Hey, I’m Steven and this is Solving The Money Problem. If it’s your first time on
the channel, welcome.
In this video I’m explaining why I’m all-in on Tesla. Well, almost all-in.
I’m an opportunistic investor. I’m not a stock investor. I’m not a real estate
investor. I’m not a business man. I just look for opportunities that line up with my
investment goals and suit my risk profile. If they do, I’m in.
Today, Tesla comprises about 80% of my stock portfolio.
This goes against the investment advice of almost everyone ever. And for good reason.
Concentrating a large amount of wealth in a single asset can be a recipe for disaster.
Thing is, I’m confident (or arrogant) enough to believe I DO know what I’m doing.
History may prove me to be wrong but so far, my prior investment decisions have led to
my achieving financial independence and retiring at age 31.
Before we dive into the video, ask yourself: is Jeff Bezos an idiot for concentrating most
of his wealth in Amazon? Is Bill Gates an idiot for concentrating most of his wealth
in Microsoft? Is Elon Musk an idiot for concentrating most of his wealth in Tesla and SpaceX?
I’m not a believer in diversification for its own sake. If you have no idea what you’re
doing, then sure, diversify. If you’re petrified of risk, sure, diversify. If you have mouths
to feed, then sure, diversify. I don’t. And I’d much rather be making investment
decisions from a place of confidence than uncertainty.
I’ve been following the Tesla story for a decade--since the original roadster--yet
it wasn’t until March 2016, just before the Model 3 reveal, that I became confident
enough to begin investing.
So, why Tesla?
The engineers - Many of the world’s best engineers work at Telsa--or want to. Let’s
have a look at a 2018 survey of engineering students who were asked to name the employers
they most wanted to work for. SpaceX took out the #1 position, closely followed by Tesla
at #2.
The implications of this are very important. Recruiting great young engineering talent
for Tesla is like shooting fish in a barrel.
Other companies wishing to compete with Tesla have a pool of lesser engineering talent from
which to draw. This matters.
Ford sits at #16 on the list. General Motors at #19. BMW at #20. They’re going to get
the leftovers. It’s just a fact.
Engineers are the backbone of Tesla’s business and they’ve got their pick of the bunch.
The technology - Tesla is embarrassingly far ahead everywhere it counts. Their batteries
are literally miles ahead of everyone on range and efficiency. Their power train puts others
to shame. Their 3 current vehicles are the 3 safest ever tested. Over-the-air updates
mean Tesla vehicles continuously get better AFTER you buy them. Their infotainment is
unmatched. Netflix. Car-aoke. How about sentry mode? Dog mode? Or how about FREE over-the-air-updates
that increase range and performance after you've purchased the vehicle? What about the machine that builds the machine?
Who else can build a factory in 10 months? Who else is profitably producing electric
vehicles at scale with gross margins exceeding 20%? And don’t get me started on the full
self driving data lead.
The leadership - Musk is a brilliant leader. Despite what the dips**ts in the mass-media
would have you believe, Elon has inspired the world's best and brightest to work tirelessly
under extremely trying conditions to innovate rapidly and solve enormous problems--over
and over. Musk may be eccentric, he may not be easy to work for but those who work for
Tesla don’t want EASY. They want MEANINGFUL, CHALLENGING and INSPIRING work.
The execution - Tesla do what they say. Sure, the timing is not always perfect but they
get the job done. Every. Single. Time. Let’s read the original master plan from August,
2006.
Did Tesla build a sports car (Roadster), then use that money to make a more affordable car
(Model S), then use that money to build an even more affordable car (Model 3)? Did Tesla
provide zero-emission electric power generation options (Solar)?
Let’s look beyond Tesla. Did SpaceX say they’d build reusable rockets and actually do it?
Yes.
THIS MATTERS.
The inevitable transition - Electric vehicles currently make up just a few percent of the
new vehicle market. In the future, they will be about 100%. Tesla is sitting atop a GIGANTIC
technological transition and no one else is even in the game.
The declining costs - Question: What is the most expensive component in an electric vehicle?
Answer: The battery. What else costs a bomb? The computer. Isn’t that fascinating. The
big ticket items in the vehicles are both on declining cost curves. So what does this mean?
The price/performance of electric vehicles will continue to improve over time. EVs are
around price/performance parity with internal combustion engine vehicles TODAY. Guess what?
Internal combustion engines are NOT getting cheaper to make. Batteries are. It doesn’t
take a genius to figure out what this means for the future.
The competition -
*hysterical laughter*.
What competition? There is literally NONE. There may be competition
in the future but currently, there isn't. Each vehicle Tesla has produced is best-in-class
by a STUPID margin and is selling accordingly. Yes, there are other electric vehicles currently
on roads and many more “coming soon”, but as of today, Model S, Model X and Model 3
do not have competition. Tesla owns EVs like Google owns search.
The survivability - At this point, I can’t see Tesla dying. This wasn’t always the
case. That’s why I held off buying any stock until 2016. But since then, Tesla have shown
profitability despite continually outlaying huge amounts of capital to build new factories
and infrastructure. Their margins continue to improve as they find new efficiencies and
benefit from economies of scale.
Today, I believe Elon Musk could raise billions within a matter of days in any economic conditions.
This wasn’t always true.
It’s also been reported that in 2013, Apple attempted to acquire Tesla for a large premium
and in the same year, Elon Musk had a handshake agreement with his friend and ex-Google CEO
Larry Page to acquire Tesla, if needed.
In the worst case scenario, someone like Google, Apple or even Amazon would jump at the opportunity
to acquire Tesla and their market-leading technology.
The F.U.D. (Fear, Uncertainty & Doubt) - What is being said about Tesla in the media does
not match reality. Analysts, media shills and others are spreading fear, uncertainty,
doubt and misinformation about the company, and its leader. Perhaps there’s some big
oil money involved. I don’t know. But at the end of the day, the truth will win. Until
then, Tesla stock is on a discount. If you can look past the noise at the underlying
facts, you’ll see a very different picture to the ones CBNC are broadcasting into homes.
To really understand the extent of this FUD, look at the short seller theses on why Tesla
will fail. Most of their reasons are factually incorrect. And all that remains is speculation
and desperate fantasies like “There must be accounting fraud” and “The competition
is coming” which we’ve been hearing for years.
Where is it?
The network effect - Each time a Tesla owner takes delivery of their vehicle, something
interesting happens. Their friends and family who currently don’t know a thing about Tesla
become exposed to one of its products. This matters. Ask anyone who’s ever test driven
a Tesla for the first time about their experience. It usually goes like this:
“I drove one."
"I want one."
"I ordered one."
And Each time Tesla releases an awesome new feature like sentry mode or smart summon,
or romance mode or fart mode, thousands of videos and tweets spread virally in an instant.
The products are so good that they advertise themselves. This is why Tesla doesn’t need
to waste money on advertising or dealer networks.
The cult - Elon has a sea of fanboys. I count myself among them.
The man has almost 30 million twitter followers -- more than the population of Australia.
Let that sink in.
30 f**king MILLION people, care enough about what he is doing or has to say, to follow
his twitter. His reach matters.
That generations of teenagers see him as an inspiring role model matters.
That he can sell $10 million worth of not-a-flame-throwers in a few days MATTERS.
That he can broadcast to an enormous audience in seconds, matters.
Do you even know the name of another automotive CEO?
The physics-thinking - As a lifelong science nerd, I view the world differently to most.
Physics is fundamental, everything else is emergent. Reality itself is nothing but particles
interacting and obeying the laws of physics.
When Elon Musk approaches an engineering problem, he boils it down to atoms and works up from there.
Few others do this. The reason Tesla has been able to innovate, disrupt and make
“bold” moves like entering the EV market before it seemed to make any financial sense
is because of first principles thinking.
Forget what everyone else is doing. What do the laws of physics say? Is it possible?
Then DO IT.
The optimization culture - Tesla has a culture of optimization and finding new efficiencies—it's
built into the DNA of the company.
[The best part is no part. The best process is no process] - Elon Musk
[And occasionally at the design level you think something is necessary then it turns out it's not.] - Elon Musk
[So it's just like making sure--connecting between design and manufacturing] - Elon Musk
[And making sure we're closed-loop on that.] - Elon Musk
Deleting complexity is an endless task. This optimization isn’t just at the level of
say, battery technology, or materials. At every level, from corporate structure to production
line optimization, Tesla is relentless in its pursuit of finding new efficiencies. Tesla
is squeezing every last drop while most others are in cruise control.
Model Y shares about ¾ of its components with Model 3. This wasn’t an accident. It
was extreme optimization. And as a result, the Model Y ramp is months ahead of schedule.
Tesla learns fast.
Gigafactory 3 was built in 10 months for 65% less (capital expenditure per unit of capacity) than the
US Model 3 production system.
I could go on.
The other stuff - You may not have noticed but Tesla does Solar and Batteries as well.
Today these products don’t account for a huge chunk of Tesla’s business. In fact,
everyone seems to be ignoring these entirely but mark my words, the world IS transitioning
to renewable energy generation and storage and Tesla is poised to capture plenty of this market.
I have about 20 more reasons but this video is getting long enough as it is.
Viewed in aggregate, these reasons paint a clear picture of a company with a bright future.
Tesla has proven its ability to innovate, execute and disrupt. They’re in a healthy
financial position. While “analysts” are crying over lack of profitability, Tesla are
investing billions in scaling production around the world while other automakers are barely
dipping their toes in the water.
Tesla has a 3-5 year lead over everyone. I mean, 7 years after its release, nothing has even
matched the original Model S for range. And Tesla will continue to innovate. The recent
acquisition of Maxwell Technologies and Hibar Systems suggest that a big battery breakthrough
(dry battery electrode anyone?) has occurred which pushes their lead out further. Telsa’s
full self driving computer is lightyears ahead. Their data lead is ridiculous. And of course,
if Tesla wins FSD and the “fleet awakens”... oh boy.
So, those are some of the reasons I’m all-in on Tesla.
Of course, I’m paying very close attention to Tesla,
it’s “competition”,
the industries it's in,
the underlying technologies and everything else I deem relevant.
If, in the future, things change, my portfolio will do likewise.
But if I’m being honest, I think in 2030, everyone will be calling me “lucky”.
This video is NOT investment advice.
It’s just a peek into MY reasoning and MY investment decisions.
Thanks for making it to the end of the video.
Let me know in the comments below, do you own any Tesla stock? Do you plan to buy any?
What reasons encouraged you to invest or to steer clear? Any holes in my thinking?
And if you have any ideas for future videos or topics you'd like covered, let me know.
I read all of your comments.
I’m Steven Mark Ryan, this is Solving The Money Problem, and I love you all.
p.s. Don’t try this at home.
[Oh, oh JESUS. Sorry. Speaking of mishaps, I just stabbed you.] - Elon Musk
[*maniacal laughter*] - Elon Musk