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Just brief counter point or 2.
”As Tesla continues to scale, they'll grow into their valuation, once again just with car manufacturing alone”
Casual read I noted 50% growth and increase a number of times. Tesla’s plants are assembly operations.
There is a relevant production capacity for a facility. New facility for capacity requires a long lead time and suppliers and integration and resources that are not necessarily able to handle that ramp up rate in a sustainable manner. The larger the base, that next 50% capacity becomes a huge problem and it gets bigger.
Tesla has little vertical integration for parts. They don’t make the components which are primarily custom. Just an example would be the transmissions, which seem to be very well designed. Tesla doesn’t own a transmission plant. There are only a few manufacturers.
”Of course, the transmission works closely with the engine and axle to form the powertrain and power the truck’s performance, so it’s essential that these components are spec’d as a group and will complement each other to do what you need them to do. That doesn’t necessarily mean spec’ing a fully integrated powertrain all offered by one company—though many fleets do take advantage of this option—but just that in general, it’s important to understand that you’re not spec’ing individual components as much as you’re forming a unit that will work in concert.”
Continuous scaling of the supply chain and parts manufacturing for the 50% sustained growth also conflicts with not having patents. The suppliers and competitors are free to dip into “commodity” products. That 100% supply can actually be constrained or reduced.
“Tesla is willing to buy every single battery for a reasonable price from any supplier.” This is an example of the issue. Batteries are not proprietary but they are a constraint.
This is why IBM exited the PC business. Growth was there, but it was becoming a commodity business. Growing into a multiple is based on profitable growth. The 50% growth is going to be tough, not only for Tesla’s capacity, but for all the supply chain. Just some of the risk. The software is scalable, Microsoft proved that in a commodity PC environment. Assembly is much harder to scale.
”As Tesla continues to scale, they'll grow into their valuation, once again just with car manufacturing alone”
Casual read I noted 50% growth and increase a number of times. Tesla’s plants are assembly operations.
There is a relevant production capacity for a facility. New facility for capacity requires a long lead time and suppliers and integration and resources that are not necessarily able to handle that ramp up rate in a sustainable manner. The larger the base, that next 50% capacity becomes a huge problem and it gets bigger.
Tesla has little vertical integration for parts. They don’t make the components which are primarily custom. Just an example would be the transmissions, which seem to be very well designed. Tesla doesn’t own a transmission plant. There are only a few manufacturers.
”Of course, the transmission works closely with the engine and axle to form the powertrain and power the truck’s performance, so it’s essential that these components are spec’d as a group and will complement each other to do what you need them to do. That doesn’t necessarily mean spec’ing a fully integrated powertrain all offered by one company—though many fleets do take advantage of this option—but just that in general, it’s important to understand that you’re not spec’ing individual components as much as you’re forming a unit that will work in concert.”
Continuous scaling of the supply chain and parts manufacturing for the 50% sustained growth also conflicts with not having patents. The suppliers and competitors are free to dip into “commodity” products. That 100% supply can actually be constrained or reduced.
“Tesla is willing to buy every single battery for a reasonable price from any supplier.” This is an example of the issue. Batteries are not proprietary but they are a constraint.
This is why IBM exited the PC business. Growth was there, but it was becoming a commodity business. Growing into a multiple is based on profitable growth. The 50% growth is going to be tough, not only for Tesla’s capacity, but for all the supply chain. Just some of the risk. The software is scalable, Microsoft proved that in a commodity PC environment. Assembly is much harder to scale.
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