Tesla Motors Inc (TSLA) Lugs The ‘First-Mover’ Burden Down The Road

Tesla Motors Inc (TSLA) Lugs The ‘First-Mover’ Burden Down The Road

Tesla Motors Inc (NASDAQ:TSLA) has surpassed numerous odds so far and done better than expected, but unfortunately, it risks getting ahead of itself. In the past, companies which came up with new ideas were known as first movers, and they had the advantage over other companies. However, as the technology industry as developed, we’re seeing that more and more first movers do not always end up having an advantage over others.


Tesla carriers a burden

Think of first mover technology companies as carrying the burden of their sector on their shoulders. They’ve got to lug that heavy load down the road for miles and miles, blazing a path as they go. But after a while, that load weighs heavily on the company, and it becomes easier for others to follow in their footsteps and use the road they already built to rapidly catch up and then sometimes even pass the company up because those competitors don’t have to recover from having to carry the heavy burden all that way.

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There’s no denying that right now, Tesla Motors Inc (NASDAQ:TSLA) is carrying this burden. The company is currently dealing with a lack of infrastructure and a lack of supply within the electric vehicle market. But what really makes a success story these days is when a company not only carries this burden, but does so in such a swift manner that it remains ahead of competitors who start out lagging behind. Only time will tell if Tesla is this massive growth story.

Tesla is supply constrained

MarketWatch contributor John Shinal notes that first movers within any industry are no longer always the winners. Tesla Chief Executive Officer Elon Musk said last week that their biggest problem right now is a lack of supply. In other words, the capacity of the battery industry is running behind their needs. Tesla Motors Inc (NASDAQ:TSLA) said earlier this year that it plans to ship 20,000 vehicles. If the EV automaker is going to meet its goal of producing 500,000 vehicles annually, more cell factories will have to be built. As a result, the timing of Tesla Motors Inc (NASDAQ:TSLA)’s success is dependent upon when the battery industry catches up with its needs.

Shinal points to other companies like Facebook Inc (NASDAQ:FB), which wasn’t the first social network. It followed MySpace and Friendster. Search giant Google Inc (NASDAQ:GOOG) came after several other companies had already developed search engines. So will Tesla be the first but not the most successful EV automaker?

Tesla as a builder of infrastructure

Of course other major automakers made electric vehicles before Tesla, and those vehicles have not been successful. It could be argued that a lack of infrastructure is to blame, and this is certainly one burden Tesla is carrying. The automaker is funding construction of its Supercharger network, putting the infrastructure in place for others to follow in its footsteps.

The key is going to be Tesla Motors Inc (NASDAQ:TSLA)’s ability to capitalize upon other automakers utilizing the infrastructure it built, so the situation here is likely different than it was with Internet companies like Google Inc (NASDAQ:GOOG) and Facebook Inc (NASDAQ:FB).

Battery supply is still going to be an issue though, but it’s common for technology companies to invest in the factories of their suppliers. Tesla just might have to pony up some more dough for that if it wants to find success, and it has been working with Panasonic on its batteries. However, battery makers which want to tap into the important role Tesla will play as a buyer of batteries will want to step on the accelerator if they want to be the one to capitalize upon Tesla’s early need for batteries.

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Michelle Jones is editor-in-chief for ValueWalk.com and has been with the site since 2012. Previously, she was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Email her at [email protected]
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