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Creating value to the world, not to the investors

When Elon Musk was introduced in one chapter of The Simpsons, one of the more clear messages he sent while talking with Mr. Burns was that his intention with Tesla was not to make reacher Mr Burns, but to change the world for better.

And it is true and undeniable that Tesla has brought the EV world to everyone. In 2007 Apple introduced the iPhone, and while many will argue that they weren’t the first smartphone, the first with a touch screen or the first with internet, it is undeniable that they brought them to everyone by creating a necessity.

The same has done Tesla. For sure they weren’t the first in anything (sorry for the permabulls). The first electric car was presented over 100 years ago by Porsche and several models were out on the market but unattractive as the technology for long-range batteries was not there. Also, they weren’t the first to introduce the cool door handles or the wing doors. Not the first to have a huge screen or the first to have a clean and empty dash. But they were the first ones to do everything right, and create a necessity.

How do you know it is a necessity? When you see a kid mentioning it. Easy as that. Kids are not interested in investing or in pumping a company. They are honest. They are pure. So when a kid says: I like this car or I like this phone, there are for sure reasons to say that. And yes, kids these days say “wow, a Tesla”. Not a Porsche, not a Ford, a Tesla.

Photogram of the Simpson´s episode 564: The Musk Who Fell to Earth

Being the first and doing everything right move had the same effect the iPhone had: everyone followed. VW, GM, Ford, the PSA Group and Fiat (now both merged into Stellantis). Everyone went from presenting small silly engines to offer 1l/100km to presenting new concept cars or even the same cars transformed into EV. Why? Because EVs are good. Since the most expensive part is the battery, you can have city cars with funny engines and small batteries (ergo small price) that are way better than having a 20cv ICE car (internal combustion engine). Don’t believe me? Check out your nearest car-sharing EV car, go around the block, push the gas throttle as hard as you can and compare that with the same model of any non-EV.

Of course, we are not into EVs only to have fun. We are into EVs for the environment. Of course, they come at a cost. The pollution to create the batteries and the number of minerals they need are a danger to many parts of the world. But this could be another debate, as many countries are seeing their capability of producing these resources as the petrol of the XXIst century.

Nevertheless, and given that each day the cities grow more and more, taking the pollution away from the cities and bringing in only electricity for the EVs could and will mean for sure less respiratory problems, less lung cancer, fewer allergies and even more intelligence (don’t believe me? Check this video).

But, this is taking me away from Tesla. While they were the first, their adoption curve is distancing from the adoption curve of the EVs. How is that possible? First: it is natural. If there was only one product, only one model, only one brand it all will be like 1984. We love different designs, we love our brands, the country of those brands… that is why many will buy Mercedes instead a BMW. Why one will choose black and other white. Why one will want leader and other vegan interior. But the adoption curve also is being beaten by the quality of the cars.

These cars are only better than the ICE model (when we talk about the CO2 emitted) after more than 250.000km. And they are, because of the simplicity of their technology, capable of doing up to 500.000km before the batteries start decreasing their charge capacity, and over 1.000.000 km for the engines. So if people are changing them is partly due to wanting something new (of the same, or to try something else) and partly, and mainly, because of the quality and after service.

Also, and one of the main factors that have driven the market cap up, many people saw in the software the biggest weapon. That software capable of driving for you. The envy of other drivers. That software that once was unique is nowadays not only not the only one, but also one of the worse. We have seen over 250 severe or fatal accidents in the past 10 months where the software was in control of the car meaning that not only the hardware quality is poor, but also the software is terrible. on the bright side, they still have the best crash rating record, meaning you are more likely to survive an accident when the car fall apart or try to kill you.

Is Tesla making it wrong? No. Their mission statement was clear: to change the world. That brings me back to the Simpson’s episode. But this mission is colliding with their stock, and the wish of their investors to have a bigger brand with market quote. Many, trying to only see the sunny part, still argue that they are the best-selling car. But the real deal is, in my opinion, if their consumers are coming back for more (they are not) and if the quality is the standard of a premium brand. As for now, their intention to change the world is done. They have, for sure and forever. But they have now a bigger challenge as the industry evolves: to bring quality to their products and loyalty to their customers.

Am I going to talk about the stock price? For sure not. So far you should be able to think for yourself and understand if they are overvalued or not.


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