Tesla, Elon Musk’s automotive start-up, is having a very good year. In September, the company expects to begin shipping its all-electric Model 3 to non-employee customers, who have already logged 500,000 pre-orders. After reporting earnings earlier this month, its stock jumped, rocketing the 14-year-old startup’s valuation to over $53 billion, ahead of every other U.S. car manufacturer and all but three worldwide. This despite the fact that the company lost nearly two billion dollars in the past two years alone.
Is Tesla Really a Disruptor? (And Why the Answer Matters)
There’s little argument that Tesla is a wildly innovative company. But is its automotive business a disruptor, poised to transform the entire transportation sector? The answer matters. Investors and lenders are betting on the company’s long-term potential to dominate a future that may feature autonomous vehicles, sustainable energy consumption, and the ability to upgrade easily as both hardware and software evolve. If that potential isn’t realized, the money will quickly dry up. Successful disruption often requires a robust manufacturing, distribution, and service platform that can be repurposed to help scramble the incumbent industry supply chain in short order, as well as a steady supply of revenue from more mature products to fund continued experimentation. It’s not clear that Tesla has those components in place. Elon Musk may succeed in starting a disruptive revolution, only to fade from the field just as incumbents or other new entrants waiting nearby storm the palace.