Paul Krugman: Elon Musk’s company was never going to be the next Apple or Microsoft.
In this Nov. 8, 2020, photo, an unsold 2021 S70 sedan sits at a Tesla dealership in Littleton, Colo.If you’re one of those people who bought bitcoin or another cryptocurrency near its peak last fall, you’ve lost a lot of money. Is it any consolation to know that you would have lost a similar amount if you had bought Tesla stock instead?
On the other hand, as someone who has spent much of his professional life in academia, I’m familiar with the phenomenon of people who are genuinely brilliant in some areas but utter fools in other domains. For all I know, Musk is or was a highly effective leader at Tesla and SpaceX. But we more or less understand the durability of the dominance of Apple and Microsoft, and it’s hard to see how Tesla could ever achieve something similar, no matter how brilliant its leadership. Apple and Microsoft benefit from strong network externalities — loosely speaking, everyone uses their products because everyone else uses their products.
Similar stories can be told about a few other companies, such as Amazon, with its distribution infrastructure.Electric cars may well be the future of personal transportation. In fact, they had better be, since electrification of everything, powered by renewable energy, is the only plausible way to avoid climate catastrophe. But it’s hard to see what would give Tesla a long-term lock on the electric vehicle business.
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