The Trough of Disillusionment
The Tesla Peak of Inflated Expectations was the all time high two and a half years ago – late 2021. A lot has happened since then that has disappointed Wall St. Tesla is morphing from an EV car maker to an AI driven robotics company, FSD, Optimus, and RoboTaxi. Cars are commodities and after leading the Parade that experts said would never happen the competition heated up, some flourished (China) while others hemorrhaged cash (the BIG 3). The experts, who were wrong before, are now saying that the lust for EVs has vanished. Those expecting instant gratification are disillusioned sellers.
5 year chart
The Plateau of Productivity is still a year or so away. The production lines for Optimus and RoboTaxis are being built and the AI computing power is being assembled. Once in place, Tesla becomes an Increasing Returns business…
The Increasing-Returns World
What would happen if Marshall’s diminishing returns were reversed so that there were increasing returns? If products that got ahead thereby got further ahead, how would markets work?
The Captain