The Big Picture Tesla is more valuable than every other American automaker—combined. But is it really that different?

Angus MacKenzie The Big Picture

Is Tesla really any different from other automakers?

ne of the many puzzling things about Tesla’s trillion-

Odollar market capitalization—and there are indeed many puzzling things about it—is the notion Tesla is worth more money than other automakers because it’s a tech company and not a car company. Yeah, right. Last time I looked, Tesla made cars. Electric cars. Electric cars that offer class-leading range and performance, but electric cars nonetheless.

Tesla ain’t Apple. Or Alphabet. Or even Meta.

As I’ve pointed out before, Tesla’s real genius—Elon Musk’s masterstroke—was to create an ecosystem that made its electric cars viable alternatives to vehicles with internal combustion engines. The fact Tesla’s first mainstream product, the Model S, looked great, was exhilarating to drive, and had a roomy interior was icing on the cake.

I was a member of the judging team that voted the Model S the 2013 MotorTrend Car of the Year, the first vehicle without a gas tank and an exhaust pipe ever to win the coveted award. From the get-go, it was clear to us all the Model S was a standout, a benchmark. But it didn’t take us to Mars. It did car stuff.

If Tesla is a tech company, then most other automakers are tech companies, too. Like Tesla, they don’t just manufacture or assemble hardware limited to cars, trucks, and SUVs; they also create or commission the software that makes those vehicles work. Nearly 20 percent of the engineers now working at Jaguar Land Rover are software engineers, for example. GM has hired 3,000 software engineers in the past year alone. Toyota is upping the share of software specialists among its new engineering hires from 20 percent to 50 percent.

Of course, the number of software engineers an automaker employs has nothing to do with whether it makes a great vehicle: Volkswagen, for example, struggles to make its software operation deliver. The point is mainstream automakers are now just as invested in Silicon Valley skill sets (the tech company stuff ) as Silicon Valley’s most renowned automaker. They must be invested, or they won’t be in business much longer. Consumers want seamless connectivity, over-the-air updates, and real-time driver assistance systems in their cars, trucks, and SUVs, regardless of the badge on the hood.

But what about Tesla’s brash tech company ethos, the whole Silicon Valley “move fast and break things” schtick?

Certainly, Tesla has made progress in terms of motor and battery-pack efficiency. In 2013 the most potent Model S available had 416 hp and an 85-kWh battery pack that gave a 265-mile range. Today the Model S Plaid boasts 1,020 hp and a 100-kWh battery pack that delivers a 348-mile range.

But a mild exterior refresh and recent interior upgrade notwithstanding, there’s no escaping the fact the Model S is now a 10-year-old car with no known replacement on the horizon. The Model X, now 7 years old, still has its heavy, complex, and troublesome “falcon-wing ” rear doors. The Cybertruck and Roadster programs are years behind schedule. There’s little evidence trillion-dollar Tesla can pump out new, high-quality vehicles with the speed and consistency of companies said to be worth much less. Companies like, for example, Hyundai or Mercedes-Benz.

And then there’s Tesla’s much-hyped Full Self-Driving (FSD) system. By the standards of autonomous driving technologies under development by other automakers and by specialists like Waymo, FSD isn’t game-changing. The principal difference between FSD and other autonomous systems is that Tesla seems prepared to allow other road users to be crash-test dummies as it irons out the bugs.

The FSD development process reveals where Tesla is perhaps most like a tech company. It’s made its fortune building the automotive equivalent of “minimum viable products.” But as the auto industry knows through bitter experience when it comes to safety, building minimum viable products is ultimately an unsustainable business model. The Chevy Corvair and Ford Pinto are just two examples.

Tesla is a car company. The difference between it and the rest of the auto industry is fundamentally one of style rather than substance.

A trillion dollars’ worth of style, apparently. Q

Tesla may represent many things to many people, but ultimately, it’s a car company.