What Tesla and Google Share

NEW YORK (TheStreet) -- Tesla Motors (TSLA) shares something important with Google (GOOG), which may be driving its latest stock mania. Tesla shares jumped almost $20 in one day yesterday, and are up 18% in just the last week, to more than $153.

Its focus is in taking people out of the creation of value.

Machines scale better than people. You can cut unit costs almost infinitely with machines. People, on the other hand, want to get paid.

Just as Google focuses on scaling digital infrastructure, constantly driving down the cost of delivering Internet search or content, Tesla focuses on completely automated manufacturing.

Neither company makes a secret of this.

Tesla blogs about its robotic factory regularly. The heavy use of robotics is more important toward understanding the company than the fact it makes electric cars. You can scale a robotic advantage. Whatever your price you can become the low-cost producer.

A chart of Tesla's quarterly earnings looks bizarre. In the June quarter of 2012 Tesla was losing twice as much money as it was taking in. Now its gross profit is nearly $1 for every $4 of revenue. A conventional car company, like Toyota ( TM) has huge sales but a gross profit of just $1 in every $5.

Excluding one-time items Tesla made $26.3 million for its last quarter, 20 cents a share, while analysts were expecting a loss of $18.9 million, 19 cents a share.

Suddenly the light bulbs went on all over Wall Street. Tesla is not only profitable, but its profits are replicable. Tesla's build-from-scratch, fully-automated production process scales and succeeds. Tesla is Google, while Toyota looks more like AT&T ( T).

Now there remains a bearish case. Tesla has yet to prove it can deliver a car at popular prices, and make money at it. Tesla has yet to build out its line of charging stations so its customers are truly untethered. Tesla just builds electric cars. Tesla is still building just 500 cars a week, while Toyota is making closer to 195,000.

But suddenly analysts can see Tesla's future. It's profitable, and it scales.

Tesla hasn't really invented anything any more than Google invented the Internet. Tesla has simply taken factory automation to its logical conclusion. They've done this within a small niche, high-end cars that run on batteries, but it's a niche that can now be extended, down-market and worldwide.

While Tesla has focused on robotics, Toyota has been going the other way, building smaller, cheaper plants that are flexible and more driven by human energy, as Michel Baudin describes in detail on his blog.

It sets up a market battle where the small, American company is focused on low-cost, mass manufacture, while the gigantic Japanese company that has been using robots for 40 years goes the other way. Many investors, having seen the story of Google, think they know how to bet on that.

It will be fun to see if they're right. Watching the car market has suddenly become fun again.

At the time of publication the author held GOOG.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Dana Blankenhorn has been a business journalist since 1978, and a tech reporter since 1982. His specialty has been getting to the future ahead of the crowd, then leaving before success arrived. That meant covering the Internet in 1985, e-commerce in 1994, the Internet of Things in 2005, open source in 2005 and, since 2010, renewable energy. He has written for every medium from newspapers and magazines to Web sites, from books to blogs. He still seeks tomorrow from his Craftsman home in Atlanta.

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