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Tesla's disruptive success in competitive car-making and how it can airlift Boeing

January 28, 2020 / AJINKYA BAGADE



  • Ferragu boosted his price target on the equity to $800, implying that the stock could gain another 57%, which fuelled Tesla's most recent success.

  • Many reports suggested that Tesla is not only attracting customers from the all-electric-luxury vehicle market but also the entire luxury car market.

  • Musk has a knack of making safe, cost-saving, environmentally friendly products and he might just be the man to save Boeing.


Tesla's success in the recent months has defied investors' low confidence in Elon Musk and his company, as it outpaced long-established car companies like Ford and GM in market capitalization, even though their businesses dwarf Tesla’s. Last year Ford and GM delivered 2 million vehicles in the US, while Tesla delivered 367,500 around the world.


Tesla reportedly manufactured over 100,000 vehicles and delivered even more in the fourth quarter of 2019, ending the year on a higher note.

“ When you deliver more cars than you produce, you get into your bank more cash than you spent. ”

- Pierre Ferragu, analyst with New Street Research.


Even in the run of its success, analyst and investors remain skeptical about the company's ability to deliver profit. Tesla's history of missing deadlines and the fickle behavior of Elon Musk in recent times is termed as the possible reason for this skepticism. Some analysts continue to rank Tesla in the 'buy and sell' stock category, unusual for companies on Wall Street.

Tesla's winning streak


Tesla's market value reached surged at $104.5 billion, as it overtook the combined market capitalization of Ford and GM. Tesla has ousted German carmaker Volkswagen to become the world's second most valuable carmaker, as its share rose by 6% in early trading last Wednesday making it the highest valued automaker in the US. 

The soaring market value is the most recent Elon Musk accomplishment. Since its surprise return to profitability in October, the shares have doubled, mainly due to the solid vehicle-delivery in the fourth quarter and the optimism around its Gigafactory in Shanghai. Ferragu boosted his price target on the equity to $800, implying that the stock could gain another 57%, which fuelled Tesla's most recent success.

Tesla's Impact on the Automotive Industry


“ “I think it’s great to have good competition. We think that Tesla plays a very important role in the transition because they are paving the way. They showed that electric cars are working, that a fully electric car is the right solution. So, we appreciate that. ”

- Herbert Diess, CEO, Volkswagen.


Tesla has made a huge impact on car manufacturers in the U.S, and Musk's contribution to it is undeniable. Though their early difficulties like getting the cars out of the Fremont unit, missed deadlines and prioritizing Model X ahead of Model 3, Tesla has been successful in building a mindset of switching to EV vehicles. It is difficult to say where the automotive industry must have been with Electric Vehicles without the entry of Tesla.

For instance, Tesla's relentless effort to create its space in the automotive market with its futuristic EVs gave Volkswagen enough reasons to enter the EV market with MEB. With the EV revolution, Volkswagen was granted a chance to recover from its diesel cheating scandal broke in 2015. Since then, it has once again become one of the top car makers in the world and plans to become carbon neutral in all of its manufacturing activities by 2050.

Destroying the competition:


In 2018, Citron Research reversed its earlier prediction: "By the time this (Tesla's) product is even approaching market, there will be multiple other 200-mile range plug-ins that have been out for years," saying "Tesla is destroying the competition".

Then, many reports suggested that Tesla is not only attracting customers from the all-electric-luxury vehicle market but also the entire luxury car market. Tesla or Musk haters believe that one of the major car manufacturing companies will soon launch a 'Tesla-killer', but no one has yet to come closer to Tesla's high performing EVs.

Tesla's Model S promises to drive 370 miles before stopping for a charge. The closest that companies like Chevrolet, Jaguar, and Nissan have gone with their EVs is 240 miles.

2020 is deemed as the "year of electric cars" across Europe. Many of the leading car-makers are poised to present their EVs such as Ford's Mustang Mach-E, Nissan's Ariya, and Fiat's Jeep Wrangler. Tesla is already one of the best EVs selling companies in the continent, which is mainly due to the more high-powered battery tech and the number of risks taken.Tesla has been designing and improving its battery-powered cars built from the ground. It has taken the risk of making its batteries more denser and used different materials, which its traditional car-making competitors would not.

Even as traditional car-maker have stuck to hybrids models and had to go through federal scrutiny due to their EV batteries, Tesla's battery range has helped it to maintain a firm grip over the EV market. But it's not just the batteries that sell Tesla. The futuristic designs with features like autopilot have largely attracted crowds.

Learn More:   Where is all the Cybertruck merchandise? (Because it's everywhere but Tesla's site)

Can Musk's take off the landed Boeing?

 

In 2018, a video showed Tesla's Model X pulling Boeing's 787-9 Dreamliner.

Boeing has been struggling to get its 737 MAX aircraft in the sky since it got grounded worldwide after two crashes that killed 346 people. While a year has turned since the aircraft was grounded, Boeing now faces an investigation into other aircraft, an economic slowdown, distrust in the industry, and strong competition.

Elon Musk might just be the man to save Boeing. Musk is the mind behind Tesla's moving in a direction that it has. Innovating, taking the risk, and believing. Back in 2018, Musk had revealed big ideas for an electric plane. He described his aircraft to take off and land vertically and powered by an electric battery.

This might just be the turnaround Boeing is looking for. Working with Musk would give it much needed confidence and help create one of its safest, and most exciting products ever, while moving the world closer to a sustainable, zero-carbon economy.

Musk turned around Tesla fortunes from being at the edge to a $100bn market cap in one year. He has a track record of cost savings in aerospace too. With the SpaceX Falcon 9, Musk cut the rocket launch costs from $18,500 per kilogram to $2,720 per kilogram. Musk has a knack of making safe, cost-saving, environmentally friendly products. An electric Boeing aircraft will help its customers cut down fuel costs and making air travel cheap. An electric aircraft will save money on maintenance.

Handover Boeing to Elon Musk, already?

Learn more:

Elon musk says the bizarre-looking new Cybertruck from Tesla was 'inspired by games like halo' - here's how they compare