Moving this to its own thread to hopefully avoid clogging up Saul’s great End Of Month Summary thread.
While I have a large TSLA position, I don’t bang the table on it as an investment for most people. It can be a hard company to own. But, for those that have the stomach, here are some reasons to own TSLA:
Tesla makes great products, as Saul’s comment about people who own the vehicle “giving up all rational thinking about the value of the company” shows. For years people have been pointing to eventual competition for Tesla, but today, with pretty decent EVs from Ford (Mach-e), VW (ID.4), Hyunday (Ioniq), Kia (EV6), and even BMW (i4, i5, i7 & iX) and Mercedes (EQE, EQS), Tesla still outsells everyone. Heck, in California, Tesla has the top two selling cars of any car. this year, and the 3rd place Camry is pretty far behind. But, it’s not just crazy California, Tesla’s Model Y was the best selling car of any kind in Europe for the first half of this year.
I totally get concerns over the CEO’s tweets. But, I think it really is just his tweets. If you look at his Tesla decisions, many were controversial at the time (building its own charging network in 2011, building a “GigaFactory” in Nevada when Tesla was only selling 19k cars a year,, building another gigafactory on a muddy lot in Shanghai, buying Solar City, not using lidar for autonomy, designing its own AI chips, etc. etc. all turned out to be great decisions. Moreover, of all the CEOs I follow, Musk is the only one who doesn’t make any decisions just to placate short-terming thinking Wall St. analysts. We all say we want a CEO who is making the right long term decisions for the company, and I’ll put Musk up against anyone on that metric. And yeah, I totally get that running Twitter has been a distraction for him that hasn’t helped, there is a pretty great management team under him keeping things humming.
Saying “Tesla is a hardware company” today is like saying Amazon was an eCommerce company in 2008. Investing in TSLA isn’t just about the company selling more than 10m vehicles in 2030 and associated charging revenues from most EVs in the US, it’s about recurring software subscription revenue from autonomous driving, a potential lower-cost, human-driverless competitor to Uber/Lyft, an affordable robotic company (Optimus/Tesla Bot), and who knows what else from its AI leadership.
As for valuation, see all of the above. Ford is still selling vehicles it admits aren’t optimal, VW can’t get its software act together and keeps delaying its new architecture, GM can’t make enough Ultium battery packs, etc. Tesla’s Cybertruck will likely outsell Ford’s F-150L next year. Tesla is working on a more affordable vehicle. The solar and energy storage business still has potential, autonomy and off-shoot AI products, robots, licensing not just of tech but actual AI capacity (its Dojo installation), etc.
I totally understand if people doubt all or even just most of the above potential expansion areas for Tesla. For me, Musk’s and Tesla’s track record is very good and while all of those potentials probably will not come to pass, I believe it only takes one of these to hit to make TSLA a great investment.
I go back to an old baseball analogy. In 1956, Mantle won the Triple Crown - leading the league in batting average, home runs and RBIs. But, he quipped that he should have won the Quadruple Crown since he also led in strike-outs!