Why Tesla Isn't Your Average Tech Company
Investors and analysts often conflate Tesla's (NASDAQ: TSLA) position in the auto and energy industries with Silicon Valley's position as a disruptive force in business. It's easy to talk about the way companies like Facebook (NASDAQ: FB), Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), Apple (NASDAQ: AAPL), and Amazon (NASDAQ: AMZN) have upended traditional businesses like retail, TV, music, and advertising and think Tesla will be able to do the same in the auto industry. That tech association is one reason Tesla has a valuation of $57 billion, more than most other major automakers despite its much smaller manufacturing output.
The problem is that Tesla isn't anything like traditional technology companies. It's a manufacturing company at its core, and its manufacturing prowess will determine whether it succeeds. Yet manufacturing is expensive and simply doesn't generate the returns tech companies are normally used to seeing.
Image source: Getty Images.
Source: Fool.com
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