Analysts and industry observers have compared Tesla and CEO Elon Musk to Apple and Steve Jobs. The comparisons don't make sense.
Chip HIRES/Gamma-Rapho via Getty Images; Rebecca Zisser/Insider
On paper, Apple and Tesla have a lot in common.
Apple didn't invent the smartphone, and Tesla didn't invent the electric car, but each has followed their chief executives' idiosyncratic visions to come from behind and become integral parts of their respective markets.
Over the years, Wall Street experts like Loup Ventures' Gene Munster and Morgan Stanley have gone so far as to call Tesla the Apple of the auto industry; some analysts have even asked whether Tesla would be more valuable than Apple by 2030.
More recently, however, the comparisons have started to fall apart. Musk's acquisition of Twitter, and his behavior on the social media platform itself, have spooked Tesla investors as its stock fell 65% in 2022.
What should be more concerning to investors is it's becoming less clear by the day how Tesla itself can remain competitive in an EV market that's growing fast and in danger of leaving the company behind.
Which is to say, where Steve Jobs led Apple with a steady, consistent (if certainly imperfect) hand, Musk's erratic leadership style and extremely public persona show that the two tech legends have very little in common. And that's a huge risk for Tesla's auto business, which has shown signs that it may not have the staying power of the iPhone.
Both Apple and Tesla had a first-mover advantage, another reason so many analysts like to draw parallels between the two brands. But there are key differences between them.
When Tesla released its first model, the Roadster, in 2008, it was one of the first EVs on the market, but it still had years of struggling through production hell and some dire financial straits.
When Tesla emerged with top-selling electric cars, the Tesla Model Y and Tesla Model 3, held a commanding market share in North America.
But that lead has eroded quickly. In 2020, Tesla held with 80% of the US market in EVs. By 2021, Tesla had 71%. In 2022, the share shrunk to 64%. As the US market finally starts to see real competitors enter against Tesla, S&P Global Mobility predicts its market share will dwindle to 20% by 2025.
A shrinking market share isn't disastrous for Tesla — part of the reason Tesla's market share will shrink is that every auto maker will be selling a lot more EVs. But many investors piled into Tesla stock because they saw the EV market as one where a single company like Tesla could take and control a majority of the market.
Apple, which debuted the first mass-market smartphone, was able to hold on to its commanding market share in the US even as cheaper competitors started to flood the market. It's very unclear whether Tesla will be able to do the same.
For one, the automotive industry outside of EVs is fragmented. The world's largest automaker, Toyota, had a market share of just 10.5% in 2021 — nowhere near the 55% market share Apple holds in the US.
As Paul Krugman pointed out last month in his New York Times column, one reason the iPhone resists competition are benefit from network effects: "Everyone uses their products because everyone else uses their products."
In his newsletter, economist Noah Smith gave one example of Apple's network effect: Developers create apps for iOS because there's a large number of app users. Customers buy iPhones because there's a large and dynamic ecosystem of apps.
It's much harder to see where Tesla will be able to get the same sort of symbiotic network effect happening with its own cars.
As Smith notes, Tesla tried to create nationwide network of Supercharger stations that offered much faster recharging, but only to Tesla owners. But the threat of government intervention (and the promise of federal funding) was enough to convince Musk to open up Tesla's Supercharging stations to all EV owners.
And while Tesla's infotainment system has some unique apps, and it offers over-the-air firmware updates, its software offerings are unlikely to lock in consumers the way iPhone owners are reluctant to move to Android.
But what about Tesla's transformational CEO?
Elon was compared to Jobs because the media needed a new white male middle-aged tech-prophet CEO after the death of Steve Jobs. Musk seemed to fit the bill — until he didn't. Musk is more erratic, more distracted, and less willing to delegate than anyone could foresee at the time.
Jobs made decisions that protected its core product, the iPhone, which generates most of its revenue, even as competitors tried to take away its spot as the premier flagship phone.
At a time when Musk should be doing the same, he's instead embroiled in a never ending debacle at Twitter, with a growing chorus of analysts screaming that Elon Musk's Twitter obsession is hurting Tesla
Meanwhile, Tesla has missed production targets, is being forced to offer heavy discounts to move cars, and is watching competitors roll out new models with better pricing and better reviews.
Maybe Tesla didn't invent the iPhone, but instead the BlackBerry: a bold innovation that radically changed the sector and created a passionate fanbase, only to see its market share get washed away by competitors.
