As I listened to the latest Tesla shareholders' meeting, with Musk on the stage. A few things left me blown away.

\
And I wanted to share them with you.

\
To be sure, first, I'm not a Tesla investor.

\
Second, this is not investment advice.

\
Third, independently of whether you like or not Musk, there are a few incredible facts here.

And I, as well, have a conflicting relationship with Musk's public figure.

\
On the one hand, I respect him as an entrepreneur, and I believe he's one of the greatest entrepreneurs of our time.

\
On the flip side, I do not agree with many things he says. And as he is one of the most powerful people in the world today, I think it's critical to have him in check, more than anyone else.

\
Having premised that, let me dive into a few interesting findings from Tesla's latest shareholders' meeting.

\
## Tipping points! (it takes years to fully roll out a business strategy, and when it does roll out, it looks like the tip of an iceberg!)

\
 ![](https://cdn.hackernoon.com/images/U6g5S4clvAfPBkwpyb7K9m2l1xf2-oca3qs7.png)

\
Three years ago (pre-pandemic), Tesla was worth $41.8 billion.

\
Today Tesla is worth over $900 billion; Ford is valued at $61.5 billion.

\
It took 14 years for Tesla to pass Ford's market cap.

\
In the next five years since then, Tesla's valuation 20xed.

\
In 2017, when Tesla passed Ford, it made $11.8 million in revenues, losing over $2.2 million.

\
In 2018, Tesla went through what Musk dubbed "production hell" (the attempt of the company to ramp up manufacturing), which brought it very close to bankruptcy (a few days away).

\
Analysts all called up Tesla for that (I was among them).

\
Yet when things turn around, those same analysts disappear.

\
I want instead to give you a deep dive into the current state!

\
## Production Hell! (one thing is to prototype, another thing is to scale)

\
 ![](https://cdn.hackernoon.com/images/U6g5S4clvAfPBkwpyb7K9m2l1xf2-2lb3qpc.jpeg)

For this quarter, Lucid motor delivered just 679 vehicles on 37000+ reservations.

\
For some context, in the same period, Tesla delivered 254,695 vehicles.

\
This reminds us that one thing is prototyping, and another thing is scaling.

\
For Tesla to be where it is today, it took years of going through what Elon Musk has dubbed “production hell.”

\
That flirt with the production hell made Tesla very close to bankruptcy, not once but at least three times.

\
The latest - a few days away from it - was 2018.

\
Just ten years before, in August 2012, Tesla had barely made three thousand cars.

\
Thus, the most difficult part (as Musk confirmed over and over) was not to make a viable EV but to go from production to mass production!

\
## The profitability paradox (a single year makes up for all the lost years)

\
 ![](https://cdn.hackernoon.com/images/U6g5S4clvAfPBkwpyb7K9m2l1xf2-x9e3qlq.png)

\
Above are Tesla’s cumulative losses over the years.

\
After losing money pretty much for all its history.

\
Suddenly, profits in 2021 made up for the losses throughout the years.

\
For new developing industries.

\
Once the new industry becomes viable. And if you’re taking advantage of economies of scale.

In a single year, you make up for all the losses produced over the company's history.

\
This is the best way to measure scalability.

\
And perhaps an index that the company dominating that industry has reached/or is reaching economies of scale.

\
That’s a powerful combination. Indeed, it doesn’t matter whether you create a new industry.

What matters is that you dominate it.

\
## A new paradigm (what we call EV will have a different name and a clear set of features in the consumer's mind)

 ![](https://cdn.hackernoon.com/images/U6g5S4clvAfPBkwpyb7K9m2l1xf2-yvf3qma.png)Each new industry comes with its paradigm.

\
In the EV case, we’ll learn to call it in a way that comprises these primary components:

\
* self-driving for consumers to make demand scale
* robotics in manufacturing to make supply scale
* energy storage and distribution to solve the “range anxiety.”

  \

Like today, the iPhone wouldn’t make sense without touch, apps, and cameras.

\
EVs won’t make sense without self-driving on the consumer side and robotics on the manufacturing side.

\
And, of course, the energy infrastructure that solves the “range anxiety” of people owning EVs.

On the robotics side, it’s interesting to notice that robots make other robots obsolete.

\
In the picture, you find the “body shop robot count” per unit produced at Tesla’s factories.

\
In other words, at Tesla, the same Model Y takes much fewer robots to build in Berlin than in Fremont.

\
## Non-linear growth (slowly, then suddenly - the snowball effect)

 ![](https://cdn.hackernoon.com/images/U6g5S4clvAfPBkwpyb7K9m2l1xf2-78g3qoq.png)

When new industries develop, they initially move painfully slow.

\
And to be fair, in many cases, they collapse on themselves.

\
That is why it’s so risky to develop a whole new market.

\
And that is why it’s so hard to predict what new industries will be able to pass the embryonic development.

\
Indeed, there is a threshold before which growth seems painfully slow, and no matter how much you push, things don’t move faster.

\
Yet, as you pass through that threshold, things start to move so quickly that growth becomes exponential!

\
That is what a hockey stick's growth trajectory looks like!

\
This is a dream for those surfing that trajectory and a nightmare for competitors that have to deal with a rising tsunami coming against.

\
And that’s what the EV industry, headed by Tesla, looks like, as of now.

\
And Elon Musk explained it well; when commenting on the chart above, he said:

\
> This is one of the cleanest exponentials…it looks like one of those fake projections you see in VC meetings, but it's actually true!

\
The quote above explains the snowball effect of creating a new industry while dominating it!

\
***Also published [here](https://fourweekmba.com/tesla-vs-the-world/).***

Tesla

2022 - HackerNoon Contributor of the Year - Business Strategy

2022 - HackerNoon Contributor of the Year - Cryptocurrency

2022 - HackerNoon Contributor of the Year - Finance

2022 - HackerNoon Contributor of the Year - Investing

FourWeekMBA

Nominated for 2022 - HackerNoon Contributor of the Year - Investing

Nominated for 2022 - HackerNoon Contributor of the Year - Finance

Nominated for 2022 - HackerNoon Contributor of the Year - Cryptocurrency

Nominated for 2022 - HackerNoon Contributor of the Year - Business Strategy

Too Long; Didn't Read

Cassandra Forward a free Cassandra-focused community event

Tesla's Snowball Effect 

Tesla's Snowball Effect

Too Long; Didn't Read

Company Mentioned

@gcuofano

RELATED STORIES