To Short Tesla Motors is to Short Sell Your Soul
Here's why you should buy Tesla Motors.
1) Their vehicles totally rock. And awesome cars, awesome everything, sells
When the iPod came out, I asked for one for Christmas and my dad bought me an MP3 player.
Beautiful design, beautiful technology and reviving stoic past times (like music after Napster) commands high price when done well and presents value for money. A Leaf and a Model S are both electric cars (the Volt is a mermaid), but only one is desirable and worth the money.
Is that a defence of the Model S price tag? Hell no. It is a testament to a revolutionary technological approach to the electric car, and spectacular design. It's a radical new way to enjoy something many people love - driving.
Frankly, the car is cheap. It competes and wins against the Audi A7, BMW 5-series, Mercedes S class, Lexus GS, etc., and is, give or take, about the same to buy. But, it costs 10% per km (or mile for Imperial forces) to operate. It's really like buying a $50,000 sedan and 5 years of gas but getting a car that fits better and performs better than a $100,000 sport sedan, that might seat 5 (not 7) and only has room for luggage for 2 (not 7). Wait, I wrote that like a simile, it's not "like" that, it is that!
2) Tesla is selling it's drivetrain to other automotive manufactures
The made in Canada Toyota Rav4EV runs on a Tesla drive train, as does a Mercedes city vehicle. Toyota is a significant investor in Tesla, but the company has doubts about electric vehicles. Frankly, it's hard to trust Toyota, they're really good at double-speak. Mercedes wants to do more work with Tesla to get better results from future EV's. Tesla exists to accelerate the advent of sustainable vehicle transport and will work with products and services to achieve that end - likely licensing technologies and manufacturing approaches to the highest, or many bidders.
A valuation of Tesla based only on their own branded vehicle production could represent 50% of 2017 revenue generating vehicles (units not dollars) for Tesla. Tesla's technology and infrastructure leadership makes them the obvious and only choice for success.
3) Tesla superchargers connect Point A's to Point B's.
The 2015 North American map of superchargers (required for travel beyond 200 - 300 miles per day) could presumably be optioned by any auto manufacturer licensing Tesla technology (monthly service fees and/or electricity costs notwithstanding). For manufacturers like Nissan and BMW who are pussy-footing their way into electric vehicles, the Supercharger network is infrastructure made for the established auto maker that wants to be relevant in the future.
So, if you we're to buy a Nissan Leaf in 2017 you'll likely be stuck with home chargers and public charge points but no coordinated network of high voltage fast charging Supercharger equivalents. If you buy a Toyota EV or a Mercedes EV with a Supercharger subscription, the nationwide network is already there - boom. Let's drive.
Let's remember that Elon Musk, like myself, has an economic degree. Lets assume that a Supercharger station costs, conservatively, $150,000 to commission. Do you really think Tesla would just install those out of charity to sell some vehicle units? No. Those are little energy assets with all sorts of profit potential (community grid storage, congestion management, demand response, vehicle to grid, responsive demand, renewable generation, net metering).
Tesla Motors is like an onion, and automotive analysts that cover the stock are like Flint, MI. The ship has sailed and they don't know how to value a technology company that makes cars. Ok, that's a crappy analogy. But, maybe you get my point.
This company is transformative, and it's incredibly early stage. It's the dawn of a new capital intense industry and it demanded an early public offering. Not like saturated software, social networking platforms who come to market when they are obligated to. Tesla came to market because it needed the kind of capital public markets can provide, and the stock has done incredibly well for people with vision. Do you have vision? Or are you like my dad that likes the reliable income stream tarsands producers offer; and drives a Prius?
4) The opportunity for improvement is exponential
The internal combustion engine has been flipped, rotated, opposed, notarized, hybridized, bored and blown, for more than a century. It's run on oil, tar, corn, H, hemp, vegetable oil, propane, hairspray and anything else that would explode (Diet Coke & Mentos?). The innovation potential is at the margin, and those marginal gains are incredibly expensive to achieve. Conversely, the modern electric vehicle is less than decade old (plus a few years in the 90s) and the opportunities for advanced materials, energy density in batteries, motors and more importantly infrastructure will make electrification better than a mere substitute for the internal combustion engine, it will be the obvious winner.
Tesla has a multi-billion dollar first mover advantage for the most important shift in North American culture in a generation - reviving a love affair with driving, a love we though lost, our hearts broken by high gas prices and Al Gore's ramblings. I'm long the stock, and I averaged-up above $125. I'm damn proud of what's happening at Tesla, and I'm certain that if there is a car industry in 10 years, Tesla will be the cornerstone of it.
PS - incredibly high probability that there will be a car industry in 10 years. Plan accordingly.
Disclaimer: The opinions expressed here are just that, opinions. Before making a financial decision be sure to talk it over with a financial person, blah blah blah.
Posted in Automotive repair Post Date 05/21/2017