The big problem with Jon’s thesis is that Tesla isn’t a self-sustaining entity. If Tesla wasn’t burning cash faster than a Chevy Suburban burns gasoline he might have a point. But Elon Musk is just as dependent on Wall Street as a gold-digger in high heels looking for her sugar daddy. If investors stop forking over cash to fund Tesla’s day-to-day operations that means Tesla has to turn to banks for loans. And banks will be much less forgiving than investors when it comes to making profits. Plus, Tesla would have to pay interest on their cash which would make their profit target even more difficult to hit.
Tesla’s current stock price is based on a scenario where Tesla owns the entire EV market and starts to push out traditional car makers. Anything less than that and the stock price will begin to collapse. A scenario where Tesla is one of many EV makers fighting for a piece of market share would be disaster for investors.
The other big flaw in Jon’s writeup is that the investors are the owners of the company. And these pension fund financial managers don’t give a hoot about pioneering smart mass-market electric cars. They are praying to God that the huge profits from Tesla selling EVs will catapult their investment to new heights. Why? Because companies are under funding their pensions. These pension fund managers need their investments to offset the difference or the workers will be at their doorstep with pitchforks and torches wondering where their pensions are. There is nothing altruistic about their investment in Tesla.
The other group of investors in Tesla play the stock market like a slot machine. When it becomes apparent that Tesla may never turn a profit, they will pull their investment and move on. They only need one out of ten investments to hit critical mass to end up with a net gain. These are not climate change disciples.
A lot of people a whole lot smarter than I have negative views about Tesla’s survival. But I wrote my book about Tesla because I thought it was about time that an independent observer with no financial short interest offered an opinion. I think that electric cars may very well be the future. It just seems obvious to me that Tesla isn’t the company that will usher in the age of the EV.
Manufacturing is a highly choreographed art form that takes decades to fine tune. People can say that making EVs is about tech all they want, but at the end of the day, only the best at manufacturing will be the ones to own the EV market.
Now available in iBooks —> The Tesla Bubble