AS THE REST OF THE AUTO INDUSTRY PLAYS IT SAFE, TESLA ARROWS ON MORE RISK
After years of record sales and huge profits, legacy car manufacturers are preparing for lighter future. The American Big Three has killed most of their sedans to concentrate on trucks and SUVs. GM is the sculpting plant and the dismissal of workers and has withdrawn from Europe and Russia. Ford has also announced a significant restructuring of its European operations.
* This article comes at our disposal with EVANNEX (which also makes aftermarket Tesla accessories). Authored by Charles Morris. The statements expressed in these articles are not necessarily our own in InsideEVs.
Above: Tesla Model 3 fleet in the parking lot (Image: InsideEVs)
At the same time, Tesla CEO Elon Musk attended a groundbreaking ceremony for a new Gigafactory in Shanghai, hoping to produce cars within the year. California also brings Model 3 to Europe and pushes full speed on new projects, from Model Y to Tesla Semi to a jet-floating flying roadster.
As Detroit's car manufacturer contract into their comfort zone, what does Tesla do? Takes even more risk (slightly tempered, however, with recent job cuts). Matthew DeBord, who writes in Business Insider, noted the frightening contrast between Musk's China plans and Big Auto's ongoing tightening messages. However, he believes that both sets of players simply do what comes naturally to them.
"Before 2009, large car companies will count on short recessions and robust recoveries that reliably run on difficult strategic decisions", but they no longer have the luxury of writing DeBord. "The arguments in favor of these [downsizing] movements are not complicated: when times are good and the profits roll in as they have been for years, they make hard calls. Then you shut down the shutters when the bad weather sets in, always do in the very cyclical car industry. "
Above: Some automakers move away from sedans to trucks and SUVs (Flickr: Tino Rossini)  There are alarming developments in the industry. The largest, says DeBord, is an economic downturn in China, which is now the world's largest market. Automakers also keep a cautious eye on demographic trends that can lower demand for cars and the massive investments they will soon make on electrification.
Not only the big three but also Japanese, German and South Korean automakers are all "wise at risk", while Tesla does exactly what to do: "Gobbling up risk, front-running it while the rest of the industry is happy to sit on the sidelines. "
Tesla is assuming significant risk by building a new factory when the rest of the industry closes them, but the Shanghai Gigafactory can signal an important turning point for the business. "Although Tesla does some great vehicles, it's real product risk," DeBord writes. The legendary automotive industry avoids risks whenever possible, and therefore Tesla has an incredible market coverage than GM. "For investors, the risk is equal to payout, and this applies to long and short sellers." . gains instead of committing a new factory, "Tesla unfortunately cannot afford to wait a downturn and postpone its expansion. If and when the China market begins to grow robustly again, Tesla will be well established in the country."
Moreover concludes DeBord, "where would Tesla be without risk? You must be true to your principles – and the risk is what has been done, Tesla, the first successful new car company to come for decades."
] Posted by: Charles Morris; Source: Business Insider
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