[Park Chung-hoon's Dotdanbook] The Future Warrior Becomes the 'iPhone on Wheels'

Choi Won-seok's 'Tesla Shock'

Electric Vehicle Company Whose Market Cap Increased Fivefold in One Year

From Production to Revenue Model, Similar to the iPhone

Capable of Solving Most Business Elements Independently

Accelerating the Construction of an Independent Mobility Empire

Traditional Automakers Also Form Alliances to Chase Closely

[Asia Economy Reporter Park Choong-hoon] Among those who have recently made some gains in overseas stocks, Tesla is undoubtedly the unwavering 'one pick.' While the internal combustion engine car industry suffered difficulties such as a sharp decline in sales volume due to the COVID-19 pandemic sweeping the world, Tesla's market capitalization soared about fivefold in one year, achieving remarkable success. Last year, its market cap exceeded $650 billion (approximately 718.25 trillion KRW).

The new book Tesla Shock argues that Tesla's value cannot be explained solely by financial performance. "The source that makes people around the world follow and support Tesla is CEO Elon Musk's vision and the process of that vision being realized one by one." This is reflected in the stock price as a numerical value.

Currently, Tesla's presence in terms of vehicle sales volume is minimal. Last year, Tesla's global electric vehicle sales were about 500,000 units, accounting for roughly 1% market share. Nevertheless, Musk has declared plans to sell 20 million vehicles by 2030.

How is this possible? The subtitle of the book, "The iPhone on Wheels, Heralding a Revolution," offers a hint. Tesla electric vehicles closely resemble Apple's iPhone in device characteristics, revenue generation methods, production methods, and even autocratic leadership. Just as the iPhone did, Tesla is changing human life and business models themselves.

If the iPhone is a small computer with phone functions, Tesla electric vehicles are giant computers moving on the road. Tesla EVs are equipped with powerful electronic control units (ECUs). The ECU's functions improve through firmware upgrades. Conventional wisdom held that vehicles depreciate over time. However, Tesla EVs increase in value over time through functional upgrades.

Elon Musk, CEO of Tesla, is dancing at the 'Model 3' electric vehicle delivery event held in Shanghai, China, on January 7 last year. Photo by Reuters Yonhap News

Just as the iPhone created a new business model with the application market, Tesla is launching new concept services one after another. In 2019, it introduced its own car insurance. It also plans to operate robo-taxis within a few years through autonomous driving improvements.

Tesla has achieved 'closed vertical integration' from product manufacturing to after-sales service. This means it can solve most of the necessary business elements independently. It has designed its own vehicle control software, data transmission cloud centers, and AI semiconductors?the core brain of autonomous driving. It also owns the electric vehicle charging stations called 'Superchargers' and the communication network 'Starlink,' consisting of 12,000 low Earth orbit satellites.

This enables Tesla to build the most efficient and fastest mobility empire in the maturing electric vehicle market. This approach is similar to Henry Ford's (1863?1947) method of vertical integration from iron ore mining to car assembly 100 years ago. Hence, some call Musk the 'Rebirth of Ford.'

Tesla also leverages the strengths of traditional manufacturing tailored to its own system. Takahiro Fujimoto, a professor at the Graduate School of Economics, University of Tokyo, and an authority on the automotive industry, said, "What is frightening about Tesla is not only that it proposes new ideas based on IT but also that it is properly learning the essence of manufacturing."

A representative example of this is the 'half-price battery.' At the Battery Day event last September, Musk announced plans to reduce battery costs by 56%. The author of Tesla Shock views Tesla's strategy to realize the 'half-price battery' through cost reduction in materials and production processes and process improvements as similar to traditional manufacturing methods.

Just as Android phones emerged as rivals to the iPhone, preparations are underway to compete with Tesla. The alliance of NVIDIA and ARM is a representative example. NVIDIA, a company specializing in graphics processing units, has strengths in image data utilization and deep learning. It has gained experience in autonomous vehicles through past collaboration with Tesla. ARM, acquired by NVIDIA from SoftBank, sells semiconductor circuit designs, enabling the creation of AI semiconductors requiring more precise calculations. Tesla Shock predicts that if these companies unite, they could lead the market alongside Tesla in autonomous driving technology.

Volkswagen announced plans to sell 1.5 million electric vehicles annually by 2025. Toyota is starting construction this year on a village tailored for autonomous vehicles near Mount Fuji.

Meanwhile, Tesla Shock defends Steve Jobs (1955?2011), known as a workaholic who overworked employees, and Musk with the saying, "Small kindness resembles great evil, and great kindness resembles ruthlessness." This was said by Kazuo Inamori, honorary chairman of Kyocera, who succeeded in rebuilding Japan Airlines through painful restructuring. The author states, "For a leader to thoroughly objectify themselves and their organization and to implement necessary changes, sometimes ruthlessness is required."

(Tesla Shock / Written by Choi Won-seok / The Quest / 17,000 KRW)

This content was produced with the assistance of AI translation services.