Worst prediction on the history of this blog? (Consolation is that said prediction wasn’t mine, though I did think it interesting enough to highlight).
Anyhow, far from “going to zero”, Tesla stonks have increased tenfold since May 2018.
So, what we have in Tesla is a company that accounts for just 0.4% of global car production in 2019 (365k/92M), in one of the world’s most gruesomely competitive sectors, and one that is due to become even more competitive, since batteries are simpler than internal combustion engines (fewer moving parts), which will propel a number of new entrants from China (Neo, etc.) to join the existing European/Japanese/American global auto giants. There is the rejoinder that Tesla is really more of a tech company, but its self-driving AI technology is not the best in its class (that would probably be Waymo), and in any case, any large automaker has the capability to generate a large amount of training data in short order.
It’s difficult to see how Tesla can support these valuations in the long-term, or why it is supposed to be innately much more valuable than, say, Volkswagen or Renault (whose budget EV cars are outselling Tesla’s in Europe), or those new Chinese EV companies. I can see Tesla retaining a permanent lead in the luxury segment – becoming what Apple is to the cell phone and laptop market, i.e. a strong, “cool” brand that signals status for the moneyed SWPL class that will consoom that product. But to justify its current price – let alone expand into trillion dollar territory – it needs to maintain its current profit margins while rapidly expanding to acquire a dominant market share of the world auto market. Seems like a tall order.