The company that changed vacuum cleaning, the British company Dyson has decided to produced an electric car. A column by Eric Reguly notes it is not as hard as it used to be. If you consider the average combustion engine vehicle it has 20,000 different parts which need to operate well, the electric car has 2,000 which on the surface makes it easier. Mr. Reguly compared the Tesla and Dyson.

To start with money or capital is needed, Mr. Dyson announced he and the company would invest $2 billion in the operation and 400 engineers are working on the project. Mr. Musk of Tesla has used the public offering, selling shares to raise over $10 billion and has spent most of it. With taxpayers, while most billionaires and regular taxpayers complain about high taxes, companies such as Tesla has used every tax incentive, subsidy, credits, rebates, and federal, state and local tax rebates it can to the tune of $4.9 billion. When the government offers rebates for people to put solar panels on their homes, Mr. Musk’s Solar City which is the US largest provider of panels has received the rebates and other tax credits. (They may have been brought in to encourage people to go green, but Mr. Musk’s companies capture a healthy share of those rebates). In addition, when Mr. Musk decided to locate his battery company production near Reno, Nevada the company received many state and local tax breaks. At the moment, Tesla has an edge although with Brexit coming to the UK, maybe the British government with throw tax credits to Dyson.

Electric cars conceptually are fairly simple affairs for they have 2,000 parts with the electric motor is basically an enlarged version of the one in the washing machine. The complicated stuff is the software for electric cars are rolling computers. The question for Dyson is the engineers he hired while they are good at vacuum cleaners, are they also great at vehicles? At the moment, Tesla has an edge.

One of the final aspects to making vehicles is selling them, if you are a Dyson vacuum cleaner fan will you buy a Dyson vehicle? Is the brand building the same or different? Tesla has Solar City panels and the vehicles, it would appear Tesla has an edge.

Linking to dividend paying stocks, in every industry there are barriers to entry, if Dyson can produce an vehicle to be sold then the barriers to entry into the auto companies falls drastically. This means the auto companies have to compete on price and prices should fall which is good for consumers, not so great for manufacturers. Ideally you are looking to invest in a win for the consumer and a win for the manufacturers who do not compete on price, thus maintaining profit margins.

There are more questions than answers, till the next time – to raising questions.