A couple thoughts:
1. Batteries: - Yes, if no one adds battery capacity. There are quite a few EV battery manufacturers, I don't see how Tesla has a hammer-lock in this area. Producing batteries in house might give them an edge financially, but maybe not.
2. Dealerships: - Point taken about the service model, but Tesla can't own its own dealerships in every state, and legacy brands have several orders of magnitude more dealerships than Telsa. I grew up in a small town (around 15,000 people). To this day, there is a Ford, Chrysler, and GM dealership that have been there for decades.
3. Charging network: - I own an electric vehicle (Nissan Leaf). You are vastly over stating the problems with charging networks.
4. Lack of true competition: - I would modify this as lack of true competition...yet. Tesla smartly went after the luxury performance market. Performance, after all, is where EVs crush ICEs. But while the Chevy Bolt looks like the Chevrolet Sonic, it performs like a BMW. So it doesn't have the nameplate cache' but its close to the same thing. And it is flying off the shelves in Europe (badged as the Opel Ampera). The entire 2018 production is already sold out. Speaking of BMW, BMW does have a true EV right now (i3 and i3s). In the next two years or so Jaguar, Audi, Porsche, Austin Martin, and Mercedes have plans to roll out high-end EVs. Over the next year or two, Hyundai, Kia, and others will join Nissan, Chevrolet, Peugeot, VW, Fiat, Renault, Smart (already the best selling EV brand in Germany), and Ford on the lower end of the market. That's not counting Chinese automakers. That's true competition across the whole spectrum of the market.
5. Lack of incentive: - Lee Iacocca famously said "Mini cars mean mini-profits." But that's just as true for Tesla as it is for Ford. The difference is Ford, GM and Chrysler have conventional SUVs and mini-vans to drive profits. Tesla doesn't. Remember, a lot of this is driven by regulation. Nine states including the huge California market already have ZEV mandates, as do several European countries, and next year China will too. Manufactures must sell a certain percentage of ZEVs if they wish to be relevant. That's a pretty good incentive.
6. Innovator's Dilemna - There is another part of that too. Just because you are first, doesn't mean you succeed. The Wright Brothers invented the airplane, but they were never more than a bit player in manufacturing. The number of airlines that have gone bust is too long to mention. Most of the major carriers that exist today have been through bankruptcy, some more than once. Or shoot, look at auto companies. There were a number of manufactures before Ford or Chrysler entered the business. Most of them didn't survive. Or computers. Commodore and Radio Shack came out with PCs the same year as Apple. Only Apple survived and then just barely. Or cell phones. Not very long ago, Nokia and Blackberry completely dominated the market. Nokia sold to Microsoft and Blackberry is a pale shadow of its former self.
Point is, being first in the pool is no indicator of success. I wish you and Tesla the best, but I don't see any moat.
For batteries, Tesla can buy up the battery supply and use them to build energy storage installations. Even if they break even, they can deny the competition battery capacity. I agree that over the long haul, this will not be an issue, but if Tesla can stave off competition for even 5 years, they will be in very good shape. I'm not convinced having in house battery production is going to benefit them in the long run, but in the medium term (10 years), I think it will prove to be the right decision.
Dealerships: Tesla does not need to take 100% market share. Even 5% of the world market would be fantastic.
Charging network: I own a Ford Focus electric, and the charging situation in Portland has been really bad by my experience. Maybe it's location dependent, or maybe I just had bad luck, but I no longer use public charging stations - I use my gas instead car for any trips that may require a charging station.
Lack of incentive: Chevrolet is talking about discontinuing the Sonic, and Ford is discontinuing the Fiesta. Many manufacturers are in similar talks about discontinuing entry level cars and focusing on more profitable vehicles.
As far as comparable cars, it's worth remembering that GM would need to increase their cost on the Bolt to $50k just to break even financially. Then, once the $7500 tax credit goes away, we'll see how many people are willing to buy it. The Bolt is similar to a Tesla Model 3 in the same way that a Toyota Camry is similar to a BMW 3 series.
I'm not a Tesla Fanboy, I have an MSEE and have taken classes in batteries, electric vehicle design and I work in the power industry. My depth of understanding of the topic is much deeper than that. Also, although I could, I would never buy one of their products. Thus why I'm on this forum :)
The biggest problems I see for Tesla are:
- Getting their expenses under control: This is hard to quantify because we don't really know what all Tesla is working on. Their expenditure is very high on R&D, but if that's because they're developing 5 new products, then that's acceptable. If they're developing 1, then that's much less acceptable. I could see a company run by engineers developing a lot of 'pet projects' over time that are interesting but ultimately have no profitable purpose. This problem will only become worse over time.
- It's illegal for them to sell cars in some states, so they have to have a store in the state and sell from another state. This is a real problem for the mainstream buyer
- Their ability to do creative financing (like dealerships routinely do) really limits their mainstream appeal. Tesla has a much higher share of cash/loan buyers than other auto manufacturers. Mainstream buyers prefer leases more. Tesla does not currently have the ability to deliver, let's say 200k leases per year.
- Since their ordering takes place online, it will remain to be seen if the mainstream buyer is ok with 3-6 month waits. My suspicion is that Tesla will need to have some sort of wait period so that they don't cause havoc at the factory. Traditional automakers use the dealerships as this buffer - they can push unwanted cars onto the dealerships for storage and gradually increase/decrease production
- Adding to the previous point, if there were say, an extended slowdown in demand, let's say because of some kind of PR disaster, what happens to their financials? Their profitability is dependent on them producing at near full capacity, so if they start going to 50% capacity for a year, that could spell real problems for them. This is where the uncertainty comes in because selling to die hard Tesla fans is very different than selling to the mainstream - something that they have yet to demonstrate.
- I don't see a path for them to get to say 5 Gigafactories and 5 auto factories without significant capital raises. Once Model 3 production gets to 10k/week, they will have a good amount of cash to work with, but not enough to build those factories in a timely manner. So while they will remain solvent and profitable, their growth may be constrained by the general market conditions. If we go through a credit crunch like in 2008, Tesla growth could be basically on hold for years. This time may give other auto manufacturers the time that they need to catch up as they can fuel new factory construction using their substantial profits.