Tesla vs Toyota

Tesla vs Toyota: A showdown between the most-loved brands.

My wife and I have owned almost exclusively Toyota vehicles, before and during our marriage, until our much-anticipated Tesla Model 3 from 2022.

So this is a venture critique without animosity. I'll start with some general observations before getting into the business evaluation. @elonmusk #akiotoyoda Leadership and vision of a very different kind.

Elon is notorious for bold predictions and equally-bold follow-through. Since we all have seen the predictions, I don't feel the need to quote, but it is clear he is focused on a small set of very high-quality cars, driving the EV industry forward.

Toyoda, on the other hand, seems to be focused on the Toyota ecosystem and managing a stable, complex business. Some quotes: "I don’t think the market is ready. I don’t think the infrastructure is ready."

"During a lecture on the company’s production system, Toyoda explained he believes that EVs will only represent 30% market share, 'no matter how much progress BEVs make.'"

"Playing to win means playing with all the cards in the deck – not just a select few. So that’s our strategy and we’re sticking to it."

Venture Eval

And now onto the Venture evaluation. Let's start with products.

Products

Per Tesla's focus, they have a slim set of models, 6 in total, with 1.8M sold in 2023.

All of Tesla's 1.8M vehicles produced in 2023 were EVs, while Toyota only produced a measly 25K, or 1.4% of the EV quantity relative to Tesla. The rest were ICE (Internal Combustion Engines) and Hybrid.

In 2023, Toyota produced a record 11.2 million units of 93(!) model types globally.

People

When it comes to personnel, Toyota has approximately 375,000 personnel, compared to Tesla's growing 140,000 people. This does NOT, however take into account the large Toyota dealer network and much greater supply chain needed for ICE vehicles.

I'm not a communist, so I'm not interested in a a lot of "jobs". I'm more interested in companies creating free time by producing with less. My guess is that Toyota's ecosystem is above 1M people, putting personnel around 7x Tesla's, and the people:vehicle ratio almost equal.

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Tesla's earnings came in at $18B profit on $97B in revenue in 2023. Current market capitalization is $461B. That's a 25x Capital:Profit, or 3.9% profitability return.

Toyota had revenues of $275B with $47B in profit. Current capitalization is $373B, putting Capital:Profit at 8x, a 12.6% return on capital.

Invest, Play, Imitate

If I had to choose an investment allocation between the 2 companies, I'd be confident in both, but I'd look deeper into plans, innovation track records, and low-hanging fruit financials improvement.

If I were choosing where to work, Tesla would be my preference. I prefer working around innovation that pushes the envelope, and that is not the Toyota of today.

If I were trying to imitate the success of the 2 ventures, I'd probably lean more into Tesla as a personal decision of how I like to innovate, while trying to learn some of the wisdom from Toyota's long-term viability.

Public Goods

While I don't think we have any right to judge the public benefit of private companies, we can pay attention to the public goods they produce and decide if we want to be more like them or not. Tesla's public goods are massive innovation available to all.

Toyota, on the other hand, has really slowed down in the producing of any public good. One could argue that the additional jobs in the ecosystem are good, (as does Akio Toyoda), but I prefer companies that free people up to innovate elsewhere.

All said, I'm a fan of both companies, hoping to get a Cybertruck here sometime soon, and optimistic that Toyota will create some good EVs.

P.S. we have 13.5KWH of solar panels, making it a breeze to own an EV, and they are FUN to drive.