Forget Elon Musk is a lunatic, forget Wall Street’s valuation, General Motors or Ford Motors must merge with Tesla, or they will be left behind forever and go to the waste dump.
What matters is not where we are today, but where we are tomorrow. 25 years of disruption tells us that you may be too early, but there is nothing worse than it is too late.
The automotive industry is considered a manufacturing company. That’s old school. The car in the electric world will depend on software! Remember how many different manufacturers were there during the computer boom in the last century? Packard Bell and Gateway even made significant progress. But manufacturing is a low-margin business. The winners are software companies. Look at Microsoft, Google, Facebook, and Apple’s expertise is software and hardware integration. As for Amazon…it has great software, but it also has a first-mover advantage. If the pioneers continue to innovate, they usually dominate. Just reach the scale. In addition, the main driving force of Amazon’s profits is not the delivery of goods involving a large amount of manpower, but AWS and Amazon Web Services.Now Amazon is losing market share there because it has become the addition of software to the hosting package, read Monday’s Wall Street Journal Enlightenment story:
The new owner of Amazon Cloud is preparing to defend the turf in the pioneering on-site company Adam Selipsky said in an interview that as Microsoft and Google challenge their market dominance, AWS aims to provide more cloud software
Forget Rivian, forget all American electric car startups. But don’t forget their Chinese brothers, they are already in the market, and not only in China, a huge market. All these new companies must push a heavy stone up a mountain, not only in software, but also in manufacturing. One of the reasons Amazon has done so well is because it is a trustworthy name. Do you really want to risk your hard-earned capital, because not only does it work imperfectly, but it also exhausts you when the company goes bankrupt? I do not think so.
Tesla is here today. Just like its charging network. The company is selling as many products as possible. Unlike Detroit, Tesla sells to Hertz at full price, assuming it can even deliver quantities.
This is where GM and Ford shine, manufacture. This is why Tesla needs one of them. In order to improve and dominate, the company will move into the future as the undisputed leader, not only in technology, but also in sales.
Detroit, namely GM and Ford, has expertise in manufacturing. They just don’t know much about software. Volkswagen is a pioneer in the electric field among traditional manufacturers, and has been hampered by software problems in its progress:
“Volkswagen hopes to catch up with Tesla with a $30 billion technological restart – Internal struggles, technical failures and complex structures hinder the software work of the German automotive giant” (Bloomberg)
This is harder than it seems. That is, it may look like an electric car, but it is almost impossible to compare with Tesla’s experience. So far, General Motors has introduced Bolt, a small car with battery problems, and Ford has also recalled its Mustang. Unfortunately, despite American nationalism, the Japanese still make the most trouble-free cars. This is one reason Tesla avoided GM and Ford, but without scale, you are doomed to fail. This is how Microsoft wins through scale to provide operating systems for IBM computers. Assuming that competitors are good enough, the best does not always win. But when it comes to cars, good is not good enough. No one wants car problems anymore, it was the last century, the middle of the last century.
So AOL merged with Time Warner. Talk about a disaster. Gerry Levin’s vision is correct. Upstarts know more about the future than him, but AOL is built in the air and will soon be replaced by the World Wide Web. Electric cars are the future. This has been decided. Unlike AOL, it is already here, the vision has been completed, and there will be no major interruptions coming.
Forget Mary Barra, forget everyone in Detroit. They missed the memo again and again. They are managers, not innovators. The past 25 years have proven that innovators disrupt the legendary class, very slowly, ridiculed, and then seemingly overnight. This is what Clayton Christensen said. Yes, at first you sneered at your competitors, and then it became good enough to eat your lunch. Despite the persistence of manufacturing defects, all these people are buying Teslas. Of course, Tesla does a better job in manufacturing, but it is still not Major League Baseball.
But what if Tesla’s blueprint can be used in Detroit? The problem is solved!
The problems of GM or Ford are also solved. They run the risk of becoming a zero traditional company. The digital realm is flooded with such companies. Do you remember BlackBerry?
Therefore, the merger will be a win-win situation. It will show foresight. And solve each company’s own problems.
As for the “problem” of autonomous driving, don’t you understand? This is not an accident/injury/death, this is how it works in the software and it takes a while to deal with it correctly. But when you do…please, did you calculate it in the eighties? There is a problem with the software, and it keeps improving, and then the company gets it right. Tesla is in a leading position in this regard. We will have self-driving cars. The company that gets there first will have a huge economic advantage. At the same time, General Motors and Ford Motors, as well as other auto industries, are afraid of regulators. They have no clue and do nothing in the most revolutionary car leap. Compared with self-driving cars, electric cars are just a small step. You need to be in this field.
But that is software. All the bells and whistles in Teslas… these are Easter eggs, showing the company’s ability to write software. They are so good at software that they can spend money and time to add interesting features just to entertain their customers.
In the future, you will buy a computer, not a car. It looks like a car, but under the skin, it will be a computer. This is the cornerstone, not to be discussed, this is not a distant vision, this is now! So who is ready now? Certainly not General Motors or Ford. As for the otherworldly manufacturers, there are not so obvious merger candidates. GM and Ford are Tesla’s targets.
Yes, Tesla’s valuation has reached its peak, so neither GM nor Ford can buy it. Tesla has no reason to do the opposite. This should be a cashless transaction. Again, there are tax issues, and investment bankers specialize in many issues.
Of course, Ford just made nearly 10 billion U.S. dollars in revenue through the public appearance of Rivian, but money can’t buy your love, nor can it buy your software stability. No, it requires hard work.
This is the way to go. Otherwise, GM and Ford will face major risks. As for Tesla…can it scale up in time? suspect. But with GM or Ford manufacturing infrastructure…
Oh, and one more thing, Tesla Brass finally controlled the situation. Give the Detroit CEO a title, and then squeeze them out with a golden parachute shortly after.
You will not win through the technical committee. This is all about a single vision, usually from the founder/CEO. You let the old guard have power in your dangers.
More and more people warm up to Tesla every day. They are on the road and the risk of buying is much smaller. But imagine, what if they were made in collaboration with Detroit and were everywhere?
Then you are done. Dominance. For decades.
Go to receive the award.