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Tesla needs to innovate quickly because they're in a bad spot. It turns out that creating electric vehicles just isn't that hard. BMW has the i3. Nissan has the Leaf. Ford has the Focus Electric. These are not has good as the Tesla, but they're much cheaper, and are taking the bottom of the market away. But most importantly, these manufacturers have non-electric car lines that they can use to achieve massive economies of scale. Once these manufacturers decide to do a high end product, Tesla is in a bad way. Tesla can out innovate these guys easily, but there just isn't much innovation differential in cars except at the very high end, which is not enough to survive on.

The lesson of Tesla is that you can produce really cool things if you can throw a ton of money away up front and wave your hands around vulnerability to established competitors. In this respect the conservative approach of existing manufacturers towards electrics looks much more prudent than Tesla's high risk approach.

"But others can create/sell cheaper inferior products" has always been the argument against companies like Apple, Neiman Marcus, Porche, Rolex, etc.

Tesla is in a very good position in the market. They have a hot product, visionary leadership, good funding, and political tailwinds.

If I'm not mistaken they've already brought many innovations to the field of entirely electronic cars, from the battery placement and chassis design, down to the superchargers. And Tesla is aiming for high end now, but I'm certain Elon Musk has had plans for making even cheaper version once he finds where he can make it truly economical for the average family to buy.

TL;DR - I think Elon will do just fine.

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