This Could Be Tesla's Next Billion-Dollar Industry
Tesla Motors Inc TSLA 2.75% is believed to be on the cusp of entering the energy space with a residential battery that could transform the way consumers power their homes and automobiles. After that, investors might expect Tesla to rest on its energy/automobile laurels and rake in the cash. That may not be the case.
Global Equities Research analyst Trip Chowdhry believes the automaker will enter one more multi-billion-dollar market.
"First we know about Model S, Model X and Model 3," Chowdhry told Benzinga. "[We know about] stationary batteries for three segments: residential, commercial and utility. The other thing that we know, which will probably come around 2018, is their software product."
Make no mistake: Tesla has no interest in competing with Apple Inc. AAPL 2.71% or Microsoft Corporation MSFT 0.86%. If Chowdhry is right, the Model S manufacturer might take on SAP SE (ADR) SAP 0.7% and Oracle Corporation ORCL 2.48% instead.
Tesla's Plan
"Right now Tesla has created and is developing its own supply chain management solution, which competes head on with SAP and Oracle," said Chowdhry. "What we know is, there is a big difference [between] supply chain management software that was created in the '80s, '90s and 2000s. We are living in a world which needs a global platform and instant real-time updates. SAP can't do it [and] Oracle can't do it."
To make matters worse, Chowdhry said that the industry's requirements change "very" frequently.
"You need very tight integration between marketing, supply chain, demand -- everything! -- including machine running," Chowdhry continued. He said Tesla has created its own software to manage the firm's:
- Supply Chain
- Factory Operations
- Marketing
- Demand Generation
- Lead Generation
"[It's a] complete end-to-end [solution] based on Scala Language, based on Ruby on Rails," said Chowdhry. "These are the languages that are used to create a native cloud application."
No Competition?
Chowdhry said that SAP and Oracle's offerings are not "cloud-native applications." This could give Tesla an advantage.
"Amazon AWS is the world's most innovative offering," he added. "Why? Because Amazon was solving their own problem that was on the ecommerce side. That's the reason why AWS had their own customers, their own insights [and] ran into their own issues/problems. That's the reason why no company is even close to what Amazon does with AWS."
Chowdhry said that AWS has gone on to become a profitable, $6 billion business. He thinks Tesla's supply chain management software will make a similar impact in the SCM space.
"Tesla has seen the problem they face, they know what the issues are [and] they are their own customers," he explained. "This is a product which is running on Microsoft Azure Cloud, by the way, but using the technologies I mentioned."
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