be profitable for the second quarter in a row, not only beating analysts’ forecasts, but also pointing to a hopeful 2020, with a Model 3 that exceeded all estimates, a Model Y that anticipated its availability, a Cybertruck that already had more than half a million customers waiting, a fully operational factory in China, and a relaunch of its solar energy generation and storage products.

Its shares continued to rise, exceeding $800, and prompting Elon Musk to contradict himself when he said that the company didn’t need any additional funding, and instead to issue new shares worth $2 billion. The markets, after the usual brief fall when more paper is put into circulation, reacted almost immediately in an overwhelmingly positive way, taking Tesla’s share value above $900, for a total valuation of over $168 billion.

Speculation? Or is it a sign that after the automotive industry has finally been forced to take the electric vehicle seriously, Tesla is now better positioned than any other brand? In batteries, whose manufacture has long been revealed as the industry’s most strategic asset, it has a strong position with its gigafactories and a privileged supply of its own that other companies lack, in addition to carrying out much more research and development in the technologies related to their manufacture, their components or their recharging. Every Tesla owner who has noticed how, when approaching one of the superchargers in his network, his car starts to preheat its batteries so as to obtain a faster, more efficient and less harmful recharge knows perfectly well that the brand’s technology and know-how is far superior to that of other manufacturers.

But that supremacy is not limited to the physical components of the vehicle, to those the industry believed it could compete with: it goes much further, and is expressed above all in what makes a vehicle today a computer on wheels. A recent analysis of the components of a Tesla revealed that in terms of microprocessors, architecture and software, the company is at least six years ahead of its main competitors.

So no, this is not speculation, however much shares may rise or fall depending on the movements of those betting against it or those seeking to get rich quick. It is a different approach to innovation. But above all, it is a way of formulating the strategy with the most ambitious goal there is, one that the automotive industry has never set itself: to change the world for the better.

This article was previously published on Forbes.

(En español, aquí)

Enrique Dans

On the effects of technology innovation on people…

Enrique Dans

Written by

Professor of Innovation at IE Business School, blogger at enriquedans.com and Senior Contributor at Forbes

Enrique Dans

On the effects of technology innovation on people, companies and society (writing in Spanish at enriquedans.com since 2003)

Enrique Dans

Written by

Professor of Innovation at IE Business School, blogger at enriquedans.com and Senior Contributor at Forbes

Enrique Dans

On the effects of technology innovation on people, companies and society (writing in Spanish at enriquedans.com since 2003)

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