Competitive Advantage of Tesla: Chapter II


Source: freepik.com

The third quarter of 2021 illustrates the competitive advantage of Tesla due to its integrated business. In the midst of a chip shortage that trims the production of almost all automakers, Tesla still breaks the record in terms of production units. This article is the sequel to talk about Tesla’s economic moat that discussed brand power, direct sales, and low-cost producer.

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Economies of Scale as Durable Competitive Advantage

Economies of Scale could give certain advantages to a company, and it depends on how the company achieves it.
Level of Economies of Scale by How it translates to Company advantage

Being a market leader is not always translated into a durable competitive advantage. This post will talk further about economies of scale as a durable competitive advantage. What is a common mistake regarding the economy of scale as an economic moat? How does economies scale create a layer of protection for business? We are here to answer this moat question.

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The Economy of Scale Analysis: Physical to Apps

In Moat versus growth investing, companies could be classified into growth categories or moat categories. Investors need to be very careful in this field.
Economy of Scale
source: freepik

Online-ing physical business doesn’t necessarily translate into financial profit. Teladoc, Uber, Doordash, and even the European counterpart Justeat Takeaway1 still recording losses. Investors may believe once economies of scale are reached – the long-awaited profit will be materialized. Here we perform an economy of scale analysis to get deeper into that issue.

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  1. even when we expand the territory to the Asia Pacific, the result will be the same []