During their latest episode of the VALUE: After Hours Podcast, Taylor, Carlisle, and Tsai discussed Musk Borrows From History: How Tesla is Channeling Henry Ford to Dominate EVs. Here’s an excerpt from the episode:
Christopher: And like to your point, things changed pretty quickly. There’s a guy by the name of Tony Seba. If anybody is not familiar with Tony Seba, definitely check him out. He’s a great thinker on disruption, and he influenced my talk that I recently gave called Investing in an Age of Disruption. And he basically shows how all of these technologies going all the way back to the Gutenberg printing press, then to cars, to cable, to streaming, etc and you see an S-curve kind of formation, and you see that the market is initially slow to take off, right? The new product or service is slow to take off, but then you hit a tipping point and you just get this S-curve until you hit 80% of the market, and it kind of slows down. And that formation is the same with all of these disruptive, innovative technologies. And I use the word disruptive loosely because horses and carriages were disrupted by auto. And so, I see the same thing playing out in the EV world today. I see EVs being increasingly disruptive, replacing ICE vehicles. And eventually we’re going to get to a situation where almost, maybe not 100%, but almost 100% of the market will be EVs. It’s just a better, more cost-effective product, and there’s a cost curve associated with that as well.
Musk is certainly, I think, copying the playbook of Henry Ford in the sense that Henry Ford was–. Before Bezos, Henry Ford to me was the– He understood this idea of scale economy shared that Nick sleep always talks about with respect to Amazon and Costco. It was Henry Ford who implemented the scale economy shared business model first, I think. I haven’t found anyone before Ford, so if anybody knows of anybody, let me know. But Ford, to your point earlier, dropped prices which made it very hard for the competition to keep up. And as he dropped prices, as his costs were falling, he maintained his margins, but he increased his competitive positioning and Tesla’s following the same playbook.
Tobias: You require profitability or sort of the path to profitability is one of the things that you need before you invest.
Christopher: Very, very clear path. A very clear path.
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Article by The Acquirer’s Multiple
