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    Tesla's Real Purpose Is Not To Build Cars

    Sep 04,2022 | Tesmag

    In the past few years, Tesla has been developing and rising at an alarming rate, with very good production and sales, and now it has become a banner in the new energy vehicle industry. But Geely's boss Li Shufu has a different view. He believes that Tesla's real purpose is not to build cars. Why does Li Shufu hold this view? What is Tesla's real purpose?

    When it comes to Tesla, most people will label it as a new energy car company. The reason why everyone has such an impression is inseparable from Tesla's achievements over the years.

    Compared with those traditional old car companies, Tesla is a young junior, but its growth rate is very fast. As of January 10, 2020, Tesla's market value has reached as high as $86 billion, successfully setting the latest record for the valuation of an American automaker. In July of the same year, Tesla’s market value once exceeded $206 billion, surpassing the old car company Toyota and becoming the world’s most valuable automaker. But this is not the peak of Tesla, because the market value continues to rise. It is understood that throughout 2020, Tesla’s stock price has risen by 740%. In the same year, it also achieved its goal of producing 500,000 vehicles a year, and the company's cash flow exceeded $19 billion. As of January 26, 2021, the total market capitalization has reached $848 billion. On its own, Tesla surpassed the remaining nine largest automakers combined. Tesla not only has a high market value but also has a high operating profit margin. As of now, it is still ahead of many traditional auto giants such as BMW and Ford.

    Recently, after experiencing the impact of rounds of epidemics, the delivery cycle of Tesla vehicles has gradually accelerated. Take the model Y rear-wheel drive board as an example, the delivery cycle is 1 to 4 weeks, but it has been ordered Users and new subscribers can enjoy expedited delivery. The acceleration of the cycle seems to be a small problem, but there are many advantages of Tesla hidden behind it. The most critical point is to use technology to reshape the energy ecology. This not only greatly improved Tesla's capacity utilization, but also broke the ceiling of the industry.

    Under the superposition of various advantages, Tesla has achieved another great performance in the past August. On September 1, a statistic showed that Tesla’s deliveries in August reached about 77,000, a month-on-month increase of 173%. In addition, Tesla’s financial report data for the second quarter of 2022 showed that the company’s operating profit margin in the quarter was 14.6%, and it has remained profitable for 12 consecutive quarters. It is safe to say that in today's new energy vehicle industry, this is still a transcript of a scholar.

    The Chinese market has contributed to Tesla's achievement of such achievements, but the relationship between the two is a mutual achievement. In fact, as early as 2009, in order to stimulate local new energy vehicle companies, various subsidy policies have been introduced one after another, and the number of subsidies at that time was as high as 100 billion. Even with such a strong blessing, local new energy vehicle companies still do not have enough ability to compete with foreign companies, and their technical level is relatively backward.

    So in April 2012, China officially introduced Tesla. Not only to encourage Chinese auto companies to accelerate innovation, but also to introduce more advanced new energy vehicle technologies. After entering the Chinese market, it took Tesla 8 years to gain a firm foothold, and it also left many local new energy vehicle companies behind. In 2019, Musk also aimed at Shanghai, China. Then he took Tesla to open the first "gigafactory" outside the United States here. The factory was completed in less than half a year and then began to show off its strengths here.

    However, many people believe that after Tesla entered the Chinese market, it took away the market of many local companies. But is this really the case? Tesla's arrival, is the pros outweigh the cons or do the cons outweigh the pros? First of all, as far as the consumer market is concerned, China has a population of 1.4 billion, and the potential consumer market is very large, so there is no need to worry about this issue at all. Second, although Tesla made a lot of money in the Chinese market, it also brought a lot of benefits. Before the arrival of Tesla, the Chinese government spent a huge amount of subsidies on new energy car companies, why is it delayed to see results? Because the competition between these companies is not fierce enough and the pressure is not great, they are more willing to make the money they can make now than to spend a few years or a decade exploring new energy technologies. Therefore, some of these companies have also started to subsidize the idea, and there are not a few car companies that cheated.

    However, the arrival of Tesla made these car companies panic instantly, and they would really not be able to survive if they didn't work hard. Under this pressure, the innovation enthusiasm of local new energy car companies has been greatly improved. The arrival of Tesla is just like Apple at the beginning. Although it made a lot of money and brought very fierce competition, it also accelerated the growth of a series of domestic brands. Now domestic mobile phone brands have been able to stand on their own. . In recent years, Tesla's pressure effect has become increasingly apparent, and many local new energy companies are accelerating their growth and have achieved good results, especially BYD. Without this pressure, how long would we have to wait to see where we are today?

    In any case, Tesla has indeed led the way for a long time in the new energy track, whether it is technology, sales or output, and the brand image has been deeply rooted in the hearts of the people. In that case, why did Li Shufu say that? In an interview at that time, Li Shufu had a lot of comments on Tesla. In addition to proposing that its real purpose is not to build cars, he also said that Tesla treats consumers as experimental products. Although they are developing rapidly, they didn't pay too much attention to the quality of the product.

    Many people should agree with Li Shufu's statement because although Tesla's sales have been very high in recent years, car quality problems have also occurred frequently. Especially since last year, news about Tesla's brake failure has appeared on the Internet, and it is not just one or two consumers who have encountered this situation. The first time I heard such news, everyone wondered if the car owner was not skilled enough or didn't pay attention when driving, but then similar situations continued to appear, and fewer and fewer people were on the Tesla platform. Trust in the brand has also dropped significantly.

    Logically speaking, if there is a problem with the product, the brand should provide consumers with an effective solution in a timely manner, but Tesla's attitude is "we have no problem". Take the example of Ms. Yu in March last year. At that time, she had only brought a new car for two months. As a result, the brakes failed on the way to work. In the panic, the car directly hit the guardrail. After the incident, the girl Yu contacted Tesla's staff and produced video evidence she had taken, and then applied to Tesla to return the car.

    In this regard, Tesla chose to directly refuse. Seeing that the discussions were fruitless, Ms. Yu chose to expose the incident on the Internet. Public opinion fermented quickly, and under pressure, Tesla agreed to the application for the return of the car. But the matter did not end there, and immediately after Tesla posted on its official account, after being inspected by Hainan Jietong Automobile Inspection Service Company, there was no problem with the car's braking system. We don’t know whether Tesla’s post is true or not, but when a follow-up reporter found the inspection company and asked about it, the other party said that it had not done this inspection and had no knowledge of the matter. The development of the matter gradually became interesting, such a big car company actually "ly lied" openly, and even the people who were eating melons were shocked.

    Not only the Chinese market but Tesla has also been sued by many people in the United States because of the failure of the brakes. Just recently, many car owners in the United States collectively dragged Tesla into court for a lawsuit. One of the owners said: that Tesla turned something that was supposed to have a safety feature into a horrible nightmare. Others say Tesla has "ghost brakes." So many examples prove a problem, and that is that Tesla's products do have quality defects.

    If you want to become a truly long-term car company, it is impossible not to pay attention to product quality issues. Although a car is only a means of transportation, its safety is of paramount importance. Once something goes wrong, human life is at stake. A real car company, if it doesn't consider these issues, it's definitely difficult to go far. Looking back at those traditional and established car companies, almost none of them have frequent quality problems like Tesla. They tend to focus on solving key problems such as reliability, durability and economy. However, these Teslas Lara doesn't seem to be paying too much attention and only thinks about how to prevaricate consumers when a problem occurs.

    So where has Tesla put its energy? What is the real purpose? It is not difficult to find that Tesla pays more attention to output and scale than to improving the quality of its products. The reason for this is that building a car has never been its main purpose. Li Shufu believes that Tesla's ultimate purpose is to build an online system. The whole process includes chip technology, operating system, etc., and building a car is only one step. In the end, the car has to assume the role of the carrier. Li Shufu has been working hard in the automotive field for many years. He should have a good understanding of many things or routines in the industry. It is definitely not nonsense to give such an evaluation.

    So what is Musk's purpose in doing this? There's no entrepreneur who doesn't want to stay in business for the long haul, and neither does Musk. However, rather than relying on the auto industry to keep Tesla alive for a long time, Musk prefers to build a closed-loop system of his own. When the system is completed, the things in the system will be closely connected, no matter which links it is. The company brings considerable benefits. Taking the current electric car as an example, Li Shufu believes that this will only be a carrier in Tesla's closed-loop system in the future, and this sentence has some truth. After the entire ecosystem is complete, the car is no longer an automotive industrial product, but an electronic product that can run. Because Tesla's car has a networked system, it can easily build ecological and online technologies.

    In addition, there is another very key reason, that is, the change of the times. The ecosystem that Musk wants to build is actually a manifestation of conforming to the times. Judging from the current situation, car companies in various countries are developing new energy vehicles. Perhaps in the next few decades, fuel vehicles will face obsolete. At that time, car companies will not only make new energy vehicles, but also make intelligent vehicles in combination with the Internet, and eventually develop into driverless vehicles. Only in this way can they keep up with the pace of the technological era.

    It sounds absurd to say that the purpose of a new energy car company is not to build cars, but if you think about it carefully, you will find that Musk’s approach is actually very smart. With the continuous breakthrough of science and technology, cars in the future will definitely become more and more intelligent. How can cars be just simple automotive industrial products at that time? Since it will change sooner or later, why not lay it out as soon as possible? Although Tesla's closed loop has not yet been fully formed, the current development direction is like this, and whether it can be truly realized is a matter of time.

    In addition to building an online system, Tesla has another purpose to make money. It is not difficult to find that most of Tesla's cars appear in first-tier cities, and third- and fourth-tier cities are almost rare. The reason for this is simple: Tesla's pricing. The cheapest models also cost around 300,000 yuan, and some even cost 700,000 yuan or more, with huge profit margins. And as Tesla's reputation and brand status continue to improve, sales are getting better and better, especially in the Chinese market. It is understood that Tesla's sales in my country have reached 38% of the global market, and it is very likely to exceed 40% this year. The domestic market has become the largest contributor to Tesla's profits.

    In addition to cars, Tesla has also deployed to many other industries to make money. In particular, the stock market and Bitcoin, which have brought a lot of profits to the company, have also become one of the boosts for Musk to set the position of the richest man in the world. Why is Tesla making so much money? There's one reason everyone agrees, and that's for Musk's Mars dream. As we all know, Musk is the most popular technology maniac on the Internet. The Mars immigration plan is not just a slogan on his lips. He has been trying continuously over the years. To this end, he also set a goal of having space X complete the launch of a Mars spacecraft within four years. Someone once joked that exploring space technology is Musk's real main business. In 2002 alone, he invested a full $100 million in this area. Now it is 2022, and he is still insisting on space exploration. It goes without saying that everyone knows how high the total cost behind this is.

    Under the rapid development of the times, any industry must constantly undergo changes, and Musk's layout today may only be the beginning of a new change. What do you think about this?

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