Columbia Business School Professor Bruce Greenwald joins “Influencers with Andy Serwer’ to discuss Tesla’s success in the EV market.
Video Transcript
BRUCE GREENWALD: Tesla will do a little better. I mean, there’s an easy way to measure barriers to entry. So the first element is what’s the minimum market share you need to get to in order to be viable? Now if a market is small, like the electric car market is today, you probably need to get to 20% of that market to be viable. In the mature automobile market that is global, you can be viable at 2%. Well, at 20% requirement, Tesla may be able to keep rivals out. But at 2%, nobody’s going to keep anybody down. And guess where the electric car market is going? It’s going from 700,000 a year to 7 million a year.
ANDY SERWER: And so just to follow that point, that that would not necessarily bode well, to your thinking, for Tesla shareholders.
BRUCE GREENWALD: Oh, absolutely not. I mean, 20 years from now, you really think that they’re going to dominate the auto market? Not a chance. And we know what a competitive auto market looks like. Because in that market, most of the big companies have flirted with bankruptcy at one time or another.
ANDY SERWER: Just to follow up quickly, like Elon Musk will say, it’s not just a car, Bruce Greenwald, it’s an ecosystem with a computer connected to a database, connected to solar panels.
BRUCE GREENWALD: Yeah. Go ahead, Andy. And you think other car makers don’t have that? They don’t have computers, they don’t have databases, they don’t have solar panels? Give me a break. And if you’re going to have charging stations– you know, Apple always used to try this. They [INAUDIBLE], when they tried iTunes, they tried it only working with Apple computers and the iPod. Didn’t work at all.
So when you have charging stations, they’re going to serve all the cars.
ANDY SERWER: Right. Right.
BRUCE GREENWALD: So no, Elon Musk is talking his book.
ANDY SERWER: Yes.
BRUCE GREENWALD: But when it happens is a tough question. It will happen.
ANDY SERWER: Well, [INAUDIBLE] that go back to the market can stay irrational longer than you can stay solvent?
BRUCE GREENWALD: I think so. Especially in things like this. I would not try and short Tesla. People have gotten slaughtered doing that. I’ve had my own terrible experiences in shorts. And the thing about shorts is you have a shorter [INAUDIBLE]. Because it’s uncapped on the upside. But if I were going to put the family fortune into Tesla, I would not be a comfortable [? doobie. ?]