Get Over It! Elon Musk is Winning the Automotive Game.
When asked about Elon Musk, the late Charlie Munger (former Vice Chairman of Berkshire Hathaway and Warren Buffett’s business partner) once said, “Never underestimate the man who overestimates himself… These weird guys who overestimate themselves occasionally knock it right out of the park.”
Over the years, many automotive experts have underestimated Musk and Tesla. In 2009, former Vice Chairman of General Motors Bob Lutz referred to Tesla as a “losing enterprise,” questioning the company’s ability to achieve profitability. In 2011, then-CEO of Nissan Carlos Ghosn suggested, “Tesla is a niche player… they are not a mass-market solution.” Even Akio Toyoda, then-President of Toyota, questioned the practicality of EVs in 2010, stating, “Electric vehicles are not ready for mass production… the infrastructure is not there.”
I, too, have been a skeptic of Elon Musk and his management of Tesla over the years. For example, I doubted Musk’s ability to scale production until the success of the Model 3 proved me wrong. I’ve also criticized what I perceived as the design absurdity of the Cybertruck. Yet, according to Automotive News, the Cybertruck had more U.S. retail registrations in September than every EV except the Tesla Model Y and Model 3. Yes, Cybertruck registrations outpaced the Hyundai Ioniq 5, Ford Mustang Mach-E, and Chevrolet Equinox EV that month.
Tesla skeptics should acknowledge by now that Elon Musk has been “knocking it out of the park” with Tesla for years. If there’s any doubt, let’s take a brief walk through Musk and Tesla’s history to revisit accomplishments that once seemed improbable.
Tesla Engineering Reputation and Sales Volume Explosion
Elon Musk joined Tesla in 2004 as its largest investor, contributing $6.34 million and becoming chairman of the board. As Tesla faced financial challenges, Musk assumed direct control of the company, becoming CEO and product architect in October 2008. This marked a turning point, setting the stage for Tesla’s success.
Tesla went public in 2010, the first American automaker to do so since Ford’s IPO in 1956. The company’s reputation soared in 2012 with the launch of the Model S, which proved EVs could deliver stylish design, high performance, luxury, and long range. In 2017, Tesla launched the Model 3, demonstrating its ability to produce EVs at scale. By 2020, the Model 3 became the world’s best-selling EV. In 2023, the Tesla Model Y achieved an even greater milestone, becoming the world’s best-selling vehicle of any powertrain type, surpassing the Toyota Corolla.
Direct-to-Consumer Retail Sales
Tesla’s sales achievements were made possible by its unconventional direct-to-consumer retail model. Traditional franchised dealers were skeptical, citing concerns about consumer protections, service quality, and maintenance. I recall several conversations with automotive executives and dealer principals who were certain Tesla’s model would fail, forcing a pivot to a legacy dealership system. Yet, Tesla’s customers embraced its streamlined online and in-store sales process, as well as its service-center-based maintenance approach. Opposition from franchised dealers has had little impact on Tesla’s ability to sell and service its vehicles.
Unusual Vertical Integration
Tesla has embraced vertical integration since its inception, designing, developing, and manufacturing key components in-house, including battery packs, electric motors, electronics, and software. In contrast, legacy automakers have traditionally outsourced critical parts and systems to third-party suppliers.
Initially, industry observers predicted that Tesla’s vertical integration strategy would lead to unsustainable costs and complexity. However, this approach has given Tesla greater control over critical technologies, strengthening its competitive position. Today, many legacy automakers are adopting elements of Tesla’s vertical integration model.
The Tesla Supercharger Network
In 2012, Tesla launched its Supercharger network to address EV range anxiety and accelerate EV adoption. This network, an extension of Tesla’s vertical integration strategy, initially faced skepticism. Competitors doubted the feasibility of building and maintaining a global charging infrastructure, questioning both consumer demand for EVs and the financial viability of such an undertaking.
Today, Tesla operates over 55,000 Supercharger stalls globally, widely regarded as the most reliable and extensive EV charging network. Furthermore, Tesla’s North American Charging Standard (NACS) has been adopted by most automakers in North America, making it the de facto industry standard.
Will Musk and Tesla Keep Winning?
I must admit: I’ve become an Elon Musk believer. (Note: A believer is not the same as a supporter). It seems Charlie Munger was right—some people really do knock it out of the park. Musk has placed big bets with Tesla, and he’s succeeded multiple times. Yet, many automotive experts remain skeptical of some of his current bold claims.
Take vehicle autonomy, for example. During Tesla’s second-quarter earnings call this year, Musk told investors: “I recommend anyone who doesn’t believe that Tesla will solve vehicle autonomy should not hold Tesla stock. They should sell their Tesla stock.” While the world is still waiting for Tesla to achieve full autonomy, Musk’s critics must ask themselves: What if he actually succeeds?
Skepticism is warranted, especially given Musk’s missed timelines. In 2015, he predicted “complete autonomy” by 2018. But betting against Tesla entirely might be unwise, as history has shown.
Musk’s Newfound Political Influence
On July 13, Musk publicly endorsed Donald Trump for President of the United States, a significant political alignment. As we know now, Trump won the election, due in no small part to Musk’s endorsement. Following the election, Trump appointed Musk as co-lead of a new Department of Government Efficiency (DOGE).
This development raises important questions for Tesla’s competitors. With Musk’s growing political influence, how might he impact government agencies that oversee the industry and Tesla, such as the NHTSA, FTC, SEC, and DOJ? Could this influence tilt the playing field in Tesla’s favor?
For example, Alphabet CEO Sundar Pichai recently called Trump to congratulate him on his victory, only to find Musk unexpectedly on the line. This interaction underscores Musk’s ability to position himself at the center of power and influence, a move that could benefit Tesla—and potentially disadvantage its rivals.
Conclusion
NYU finance professor Aswath Damodaran once said Tesla has moved the automotive sector closer to its vision than the other way around. This fact can no longer be denied. Tesla’s $1 trillion valuation dwarfs Toyota’s $300 billion, making the valuation of other automakers nearly irrelevant.
Elon Musk, now the world’s richest person with an estimated net worth of $326 billion, is not just winning—he’s widening the gap. For anyone in the automotive sector, the first step to understanding the future is admitting that Musk and Tesla are actually winning.