May 28th, 2020

Jeremy is awesome. You should subscribe to his YouTube channels. In this video he outlines how Legacy Auto needs to get rid of inventory and this forces them to discount which creates demand problems for new inventory and puts pressure on the executives of the company which may face the chopping block if they don't perform.

It is hard to know ahead of time the forgiveness from Shareholders wrt Co-Vid. Perhaps, this is not a concern.

But this video reminds me of what I have been saying years ago. Just change his "Sales Down" issue to any of the following:

  • Advertising Budgets Slashed
  • Dividends Slashed
  • OTA OS not ready
  • ZEV Credits Required to Purchase
  • Not Integrated Vertically Enough
  • High Fuel Costs

And the lists goes on and on. Each of the above points could potentially ruin a Legacy OEM. Tesla has no advertising or dividend budgets to slash. Their software is great and has been for years. Not only do they not have to buy ZEV Credits, but they make money selling them. Other OEMs are going to realize that the cheapest form of labour is robotic. And Tesla is striving to make their assembly lines as human-free as possible. Keeping labour costs down and vertically integrating will reduce the price of the cars even further.

So while other OEM's are fighting over who gets to give Tesla $$ for their ZEV Credits, Tesla has quietly laid out a plan so that your car no longer costs money to fuel. It makes money by selling fuel.

How can legacy OEMs expect to sell cars for more money, which are inferior in every way?

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Software Developer always striving to be better. Learn from others' mistakes, learn by doing, fail fast, maximize productivity, and really think hard about good defaults. Computer developers have the power to add an entire infinite dimension with a single Int (or maybe BigInt). The least we can do with that power is be creative.