I am surprised to see this type of argument on HN of all places. One of the primary goals of any start up is to either create a new market or to serve a market that an incumbent is failing to properly serve. You can't just assume that because a company like Toyota hasn't done any of these things yet that there is no potential to gain from them. There are countless reasons why traditional powers fail to innovate and are eventually challenged by more forward thinking companies. I have no idea if Tesla will be that company long term. But the potential is there and that potential is what is fueling the hype.

GM/Toyota have the resources to start operating in the same markets that Tesla has ambitions for. And they are certainly keeping an eye on Tesla's actions.

After watching what Tesla is doing, they have chosen not to invest those resources even though if they did, they would beat Tesla at its own game quite easily because they eclipse it both in capital and experience.

Either their analysts are wrong and failing to see a winning strategy here, or there is no winning strategy. One of these two statements must be true. I've put my money on option #2, but I'm aware that large competitors aren't idiots and there is a risk here.

Elon Musk has also publicly stated that he wants the other big players to compete with Tesla. He doesn't actually care if Tesla is ever profitable or not, he just wants to force the world to transition off fossil fuels by dispelling the myths sown by the oil industry with concrete examples of success. It is stupid to ignore Musk's stance on this matter as an investor.

You have very skewed perception of how a company like GM operates. The incentives for managers are pretty short term they have 0 incentive to do a project that might pay off 5 years from now. In deciding on how to allocate capital there is 0 chance they will allocate it to doing high risk long term project vs doing a bigger truck now that they will sell next month at some ungodly margin.

Using this logic every start up would fail as soon as they showed their business model could lead to success and a bigger company swooped in a with their overwhelming capital and experience.

Right the argument isn't sound. It basically boils down to if big company x hasn't done it already, it's because it's not worth doing it. We know this isn't true because small players make improvements in their fields all the time. Big players aren't perfect, don't have unlimited resources, are prescient, and most of all, are ruled by people.

Many do, for that exact reason.

If you ever pitch your startup idea to a VC, you're expected to explain how you're going to deal with this risk.

>Many do, for that exact reason.

Sure, and many don't.

>If you ever pitch your startup idea to a VC, you're expected to explain how you're going to deal with this risk.

And that is exactly my point. Tesla certainly has strategies to respond if GM/Toyota enter their markets. You and TAForObvReasons are responding as if those companies will easily beat Tesla as soon as they make that decision.

> Tesla certainly has strategies to respond if GM/Toyota enter their markets.

Elon Musk's stated purpose for Tesla is to kill the fossil fuel industry, not to create a profitable enterprise. And he is tracking well towards that stated purpose. He actually wants those much bigger companies to start doing what Tesla is doing at scales that they can achieve and Tesla can't. He said this very clearly in an interview with DiCaprio. I don't know why people keep thinking there's some master plan to be profitable when the guy steering the ship has repeatedly said the plan is orthogonal to profitability.

As an investor, I am well aware of this. I'm also well aware that the profits of SpaceX eclipse what Tesla could achieve even in its best case scenario, so he probably really doesn't give a shit about making profit via Tesla.

GM already entered Tesla's market with the Bolt. How's that working out for GM?

You gotta hand it to Elon for stirring the appetite for EVs though. What makes you think he can't do similar things in other markets?

Because he is overcapitalised with his existing projects.

Simple as that really.

I am not convinced he really changed the market's desire for EVs. He made a halo car, and now he is selling the baby version for Average Joe. I think the success of the Model 3 has a lot more to do with the brand than it does with it being an EV.

It's simply ignoring reality to not acknowledge Tesla's center role in popularizing EVs. It's not even a question.

Have to admit I agree with this. He didn't change the appetite he just recognized that it was better to make a $120k EV than a $20k EV.

By the way, why do you think the brand is popular if not for their EVs?

Tesla has vastly changed public perception of EVs, changing demand & enabling current production ramp up of cheaper models.