Skip to main content

The automotive and transportation space remains such a hot focus, both on the investor front and the technological front. That's particularly true when it comes to electric vehicles and self-driving car applications.

The goal is to build a completely autonomous driving platform -- and it's a race on which seemingly every company is focused. But it goes beyond General Motors (GM) , Ford (F) , Fiat (FCAU) and Alphabet's Waymo (GOOG) (GOOGL) .

The space has sucked into it tech companies, OEM suppliers, transportation and logistics firms, and many more. At the end of the day, there are too many reasons to automate transportation, with safety at the top of the list. In the U.S. alone, there are roughly 40,000 auto-related fatalities per year, with more than 90% of those occurring as a result of human error.

Waymo is viewed as a leader in this group, with its autonomous taxi service operating in the Phoenix area and even working with Lyft (LYFT) . GM has garnered plenty of attention here as well, after buying Cruise for about $1 billion a few years ago. It's since had various investments from companies like SoftBank (SFTBY) and Honda (HMC) , as its latest valuation rang it at $19 billion after an investment round in May.

Now, it's Ford and Volkswagen's (VLKAF) (VLKAY) turn...again.

Since the start of the year, these two have been moving in a very coordinated effort toward collaboration. First it was on commercial vehicles. Then Ford's self-driving unit Argo accepted an investment from Volkswagen. Now the duo has mapped out an agreement to share electric and autonomous technologies.

While this is a very interesting development, it brings up the question of Tesla (TSLA) and how the company can survive at a time where some of the largest automakers in the world are teaming up and collaborating on this multi-billion-dollar effort.

Alphabet is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells GOOGL? Learn more now.

Tesla's next vehicle, the Model Y.

Tesla vs. the World

For Tesla, it becomes a question of the glass being half-full or half-empty.

For instance, it seems likely reasonably bad news for two giant auto companies like Ford and Volkswagen to team up on electric and autonomous technologies. After all, that's exactly what Tesla builds right now.

But that said, even with its limited resources, Tesla has built the best electric vehicles in the market. And even with all that time to catch up, Audi and Porsche (Volkswagen brands), GM, Ford, Mercedes-Benz and others haven't been able to put out an electric vehicle that can quite rival Tesla.

That says something, doesn't it?

Fortunately for Tesla, time is its strongest friend. Unfortunately, it's also one of the automaker's largest risks. For now, no one has been able to catch up to Tesla. The company can use the next few years to make its products even better, further cementing its lead at a time where electric and autonomous vehicles are becoming more popular than ever. However, if the company can't find a way to capitalize on its strengths in a profitable manner, it could open the door for alliances like Ford-Volkswagen to catch up.

So what's Tesla's bottom line?

The company needs to continue building the industry's best electric vehicles and improve its Autopilot system before the largest players in the industry continue to partner up and catch up in quality. And Tesla also needs to work on getting that bottom line deficit erased. It can't hang with the big boys for long if it keeps losing money every year.

Finally, it brings up the question of whether


will ever partner with any of the legacy automakers. CEO Elon Musk has spoken favorably about Mercedes and even


potentially collaborating on an electric van together. Of course, that doesn't mean anything will come of it, but it's an interesting idea for the future.

This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.