Quote:
Originally Posted by NorCalAthlete
As I understood it Elon's long game was always the underlying infrastructure and tech, the cars were just a vehicle (pun intended) to get society to where we needed it.
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Can't say what is long game is or was, but Tesla is pretty clearly an energy technology company using auto sales to fund its tech build just like Amazon is a logistics tech company that used book sales to build its tech or google that used search revenue to build its ad tech or netflix that used dvd rentals to fund it streaming tech ...
and as long as we're talking business models, two points:
(1.) Zero Marginal Costs
Software companies have high valuations because the marginal cost to add a new customer is trivial, i.e, selling another Microsoft Office copy has almost zero cost, but relatively high revenue, and upgrades to Office are also low costs and get another fee. Tesla is starting to do this with its software ...
(2.) Virtuous Cycle
The greater the market share, the greater the economies of scale, thus the cheaper the prices, thus the more market share, thus more scale, etc etc. Amazon is preeminent example of this. Tesla is building some of the largest battery production technology and infrastructure in the World AND its already got multiple channels to sell its own batteries and software: autos, semis, megapack, powerwall.
(3.) Recurring Revenue
Joe Rogan's podcast, by itself, is not worth $100M ... but combined with other content it can be used to get people over the hurdle to pay a monthly fee, i.e., if you don't like spotify music you might like Rogan plus you also get the music so why not? Amazon does this with prime: you might not order enough packages to make it worthwhile but you also get the movies so ok. Tesla has this with its supercharger network ... most auto companies need to make an expiring product, but Tesla can make forever cars and basically sell supercharger subscriptions where you get the car for free ... not to mention Tesla can also then sell the battery capacity to energy companies!
So consider this for a moment:
* You pay for your battery factories with auto sales
* You sell the batteries with the car, let's say for cost
* You're now getting subscription revenue for superchargers from your battery customers ...
* You're also getting recurring revenue for the battery network from energy companies (in place of them building peaker plants)
* and the more EVs on the road, the more energy companies need peakers
It makes Amazon's virtuous cycle look rinky-dink.