Why Tesla could be a very risky bet

An investor should be cautious with Tesla’s stock, here’s why:

Compared to Microsoft, Oracle and even Google, it has very little switching cost and its competitors could easily make a car that’s just as good or better. What happens when Toyota or Nissan makes a model to compete with Tesla and this model sells well? Tesla in general has a hard time getting a dominant position because:

1) Law of numbers doesn’t work as great with cars as it does with software. Everyone can be on Facebook but everyone cannot drive same car.
2) Little switching cost. A user can’t get away from Windows easily, but he/she can easily get a new car.


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