Tesla vs China?
The Dialogue, Debate and Discussion Forum on Tesla and the Global Automotive Industry
The Tesla Forum on global automotive industry presents the possibility that China may be on the verge of becoming a global disruptor in an automotive industry. China has home market benefits such as scale, reduced fossil fuel imports and emissions in cities while exploiting related technologies such as lithium batteries where China has industrial competence. It is in China’s national interest to be a game changer in global automotive industry from fossil fuel to electricity. And building infrastructure – supercharging stations included – fits the government-directed approach that aspires to establish the country as an undisputable global leader in a high-tech sector of global significance.
Amidst this background, it is interesting to consider the implications of success or failure of Tesla, the California-based electronic car pioneer. The perspective of Greg Perkins and Peter Murmann is the opening shot in discussing Tesla as a case that challenges automotive incumbents’ hold on car manufacturing in electronic vehicles. And if Tesla, hailing from Silicon Valley, could break in, why not other well-funded (Internet) companies with strong digital capabilities in the US and China alike? John Paul MacDuffie disagrees and provides a contest to this thesis based on his prior work: Incumbents with their deep system integrator capabilities prevent significant value migration in automotive industry.
The Forum has produced an evocative exchange that may have implications beyond the success or failure of Tesla, electronic vehicles and global car manufacturing. The debate can be seen from the perspective of assessing the limits to entrepreneurship – even as powerful as that of Elon Musk, the Tesla founder; the boundedness of executive attention in countering new entrants in a rapidly changing industry; and the emergence of China as a disruptive competitor. David Teece in his overall commentary on the debate, discusses whether the incumbents are able to counter the disruptors and engage in competitive counter attacks on multiple fronts, not merely with Tesla but also with Chinese companies aggressively entering the automotive EV sector as described by Hong Jian and Feng Lu. The debate as it stands offers some interesting research questions beyond the automotive industry. What are the limits to entrepreneurial aspiration in mass manufacturing? How do incumbent manufacturers manage simultaneous competitive threats in multiple fronts? Will China success in becoming a global disruptor in key technology area?
The global automotive industry is a path-breaker test case of entrepreneurship, state direction, and incumbents’ dynamic capabilities in transformation.
Figure. The editor engaged in Tesla research: No order for Model 3.