Ford might have just killed Tesla.
The end of a company never happens overnight. Nokia, Blackberry, and Blockbuster failed over some time rather than instantly. There has to have been a moment that would be deemed as the spark that led to their closure. Tesla might have just had its spark this month from one of its main competitors, Ford.
Tesla is, to this day, one of the most successful companies in the past five years. They've created revolutionary products in the EV industry. They're not a pioneer in the EV industry, but their products' beauty and battery efficiency are for sure astonishing. They entered the industry and made it better. Similar to what the iPhone did to the mobile phone industry.
This all sounds great for Tesla. However, the time they entered the automobile industry is not the same as when Steve Jobs entered the mobile phone industry. Sharks surround them, and the ocean is red (read the Blue Ocean Strategy by Renée Mauborgne and W. Chan Kim).
They will now face competition from experts in the field. They have been for the past few years and succeeded massively. Simply, what Tesla stands for and their product puts them ahead of all others.
Earlier this month, Ford announced that they're splitting their company into two, one that is EV-focused and what that's not. So, as the reader, you have to think of the following question:
What makes a person buy an EV from Tesla rather than an EV from Ford?
This is probably what Ford's team has been thinking of in the past years and trying desperately to resolve. Here are some thoughts in regards to why people buy Teslas:-
Elite brand - similar to Porsche, yet environmentally friendly.
EV performance - compared to almost any EV in the market, Tesla is the best.
In fact, a survey from Escalent showcases that people are buying Tesla for reasons such as the beauty and performance of an EV.
Now here's another question, in the upcoming ten years:
Is Tesla (18 years old) going to always design cars more beautiful than Ford (118 years old)?
Is Tesla going to maintain creating a better-performing vehicle than Ford?
What's going on is similar to you creating a new electrical bulb that's fascinating. However, will you be more successful than Samsung or Philips in the long run? Simply put, they know how to handle the supply chain of such an industry in the long run, compared to you. They've won over fiercer competition once they were in the same ring. At this instance, we can't say that Ford's EVs are in the same ring as Tesla's, but they're for sure warming up.
What's going on is simple to the Netflix vs. Disney debate and the Slack vs. Microsoft Teams. They're both in a fight, yet one of them (Slack) is getting help (read about the Salesforce acquisition), while the other (Netflix) is still confident as a solo company.
Why is this good news?
Competition, at the end of the day, is healthy. This pushes those companies to create products and EVs that are better for us, the consumers. Additionally, creating more EVs than internal combustion engine vehicles is a win-win for the environment when it comes to such an industry.
What will probably happen?
I would monitor TSLA's stock and company performance, as well as Ford's. I'd imagine if Ford did everything correctly, they would start taking some of the market capitalizations of the EV industry. This would reflect on their stock and financials over the upcoming 5-10 years.
Tesla's already doing fantastic. However, many argue that their stock is overvalued. Given that other competitors dig into this ocean, their stock value could normalize or keep on growing as this EV industry is very much needed in our time.
Note: This is not financial advice, merely brainstorming and speculation based on the performance of similar companies.
What else to expect?
The first smartphone was expensive if adjusted for inflation. The first automobile was expensive as well. EVs are relatively expensive to the common vehicle. What should make sense is that EV prices decline over time. Governments and companies are trying to decrease pollution as much as possible; thereby, they would be pushing towards efficient and affordable solutions.
In all cases, it's a business lesson worth enjoying with some popcorn in the upcoming ten years.
I'm Al, a business consultant in Zurich, Switzerland. I believe in the power of delivering value to you, the reader. I'm focusing my content on being more and more on Medium and Linkedin. Hence, follow me on both channels to keep in touch and connect.