Hi, I'm Markus - a strategy consultant based in Munich, Germany. In this newsletter I will collect, classify and share the most interesting information from the exciting world of mobility and take a look at the business and operating models behind. In consulting, I have already worked for many car manufacturers and suppliers as well as providers in the field of mobility services. What strucks me most are all those old world dogmas still existing and new ones coming up. Let’s take a look on why they are there and how to overcome them.
Hey Markus, I am impressed on how many different misconceptions you were able to include in one single post! Don’t get me wrong, I was a consultant myself and I am proud of the work I did, but there are a few flaws that would deserve further discussion:
- What is the total compensation for CEOs in the auto industry for the past 5/10 years, that is a more comparable number;
- if battery is a commodity, why there isn’t any other EV on the market today with the same range at the price level of a Tesla;
- if software is only a 2/3 year advantage, why hasn’t any other automaker catchup yet;
Don’t take me wrong, you are in the right path, but there are still a few questions to answer.
Hello Roberto, thanks for your comment. To be honest, I also think Tesla is very impressive, but I stand 100% by the points I mentioned.
Battery:
Battery is a commodity for me. This can be seen for example in the Volkswagen ID.3, which comes with 58kWh (instead of 55kWh in the Tesla Model 3 SR) or 77kWh (instead of 75 kWh in the Tesla Model 3 LR) in Europe for about 5.000 to 7.000 Euro cheaper than the respective Tesla on the market. Where should there be a competitive advantage?
Compensation:
Ford CEOs received total compensation of nearly $17.4 million in 2019, $17.7 million in 2018, $17.5 million in 2017, $19.3 million in 2016, $17.7 million in 2015. It's a different number than Elon Musk, who gets $775 million (!!!) as part (!) of his compensation package, don't you think?
Software:
When it comes to software, I actually see a competitive advantage of Tesla. I still stand by that. But since there is neither a developer ecosystem nor any other software lock-in effect (over-the-air updates are now possible for all new vehicles), this advantage should not be greater than two to three years.
Thanks for the honest reply, I appreciate the enthusiasm. I still hold my position, Model 3 and ID.3 are in different categories, and price differences are not that big if we compare like for like. Regarding Musk's compensation package, yes it is different than anything out there, with the exception that like any other CEO it is completely insane, I have to admit. Ellon's compensation package at least has one thing that we do not see every day, a long term commitment to success and making sure the company cames first. It will be interesting to see how VW, BMW, and Audi solve the software lag to Tesla in the coming years.
I see no argument against this. You said that no one can offer a similar range to Tesla. My argument was that the ID.3 can do that and will be several thousand dollars cheaper. Answer: this is a different class of vehicle. There are already some cars on the market that are in direct competition with Tesla and have comparable ranges (Porsche Taycan vs. Model S, Polestar 2/ID.3 vs. Model 3, e-Tron vs. Model X). Where is the competitive advantage of batteries to come from if Tesla uses the same suppliers as the well-known car manufacturers?
Elon Musk's salary is definitely not a commitment to growth (Tesla sells about as many cars as in Q4/2018), but in my opinion irrationally high. It is actually quite amazing that even such a payment (as shown, 40 times higher than comparable compensations) is still defended by the fans.
I agree with you on the last point: it will be exciting to see whether the traditional car manufacturers can catch up with Tesla's software lead- or not. As written in my initial post, this is currently Tesla's only competitive advantage.
Hey Markus, I am impressed on how many different misconceptions you were able to include in one single post! Don’t get me wrong, I was a consultant myself and I am proud of the work I did, but there are a few flaws that would deserve further discussion:
- What is the total compensation for CEOs in the auto industry for the past 5/10 years, that is a more comparable number;
- if battery is a commodity, why there isn’t any other EV on the market today with the same range at the price level of a Tesla;
- if software is only a 2/3 year advantage, why hasn’t any other automaker catchup yet;
Don’t take me wrong, you are in the right path, but there are still a few questions to answer.
Good luck
-
Hello Roberto, thanks for your comment. To be honest, I also think Tesla is very impressive, but I stand 100% by the points I mentioned.
Battery:
Battery is a commodity for me. This can be seen for example in the Volkswagen ID.3, which comes with 58kWh (instead of 55kWh in the Tesla Model 3 SR) or 77kWh (instead of 75 kWh in the Tesla Model 3 LR) in Europe for about 5.000 to 7.000 Euro cheaper than the respective Tesla on the market. Where should there be a competitive advantage?
Compensation:
Ford CEOs received total compensation of nearly $17.4 million in 2019, $17.7 million in 2018, $17.5 million in 2017, $19.3 million in 2016, $17.7 million in 2015. It's a different number than Elon Musk, who gets $775 million (!!!) as part (!) of his compensation package, don't you think?
Software:
When it comes to software, I actually see a competitive advantage of Tesla. I still stand by that. But since there is neither a developer ecosystem nor any other software lock-in effect (over-the-air updates are now possible for all new vehicles), this advantage should not be greater than two to three years.
Thanks again for your comment and all the best,
Markus
Thanks for the honest reply, I appreciate the enthusiasm. I still hold my position, Model 3 and ID.3 are in different categories, and price differences are not that big if we compare like for like. Regarding Musk's compensation package, yes it is different than anything out there, with the exception that like any other CEO it is completely insane, I have to admit. Ellon's compensation package at least has one thing that we do not see every day, a long term commitment to success and making sure the company cames first. It will be interesting to see how VW, BMW, and Audi solve the software lag to Tesla in the coming years.
I see no argument against this. You said that no one can offer a similar range to Tesla. My argument was that the ID.3 can do that and will be several thousand dollars cheaper. Answer: this is a different class of vehicle. There are already some cars on the market that are in direct competition with Tesla and have comparable ranges (Porsche Taycan vs. Model S, Polestar 2/ID.3 vs. Model 3, e-Tron vs. Model X). Where is the competitive advantage of batteries to come from if Tesla uses the same suppliers as the well-known car manufacturers?
Elon Musk's salary is definitely not a commitment to growth (Tesla sells about as many cars as in Q4/2018), but in my opinion irrationally high. It is actually quite amazing that even such a payment (as shown, 40 times higher than comparable compensations) is still defended by the fans.
I agree with you on the last point: it will be exciting to see whether the traditional car manufacturers can catch up with Tesla's software lead- or not. As written in my initial post, this is currently Tesla's only competitive advantage.