Almost two years ago I predicted a spike in Tesla. The reasoning was clear, their technology was years ahead of any one else, and the five-in-one industry under development was taking off. If the price grows steadily for the next decade, the SP (stock price) will easily touch 4.000$ (pre-split, or 800 after split). As we have seen during 2020 the stock skyrocketed, making its CEO (not founder) Elon Musk the richest man in the world, but… could this last? Leaving the absurd price of Tesla company apart, and the fact that they make little to no money at the moment, the competence emerging in the last year is really kicking the electric car market into new paths.
The Tesla killer might already be around us… While two years ago almost none of the European automakers had a reasonable electric car in the market, within a short period of time they have managed not only to develop good cars but also produce and sell them.
This is something worth mentioning, as normally the European companies take years (if not decades) to develop every car. Companies like BMW or Audi have gone in almost no time from “we are thinking about” offering a PHEV (Plug-in Hybrid Electric Vehicle) for almost every model, a MINI electric with an entry price very similar to the Renault Zoe or Peugeot e-208, and the iX about to roll out (already seen in the streets of Munich). Audi have jumped directly into the SUV models with the e-tron and e-tron sportback, leaving the PHEV version for the top of the range models.
Why is this something that should worry Tesla? While we had around 30-40 car companies in the world for traditional ICE (internal combustion engines), thanks to the much easier motor of the electric car many other companies such as Sony are now jumping into creating their own car. Also companies making the conversion of ICE to electric, and building from chassis electric cars are skyrocketing. From the very strange concept of Elettromeccanica or the small and practical car of Kandi Motors, to the sophisticated Hummer of GM and RT1 of Rivian; the number of electric car manufacturers could easily be 100 at this time. Of course many of these companies are technological or product oriented not comparable to any Tesla model, but many of the traditional automakers do deliver a much better quality car, with very similar specifications where the auto-pilot may be the only difference… and the autopilot… it is something you will use once, maybe twice and the rest of the time will be something you rely on only in case of an emergency (something almost every automaker already includes: emergency autopilot systems that take over/control and drive you safely to a complete stop or to avoid collisions at any given time)*.
So the point is, that because the quality of the car is not as good as expected (going from number 1 car, to one of the least reliable cars in just three years), and being the competence so capable of providing new models almost every month we are ahead of a big drop for Tesla market capitalisation. Models like the Polestar 2 represent a much more exclusive car, with a much better quality, easily visible from the outside and inside.
Does this mean it is the end of Tesla? By no means… If you have read something about Elon Musk is that his dream was not to be the richest man in the world. He did everything (and even his appearance in the TV Show “The Simpsons” said so) to change the world for the better, and it is undeniable that he has managed to transform the way we moved. As sure as Steve Jobs put a smartphone in our pocket, even if you dislike Apple; is that Elon Musk has made you drive an electric car, even if it isn't Tesla. We have changed from less polluting and no power 3 cylinder 1.0l, to moving with insane power and range thanks to the electric cars… GOAL ACHIEVED!
Very wisely he has created at the same time five different companies inside Tesla, so when the time comes Tesla will continue profiting off the other 4 parts even if they don't sell so many cars/the same amount of cars.
As the EV market continues to expand, we will continue seeing more and more models, as we did after the Second World War with the ICE motor companies. After some time mergers and acquisitions will reduce the number of car makers to a more healthy offer, probably generated by the contraction of the demand once services like UBER and Car Sharing grow their market share.
Am I saying that you should sell Tesla or that I think that they will disappear? No. You should do with the stock whatever you want, but in my opinion neither the demand nor the mentality of Elon Musk can back the actual price. Tesla will not disappear, they will be battery providers, factory developers, charging network and chips for other manufacturers (including autonomous services).
*About the autopilot, the complexity of it to be approved for road use is something that affects not only the automaker. It is something that will deeply affect insurance companies, internet providers and car manufacturers. Even each country will be affected as the autopilot relies on a well maintained infrastructure network. And last but not least, the moral dilemma that the car will have to face in case of emergency will affect you deeply, as you will have to be the one who signs up for a car that may determine at some point that you are not as worthy as the danger ahead.
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