Tesla’s stock has sold sharply over the last few weeks. There were key people leaving, decisions were made and reversed in a matter of days and on top of that Elon is fighting SEC (Is he that bored???) None of these inspires confidence. There are also questions about demand and execution.
Will Model 3 continue to sell well? When will Model Y be released (“between sometimes and never” was one obviously very biased comment I heard on CNBC) and how well will it sell? All valid questions, but I think it is pretty obvious, a) EV market share will continue to increase, b) Tesla cars are great and loved almost universally and finally c) Tesla has multiple competitive advantages.
It’s funny how people are talking about the lack of demand and yet they acknowledge that every single car manufacturer is making a massive commitment to the EV market. Are all these car companies misjudging the demand? I don’t think so. Let’s address the demand, close to 100 million cars and light trucks are sold worldwide each year. There were about 1.2 million EVs and plug-ins sold in the world in 2017 and 2 million in 2018, how many of these cars will be sold in 2019 and beyond? I think it’s pretty safe to say that electric vehicles will continue gaining market share. Conservatively, I think EV sales will grow at least 50% YoY for a foreseeable future. Given the virtually unanimous high marks Tesla owners give to their cars, even with all the competitors entering the market again it is safe to say, Tesla will continue selling more and more units.
Now let’s talk about Tesla’s competitive advantages
- The leader in battery technology — Tesla has been at it for over 10 years, they are making roughly half of all Lithium-Ion batteries produced in the world. They control the production, they have the lowest battery cost, highest energy density, the lowest level of cobalt and soon no cobalt whatsoever.
- The leader in EV driving efficiency — there is a youtube video were people test Model X vs Jaguar I Pace, even though X is about 500 lbs heavier it was using about 17.5 kWh per 100 km vs 22.5 for Jaguar. These are real numbers, provided by an independent company. This type of efficiency is hard to beat.
- The leader in self-driving technology — every Tesla in every trim level is equipped with sensors and cameras, there are about 500k Tesla cars on the road, if we estimate conservatively that every car drives about 10 miles a day, that’s 5 million…