Response to Perkins and Murmann: Pay Attention to What Is and Isn't Unique about Tesla

Abstract

Perkins and Murmann (2018) advance a provocative thesis, based on Tesla Motors, that ‘a well-funded company could develop a new electric vehicle (EV) from scratch and move it into production within 3 to 5 years. . . .’ This thesis of feasibility – indeed likelihood – of more new entrant EV automakers is at odds with my recent work (e.g., Jacobides, MacDuffie, & Tae, 2016; MacDuffie, 2013) which argues that automotive OEMs have been able to prevent extensive value migration to suppliers and new entrants due to their structural role as system integrators with the capabilities to manage a primarily integral product and organizational architecture. This role is bolstered by societal demands for OEMs to meet regulatory requirements for safety and handle legal liability claims. These structural features have helped automotive OEMs avoid the fate of IBM, which saw massive value migration, after introducing the modular PC, to Intel and Microsoft (suppliers of key components). These same features, I argue, will position these OEMs for continued centrality, forestalling a wave of successful new entrants despite many new, disruptive changes in technology and business models.