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In response to a Seeking Alph article I wrote:

The headline, "TSLA: Tesla: Electric Vehicle Market Competition Is Heating Up" is wonderful news, it shows there is no stopping the EV revolution.

The headline, "Tesla: New Wave Of Competitors Threatens EV Dominance" highlights what one should expect in free, competitive markets. What counts is not the competitors but the survivors. 100 years ago there were lots of competitors, I listed 100 brands, but there was no stopping Ford. Most of those 100 brands simply died out as the industry consolidated.

One usual argument by bears is the deep pockets of incumbent car makers. In fact, ICE models are the big problem incumbents have because they must divide their attention between new and old. There is a lot of literature out there about it including "The Innovator's Dilemma" by Clayton Christensen and "Living on the Fault Line" by Geoffrey Moore.

Another argument is the new technologies that will eat Tesla's lunch including solid state batteries and hydrogen. In technology adoption, path dependence plays a very important role. Before they invented the term it was called "first mover advantage." VW wants to use solid state batteries but they won't be in production until 2024.Think of the time to market advantage of Tesla's new 4680 battery cells now in production at pilot scale and promising a 50% cost reduction. By 2024 VW's solid state batteries won't be competing with 2020 technology. The hydrogen fuel infrastructure does not exist. The natural gas diesel engines died for lack of NG fuel infrastructure. Tesla took steps to create their charging infrastructure and by now independents are joining in. First mover advantage is very powerful.

For investors the question is on which horse to bet. The odds favor the current leader so that's the way to bet.

Denny Schlesinger
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