And assuming Tesla has a squezze on Li supplies, laws prevent the use of that control to hurt competitors. Braking these laws carries enough fines in all major markets that they will be adhered to.
My understanding is that Tesla is leveraging long-term contractual lock-ins in various shapes. One particular one I heard was that in exchange for fronting some of the up-front cost for the mine Tesla would retain the right to buy X% of the mine's output at a maximum markup of Y% over cost to produce.
This kind of contractual lock-in can achieve the desired goal without using either of the mechanisms you listed.
They're usually used by mining companies to hedge future market variance, and are not exclusive to Tesla either. On top of other companies having these contracts in place as well, mining companies will pay to break these contracts if a high enough bidder comes along or flat out pays them to break it.
With demand pricing spiking for batteries, these lock ins are not very strong.
Agreed.
> On top of other companies having these contracts in place as well
Yes, but scale is important. My analysis at the time was that Tesla was locking in significantly more material behind contracts than Toyota or other companies.
> mining companies will pay to break these contracts if a high enough bidder comes along or flat out pays them to break it.
This assumes the contract is written in such a way that Tesla does not have to consent to the contract being broken. My understanding was that Tesla was trying to get into as many contracts as they could without such clauses.
Source: More compliance trainings I can count and enough real life experience with monopolistic raw material suppliers to know that abusing market position to hirt competitors is a really bad idea.
Both those cars look hideous to me.
Regardless, it doesn't change the fact that the Tesla aesthetic is due for a refresh. Whether they have to go as unconventional as some other manufacturers have is up for debate but that they need to come up with something new surely isn't.
> Remember, Tesla has to become bigger than Toyota to justify the stock price. It is not possible to do that at Tesla's current price points. It is not possible to do that at Tesla's current price points.
Long term Tesla has to create a balance sheet and a narrative that convince people that it's current valuation is justified. Based on my time in R&D I think Tesla might achieve that through lower cost vehicles - they were taking some very bold steps in manufacturing that might be hard for others to catch up to - but could also achieve it through other means.
One thing I was very aware of at my time at Toyota was how many of the nascent supplies of Lithium and Cobalt Tesla was snatching up directly or indirectly. Even if other companies can deliver a lower cost of production it may not matter if they can't supply the batteries. 3-5 years from now those investments might pay off substantially in lower costs for Tesla's rather than other vehicles even if the bets in manufacturing don't work out.