In the 20th century, General Motors outcompeted Ford.
Ford was the early innovator, but GM was able to improve on Ford’s achievements to become dominant.
The same dynamic is now playing out between GM and Tesla, with electric cars and autonomous vehicles.
About a century ago, give or take a decade, the Ford Motor Company was the American carmaker. Its Model T was the first successful vehicle for everybody, and its founder, Henry Ford, was the greatest businessman in history, warts and all.
At the time, General Motors was a disorganized cluster of brands, while Ford was cranking away. That all changed when Alfred Sloan took over as GM’s President in the 1920s. He restructured GM to be what we now recognize as the first professionally managed global conglomerate, the model of the modern corporation.
GM’s brands became a strength as the company was able to market a car to customers of “every purse and purpose.” The philosophy contrasted with Ford’s, which was to sell you any car you wanted, as long as it was a black Model T.
Sloan’s ideas and execution fit perfectly with the arrival of post-war American consumer culture. Ford obviously didn’t vanish, but it was relegated to number-two status as GM took control of half the auto market at its peak in the 1950s.
Tesla arrives on the scene
In the ensuing decades, as the US market changed and became more competitive, a lot of GM hatred emerged. When the company finally had to be bailed out by the government and entered bankruptcy in 2009, there was a barely-disguised sense of glee in some quarters. GM was an evil empire, and its merciless ways had finally caught up with it.
Interestingly, as GM was entering Chapter 11, Tesla was barely escaping its own insolvency. A few years later, it would launch its Model S sedan, with clear evocations of the Model T in the name. And in 2010, both GM and Tesla would stage IPOs.
Tesla’s stock is up over 1,000%, while GM is up … 34%, with much of that coming in the past year after a long period when shares went nowhere.
Tesla looks like the big winner, while GM looks like the also-ran, and that’s the narrative that Tesla fans and devotees of “disruption” have seized upon. Gene Munster, a former analyst-turned-venture capitalist, has argued that Tesla could capture 65% of the US market, selling 11 million vehicle annually.
That’s a nonsensical overstatement, but it summarizes the crazed enthusiasm around Tesla’s prospects.
Naturally, it overlooks competition — and conveniently, too, because if Tesla gets bigger, it will have to compete more broadly in the US car market, where competition is brutal. GM is the biggest player in the market, and it has just a 20% share.
Tesla takes on all the risk, but doesn’t get all the rewards
Tesla hasn’t faced any meaningful competition yet because nobody has wanted to invest the money in electric vehicles when they make up only 1% of the global market. But as Tesla has …read more
Source:: Businessinsider – Tech