The big auto companies definitely aren't as nimble in adapting to technological change but that's because they are operating on a completely different scale. Tesla would be no different if was actually selling in more than a handful of countries.
Companies like Toyota have the money, clout and scale in which to absorb any risks and change in the future. Tesla doesn't.
I think the parent was commenting on the irony of this statement considering that the big US automakers were recently recipients of a large government bailout precisely because they couldn't "successfully adapt to competitive and technological displacement risks over the medium to long term".
That's not irony, that's a big reason for giving the big US automakers a better credit rating than Tesla.
If Tesla finds itself in dire financial straits, they'll be wrapped up and shut down. If GM finds itself in dire financial straits (again), they'll be bailed out (again) or merge, or something. They won't go away.
Which one is more likely to pay back your bond? The one with a virtual guarantee from the government that they'll stay in business, or the tiny startup with a bright future?
> If Tesla finds itself in dire financial straits, they'll be wrapped up and shut down. If GM finds itself in dire financial straits (again), they'll be bailed out (again) or merge, or something. They won't go away.
> Which one is more likely to pay back your bond? The one with a virtual guarantee from the government that they'll stay in business, or the tiny startup with a bright future?
There's something I'm pretty sure you don't know. During the last bankruptcy and government bailout, GM bondholders got decimated to the tune of tens of billions (!) of dollars. If hey, there might be another bailout! is the thinking behind the credit rating, it ought not raise the rating.
I agree that they should provide context to that statement...but I also think that they should allow for the possibility of the opposite. Tesla isn't strapped down by legacy costs, processes, and contracts that larger/older manufacturers are. This, I would think, would provide them with the benefit of moving faster in a rapidly evolving marketplace.
>Companies like Toyota have the money, clout and scale in which to absorb any risks and change in the future.
Yep. They also have the government's backing, so if they fuck up in terrible ways and start to go under, the government will just bail them out with taxpayer money. Tesla doesn't have that sort of safety net.
On the other hand, one can argue that this is actually a competitive advantage for Tesla. They basically have no choice but to succeed. There are no well-greased politicians to come to the rescue if they fail.
The big auto companies definitely aren't as nimble in adapting to technological change but that's because they are operating on a completely different scale. Tesla would be no different if was actually selling in more than a handful of countries.
Companies like Toyota have the money, clout and scale in which to absorb any risks and change in the future. Tesla doesn't.