"Tesla sales plunge far more than expected": t.ly/1FSIB

A first mover advantage only gives you a head start, to maintain it you must continue to improve to stay ahead of the pack.

Tesla is selling old vehicles in a world where the new is everything. Elon Musk wants you to buy a Model T when the competition is selling spaceships. That's Detroit's core competence, exterior design. As for interiors and engineering, the Germans dominate here.

Needless to say, Volkswagen bumbled its early start in electric vehicles by not getting software right, by approaching its development like physical items. Software needs a single team and oftentimes fewer developers are better. VW had multiple teams, had to change overseers and its first autos had to be shipped sans features because they couldn't get the software right.

As for BMW... It was early, then hit the brakes, but in the decade since the introduction of the Model S, BMW has now turned its efforts around:

"BMW Is a Surprise Winner in Electric Vehicles": t.ly/McKp1

Now in truth, when it comes to luxury vehicles, most are leased. Meaning someone might have started out with a Tesla, but after three years they want something different. And for a long while there were no real options, but now there are. Furthermore, the BMWs and MBZs are far more luxurious, the Tesla interiors are still spartan.

As for software... Musk's self-driving software has been riddled with accidents and bad decisions, like not using LIDAR. Not everything Musk does is correct. And despite the introduction of a new system just recently, it is expensive and perception of the public is negative and perception is everything, just ask Joe Biden. And you have to pay attention anyway, not to mention that other manufacturers are gaining in self-driving.

And then there's price. Despite Tesla's lowering of cost to consumers, in China there are cheaper alternatives. And BYD and its brethren can introduce a new model in less than two years. Meanwhile, Musk over-promises and under-delivers. The new cheap Tesla? Keep waiting. Hell, the Cybertruck few wanted took years to finally come to market, which is like promising new housing and only building a high end needle skyscraper years late.

And then there's Stellantis, which says its EVs are now profitable. Which is a black mark on GM and Ford, who just can't get it right.

"Why Stellantis’s CEO Remains All-In on EVs as Others Retrench": apple.news/ASZQPI5ITTF-eHdWaPZab7g

Needless to say, there's an anti-EV drumbeat, led by the "Wall Street Journal" and the right. But for all those winter charging stories... Turns out most people charge at home and no one ever talks about gas car batteries dying in winter, cars not starting, which you know all about if you've ever lived north of the Mason-Dixon Line.

And you can't fight progress. Remember all the people who said they wouldn't give up their CDs? That MP3s sounded inferior? That they had to own things?

Change happens, and oftentimes the mainstream customer wakes up last. Worst is when the customer wakes up before the industry, which is what happened in music, with Napster. You've got to be a shark in business, never sleeping, always improving.

And in what kind of world can you have your CEO so distracted? Running a car company is a full-time job.

And then there's Musk's identity/personality. Tesla was a cult, new cars were sold by old customers testifying. Now you don't want to testify because you’re going to be inundated with Elon hate. You stay quiet. In today's multifarious world selling is done bottom-up, not top-down. There are just too many messages for yours to gain traction. What you need are acolytes, spreading the word.

What happens to Tesla? Right now it's too valuable for another manufacturer to swallow it. Maybe there can be a merger. Because Tesla's software is still valuable, and could be put to good use by a competitor. Tesla's core competency has always been software, not manufacturing. Apple doesn't manufacture most of its products, why should Tesla?

And the bottom line is the U.S. is moribund. While we fight tribal wars, China and the rest of the world are taking great leaps forward. If you think everything starts and grows in the U.S. today, you're plain wrong. Electric vehicles are surging in China and in Europe. It's only a matter of when you drive an electric car. Do you even have a CD player anymore?

If you are an industry leader, you cannot rest on your laurels. You must continue to improve your product or others will eat your lunch, especially if there are legacy competitors who are given time to wake up.

We've learned this again and again in tech, where what you did yesterday does not matter today. Microsoft fell asleep. But now it has pivoted into storage a la AWS. Suddenly Apple is behind the eight ball on AI. How come Microsoft saw the future and Tim Cook did not?

This applies to all verticals. You might be a leader today, but you must continue to innovate and risk to be a leader tomorrow. And image is everything. You mess with it at your peril.

--
Visit the archive: lefsetz.com/wordpress/
--
Listen to the podcast:
-iHeart: ihr.fm/2Gi5PFj
-Apple: apple.co/2ndmpvp
--
www.twitter.com/lefsetz
--
If you would like to subscribe to the LefsetzLetter,
www.lefsetz.com/lists/?p=subscribe&id=1

If you do not want to receive any more LefsetzLetters, Unsubscribe

To change your email address this link