This is the conclusion of an interesting opinion piece from Nikkei Asian Review.

Tesla is currently the most valuable car company in the world despite having sold – in all its history – only 10 percent of what Toyota sells per year. While Bob Lutz thinks this is “almost mass psychosis,” William Pesek raised another discussion with his opinion piece on the two companies at the Nikkei Asian Review. According to him, the fact that we can’t say Tesla won already does not mean Toyota did not lose.

Pesek mentions that Tesla is structured to win with verticalization, which allows it to innovate whenever it wants without compromises to suppliers, for example. On the other hand, Toyota is committed not only to the investments it has made to current technology but also to the money its suppliers have applied to support it.

iPhone

Another significant difference between the two companies would be that Tesla is devoted to software, while Toyota worries about hardware quality. Pesek says Tesla sells an “iPhone on wheels.” Most Tesla advocates will echo that by saying that what matters is the technology.

What they seem to miss is that iPhones sell well because they work as expected. If you have an issue with it, you can swap it for a new one, no questions asked. Tesla’s current way to deal with similar topics is by telling customers defective cars are “within specs” and reducing warranty time for problematic parts such as the MCU. This is why Pesek does not say Tesla won: it still didn’t.

Anyway, Toyota and “Japan Inc.” as a whole need to up their games as soon as possible. Without that, they risk becoming the next Kodak, ironically beaten by the iPhone and other smartphones to which Pesek refers in his text.

The sweet spot would be a company with Tesla’s technology and Toyota’s build quality. To get there, either Tesla would have to invest in improving “dinosaur stuff,” as Sandy Munro once said, or Toyota would have to focus on software. And on verticalization, to speed up innovation.

Without the same commitments the Japanese company has, it seems to be an easier task for the American one. Will any of these companies get the memo and realize what they have to do? That can decide who wins and who loses.

Source: Nikkei Asian Review