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A Lesson in Technology Head-starts from Apple and Tesla

Tesla leads a disruption of the auto industry with electric vehicles, while conventional manufacturers have not yet got to big time electric vehicle sales. <br>

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A Lesson in Technology Head-starts from Apple and Tesla

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  1. A Lesson in Technology Head-starts from Apple and Tesla Tesla leads a disruption of the auto industry with electric vehicles, while conventional manufacturers have not yet got to big time electric vehicle sales. TradeZero Ocean Place Cable Beach, Unit #1 Nassau, Bahamas

  2. One of the principles of success in stock trading and investing is identifying stocks that are at the forefront of some technology that has significant potential for the future. And with commission free trading, the earnings can be maximized. Getting a head-start on technology always gives a company an advantage. And that’s what MarketWatch columnist Vitaliy Katsenelson reckons is the case with Tesla Motors ($TSLA), a company that has taken the leap in electric vehicle technology and is already selling different models of electric cars while much of the rest of the auto industry is still researching on manufacturing electric vehicle technology in a cost-effective manner. How Apple’s iPhone Dethroned Nokia from Its Perch Katsenelson compares Tesla to the position Apple ($AAPL) was in 2008 when it launched the iPhone 3G. Back then, Nokia was the largest mobile phone manufacturer. The high costs of iPhone made many people think of it as an unnecessary technology. A mobile phone was thought of in the most basic terms, when considered by today’s standards. In such a circumstance, Apple’s move didn’t seem to make much sense. Nokia felt the same too. But we all know what happened later. The iPhone 3G kick-started the smartphone revolution and, while other manufacturers started manufacturing smartphones, Nokia lost its market share and was quite soon dethroned from its perch. The rest is history. Why Tesla Is In an Enviable Position So is Tesla in such a position? Katsenelson argues that, from the perspective of the sea change that’s required for conventional internal combustion engine (ICE) manufacturers to move towards electric vehicle (EV) technology, Tesla is certainly on an enviable perch. For conventional auto manufacturers, it’s unlearning everything they’ve acquired over years of experience. Electric technology does away with most of the components that are part of ICEs. It is a leap to the unknown. But the fears of global warming have made the world really keen to welcome EVs, and conventional car makers are eager to beat the competition. But they need to make a lot of compromises, which is why Katsenelson considers that their success in the EV market isn’t a guaranteed success. Handling the ICE and EV Divisions Simultaneously For one, the conventional car makers need to worry about their current success and profitability. So they need to keep manufacturing internal combustion engine cars and simultaneously set up a separate division for researching electric vehicles to eventually get them into production. They need to recruit special engineers and research staff, all while their existing ICE division keeps running. That’s expensive. Tesla’s Direct-Sales Model Moreover, Tesla’s distribution system is different and perhaps more suited for electric vehicles. Tesla is in full control right from the production to sales and service. They directly run dealerships and handle service, which enable them to be in direct control of the customer experience. That’s vital for earning goodwill. And electric cars are also lower on www.tradezero.co +1.954.944.3885

  3. maintenance since there are a much lesser number of complex parts. Many Tesla models are also built to order, so they don’t have to deal with a great deal of inventory. But this direct-sales model, while being quite efficient for electric cars, may be harder for ICE auto manufacturers to employ, because they’ve already signed agreements with various dealers and parts manufacturers and suppliers. And when they eventually do get to launch electric cars, they can’t change this model. It would be interesting to see how the big auto manufacturers finally satisfy the EV urge of the world’s public. Tesla certainly knows the way since it’s been designing, manufacturing and selling electric vehicles for a lot more time. Looking out for such disruptive technologies and the stocks that have mastered them is the key to success in investing. With the stock market trading software, you have a great view of the markets. www.tradezero.co +1.954.944.3885

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