What have we invested into?
I bet if you ask 10 different tesla investors you might get 10 different answers.
However, a lot of those answers may have some commonality, a lot of overlap, or similar
inference.
I invested in Tesla because I thought EVs were the future, and Tesla was so much further
ahead than anyone, well there was practically no one back then to even be ahead of.
Of course there was the rhetoric that the legacy autos could come in at any time and
eat Tesla's lunch, but they just couldn't be bothered yet, as it it was just some niche,
and didn't even appear profitable, of which it wasn't really back then.
So why bother.
Of course it ended up proving to be very difficult as everyone is still discovering to this day.
I was right, EVs became a lot larger segment, and Tesla maintained their lead, or even increased
it.
And they also became very profitable, with some of the highest margins in the auto industry.
But others invested in Tesla as a tech company, rather than a car company.
I was an avid auto enthusiast, and I did pretty much invest in Tesla as a car company, although
understanding it is not just a car company of course.
And that Tesla make a smart car too, viewing it as the equivalent of smart phones, and
will do for cars, what Apple did for phones.
Although, I am not sure people cared that much.
Perhaps a moderately sized screen, navigation and a smart phone connection is good enough
for most people as far as tech is concerned, and looks and brand are of more importance.
That is investing, the sport of trying to predict the future and then make a bet accordingly.
I love the smart car technology that comes with my Tesla, but perhaps its not as important
to most people as I thought, as there are plenty less smart cars still selling, and
some that are catching up more too.
Of course Tesla was electric as well, and offered amazing ranges, and an impressive
network of chargers making long distance travel a possibility with electric.
Anyway, that was my theory, and why I bet on Tesla.
But others saw it more as a software company than the actual hardware.
Some put out crazy price targets that were laughable at the time, except Tesla ended
up beating them and earlier.
But these price targets were based on FSD and Robotaxis, Tesla hit them without those
features.
Tesla looked to grow EVs to insane levels.
We were told quite clearly 50% growth year over year, and even more some years.
This was clearly stated many times.
In fact with some pretty substantial physical evidence to back it up, the largest factory
in the world being one of them.
Not only that, cells that would cost even less and have higher energy density.
And Elon was wrong with all his targets he gave us.
Unfortunately these factories cost a lot to run, and are not doing high quantities in
production in order to reach the right economies of scale, so the margins are low from these
factories.
And now since Texas is also making the 4680 cells, I the margins are likely even lower.
In fact I bet 4680 cells are quite expensive, at such low quantities.
So despite not seeing evidence that Tesla can achieve this growth, the stock price seems
to be recovering nonetheless.
Which tells us that Tesla is not valued as some high growth, high margin car company,
which to be honest, it looked very much like that to me a while back, and was very exciting
to see.
The stock price didnt care, in fact it cared significantly more about the impact Twitter
had.
Which is somewhat nonsensical.
As long as the business fundamentals are there, then it will thrive, and grow.
Anyway, Twitter is just about in the rear view mirror now, and the stock is better for
it.
With technical analysts saying its going to run to 300 now.
In fact I think if we had Model 3 Highland launch, Mexico breaking ground, advertising,
and Cybertuck delivery event, it could run to mid 300, assuming the economy holds.
And the economy may do more than just hold, the markets might go for another bull run
even.
Yet we don't have 50% year over year growth.
Alright we might see 30% growth this year still, which is not too bad, although minimal
ramping throughout the year.
As for next year, there is still capacity at Berlin and Texas, so Telsa just need some
more cells, and perhaps Cybertruck might contribute a little too.
But even basically impossible to see 50% growth in 2024 too.
So high EV production growth isn't the investment here.
And my research from investor sentiment would agree.
It's all about the future.
Just give Tesla enough time to get these things sorted, and it will be insane.
The industries that Tesla are disrupting are the biggest in the world, energy and transport.
Oh, and labor potentially too.
It's all coming together.
Tesla have so much capital and cash flow, along with resources, and the best engineers
on the planet working around the clock to solve these challenges.
Accompanied with a highly driven determined charismatic leader, who has every global connection
he needs to the highest scale.
Even the most followed person on Twitter.
Accompanied with a track record with a string of previous successes.
And slogans like don't bet against Elon.
The inference is that it will take time, but Elon and Tesla will get there.
They will hit the targets.
The targets being unimaginable wealth for all Tesla investors, as long as they have
been patient enough.
You just need to hold for the rest of this decade, and then no doubt some of these incredible
areas of the business will pay off, and take it to the next level again, like they have
in the past time and time again.
The Model S and X leveling Tesla up from just the Roadster, then the Model 3 from there,
the Model Y from there, along with technology evolving parallel to production like FSD and
Dojo.
FSD is an incredible concept, and something we see in movies set in the future.
But the concept of Robotaxis takes it to another level again.
Anything that can replace full time human labor has massive value.
Just look at how much a full time Uber driver makes, that is the value of a Robotaxi, if
the Uber driver didn't need to sleep.
Although when they sleep demand is relatively lower.
But not only that, the largest expense for an Uber driver is fuel, if its a Tesla, then
it costs even less again.
These Robotaxi numbers get big.
And sure, I don't think they will replace all transport any time soon, I mean markets
like India, are going to be insanely tough.
But even 10 million operational around the world in areas that are easier, well if they
can make $30,000 a year even in fares, then that is $300 billion a year.
Also known as a really big number.
Which is why some people place the potential for Tesla to hit a $10 trillion market cap.
It's hard to resist investing in a company aiming for this.
Who would want to miss out.
And the CEO is convincing and likely believes he can achieve it.
Along with the AI Days we get to see just a glimpse of the levels of complexity Tesla
are delving into to achieve this.
As it is really hard to do, but obviously worth it when you look at those numbers again.
And yes, there is also the penitential Tesla sell 20 million EVs a year too, at $10,000
gross margin that is also $200 billion gross profit.
And then energy too.
And then robots, which could be bigger than everything else combined.
So I am of the belief that this is the investment.
A massive asymmetric investment with 10 to 20 times return perhaps as early as the end
of this decade.
This is what everyone is prepared to wait for, and not concerned about year over year
growth as early as now.
When Tesla have so much more left to see manifest.
But I think I can sum it up as gen 3 production, extremely low cos production with very high
output.
A way to get enough EVs produced for numbers of up to 20 million a year, whilst costs are
low enough to also have the demand meet that supply.
4680 cells with dry battery electrode process, a way to dramatically reduce factory size
and footprint, so its feasible enough to scale up battery production for enough cells for
an electric future.
FSD, software as a service, selling more time for drivers to have the ability to concentrate
on other things whilst in the car.
Robotaxis - replacing labor in transport.
Energy - lower cost, more abundant, decentralized, renewable, cleaner energy.
And robots, as Elon says, so hard to fathom, he can barely understand what an economy would
be at that point.
All this is all backed by governments with climate change movement.
Fossil fuels are not going to last forever, if oil ran out tomorrow I imagine that the
vast majority of people wouldn't survive months.
There needs to be an alternative eventually.
These are Tesla's missions, and the investment is long term, these investors are patient,
and going to wait the necessary time, and are not so concerned about the minor improvements
we see from month to month, and thinking long term.
As the potential upside, significantly outweighs the downside.
If this is the play, then its just a waiting game, and a lot of Tesla investors out there
simply get it, hence whey they will say just wait until 2030, its still early days.
Other investors also look around to make sure they get the investment too.
Everyone wants to know the value of this company, and work out how where it is derived, and
what others see that they dont, as no one wants to miss out.
They are trying to judge what the market thinks Tesla is, and trying to interpret that.
And I think that is what I have done in this video.
But look forward to reading everyone else's opinion on a succinct summary of what Tesla
is as an investment.