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Tesla 1st Half 2020 vs Legacy Auto & Big Oil, An iPhone Awakening Moment

by Eva Fox July 30, 2020

Tesla 1st Half 2020 vs Legacy Auto & Big Oil, An iPhone Awakening Moment

Featured image: Futurism

The ongoing COVID-19 pandemic has left a big mark on the automotive industry. Most factories have been shut down, and new car sales have also fallen due to unemployment caused by layoffs and fears of the coming financial crisis.

All automakers have been hit hard in the 1st half of 2020. The abrupt closure of manufacturing centers in China has caused chaos among global automakers. Supply chains were disrupted and some manufacturers were forced to slow down or even stop production. A number of automakers reported strong declines in sales and recorded losses. 



Renault SA swung to a record 1st half loss as the French carmaker grappled with a sharp market downturn and increasingly dismal results from partner Nissan Motor Co. The €7.29 billion ($8.58 billion) net loss underlines the challenges facing the manufacturer, which is slashing costs and trying to repair relations with its Japanese alliance partner.

Volkswagen has reported an operating loss of €800 million ($940 million) for the first half of 2020 and cut its dividend as the coronavirus pandemic hammered car sales.

The profits of the oil corporations also fell. Oil giant Royal Dutch Shell on Thursday reported a sharp drop in net profit for the three months through to the end of June, following an unprecedented period of energy market turmoil and significantly weaker oil and gas prices.

The crisis also had a negative impact on Tesla. Nevertheless, the company showed strong results for the 1st half of 2020. Despite worldwide headwinds, the demand for Tesla cars remained robust.

In the first half of 2020, the company delivered 179,050 vehicles, which is more than the 158,000 that were delivered a year earlier. During the Earnings Call, CEO Elon Musk confirmed that demand isn't a problem at all.

"Demand is not a problem. Definitely not."

This shows that the world is awakening to Tesla’s mission. Across the globe, people are transitioning to zero-emission vehicles.

While the automotive industry suffers from the effects of COVID-19, Tesla's production capacity continues to grow. According to the information provided by the company to investors, over the next 18 months, the capacity will increase from 690K vehicles per year to 1,790K.

Even though Tesla was hit by supply chain slowdowns like everyone else, the company's unique approach to manufacturing its vehicles helped to mitigate the negative impact. The company's secret is that the factories are autonomous. Gigafactories have all the necessary equipment to independently produce the components for their products. Much of Tesla's supply chain is owned by the company. And each unit in the company's supply chain makes its own products. Products are then combined to meet a common need.

 

To top it off, Tesla has developed a sales system distinct from that of legacy automakers. Any order can be placed online, that is, the company is not tied to sales based on physical stores. While dealerships around the world were closed and buyers of legacy auto were out of luck, Tesla successfully accepted orders online.

The second unique moment for Tesla was contactless test drives and vehicle delivery. Any customer could, as before, test the car, and after placing an order, receive it, avoiding unnecessary contact.

Tesla's business model demonstrates the strength of the company and its leaders. Where Tesla excelled, the weaknesses of other automakers were highlighted. Customers the world-over are awakening to Tesla’s critical mission. Legacy auto and big oil: your move.

Article edited by @SmokeyShorts, you can follow him on Twitter




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