Tesla started as something Elon supported, in a hands off way. He had given control over a group of people to build the Tesla Roadster, I guess he was reading rocket science books or trying to get SpaceX going and did not expect to be needed. He was needed, Tesla lost a lot of time and money because of bad management, so he took over the reigns.
Elon is focussed. He makes choices. The time you win by not doing what has no future relevance is quite significant, but it doesn’t feel nice. You are forcing yourself to do the things you understand are necessary, but your body may not be ready for it. Elons asperger nature came in pretty handy because it both allows untangled focus and reduces emotional attachement (which he clearly does have though). We are quite blessed with someone that has been made aware of his individuality quite early, one that has an aggressive drive he has decided to steer towards an altruistic outcome. But that’s enough of psychologizing Elon Musk.
Most people don’t have a clue about reality, the real reality. They know a lot about promises and myths told to them, but most have never been pushed to explore or question their world. They have not been given access to learn about their world, to take other viewpoints. If you have, you may be considered unlucky or raised well, it seems a good father ensures his kids don’t love him so much they refain from exploring or doubting his word. This is a sacrifice many parents never consider, but one that makes kids stronger. If you are pushed into the world and feel left to your own devices you will learn more.
The quest to break into the car market with an EV was extremely tough, and the strategy depended on people with cash, because banks are against EVs, they are like returning cashflow which fossil fuels ensure. Tesla sold their first roadster to patient and wealthy people who where as enthousiastic about the idea of EVs as Elon. This afforded him to build the Model S, this allowed him to build the Model X and 3 and now the Y. The X was a result of overreach, I can’t imagine how many people will have been send in from banks and legacy car makers to screw Elon over and try ot make him fail. Another EV maker’s workshop was burned to the ground. Rivian has been a pretend EV maker for years.
In a bid to survive Tesla did everything it could to make money. Part of the first Roadster development process yielded battery packs that Mercedes could use. Mercedes-Benz AG can be credited with helping Tesla in a crucial phase. It is a testament of pure thought on the side of Mercedes, not pure delusion as we now see happening in the US. Of course Tesla used incentives and got some subsidies, but legacy car makers where bailed out, sell al their monster trucks with loans, fossil fuels are subsidized, the amount of support government and banks give to fossil gas guzzlers in the US is disgusting.
Tesla grew as fast as it could. It drew in all dependencies because once the Model S and Roadster caught on and where beating the best of the internal combustion cars it was full on war. Don’t believe that nobody tried to buy all Lithium or all USB cables or something like that to make Tesla run down its financial reserves and crash. I know personally from the constant nonsense about Tesla I hear from bank lakeys (usually right wing voters well to do who read the economist and repeat right wing news because they basically want to be left alone). This war has entered a new phase it seems..
The basic loop : Try, Review, Reorient, Repeat
The process of Tesla is simple : It sets goals, it focusses on achieving those goals, it corrects its proces with a humane touch (in contrary to Amazon), but it corrects relentlessly, without sentimentality. It itterates because every itteration means your behaviour becomes more effective. It uses driven people that have forced themselves to some notable achievement, because that’s what you need to optimally utilize a human mind, be internally driven and willing to endure discomfort to get something right.
While other car companies have been comforted with assured affordability (loans) and bank enthousiasm because of a large army of suppliers that all would generate cashflow and of course make profit, Tesla minimized these costs by figuring it should only need to take in the raw materials and do to it what is needed to end up with a car. This ensured both a reliable production process and lower cost. Tesla has reached all the way to the mines to improve its raw materials supply chain. Legacy car companies have NOT.
The above is just the car manufacturing side of Tesla, but Tesla also makes batteries, battery packs for utilities, solar shingles and plans to be its own energy company. It has an AI arm to develop Full Self Driving autonomous cars (Roadbots as I call them since 2017) and wants to apply the FSD know how to a bipedal bot called Optimus.
Now the $tsla stock is down on a huge production and profit ‘beat’ (unexpected windfall). Some ‘whales’ (big investors) sold off and the stock is down 20% where it should be up. The fundamentals of Tesla are ridiculous, there is a ‘price to earnings’ logic where the price of the share is now very low. However this is not what drives stock prices…
Stocks are bought and sold at moments in time, resulting in ‘volume’ which varies from minute to minute and hour to hour. There is some ‘market making’ necessary because it will never be the case that a buyer at a price will meet a seller at a price at exactly the same time. This is how stock markets and banks profit of stocks : I want to buy at $1050 someone wants to sell at $1045, the banks buys the stock, and sells them to me and takes $5. Banks steal money all the time where ever they can, it makes people need more money!
The volume can be very low, meaning while there are 900 millon Tesla shares outstanding volume can be 3000 shares over a minute. If during that minute people really want to buy Tesla because they learned something new, and they think it will be $1200 while the price is $900 they will bid $930 to be done quickly, the sellers from $800 to $930 hand over their shares, the bank takes its cut and the price is raised to $930. Same thing if people thing the stock will drop to $850 and it is now at $900 a seller will be happy to sell at $890 to make it a sweet deal and be done quickly. Sometimes the stock is just dumped and the bank can make the price!
What I am trying to convey in the above is that stock prices can be sensitive to small sell offs and events that cause investors to suddenly buy or sell. The price is like the direction of the car, while the talk is the steering which is sometimes not well connected or delayed. People that point to the fundamentals will be frustrated because a small selloff at a low volume moment will move the price for all holders of the stock. This is exactly the same with crypto currencies, except that there is a real company underlying the stock which you in principle co-own if you own the stock.
Now why hold Tesla stock right now? Reasons :
- It is a company that will make ever more profit on every car it sells
- It is a company that will create a closed low cost system to provide energy and mobility to millions at an accelerating pace
- It is a company that can enter new markets with ease, and has the mentality to do it not with the aim to create as much cashflow in the economy, but cashflow towards the company.
- It is a company that develops its own cutting edge AI software and has the platform to optimize and improve it independently
- It is a company that knows the details of its raw materials production chain, in short it doesn’t have to enter the markets and it does not have to use money if it can provide its products and energy to its suppliers.
- In short this company is bound to draw in money from the world while needing ever less to make ever more profitable products.
- No legacy company or competing EV company has comparable scope or proven ability or even ambition. They will all be struggling in an economy 100% dictated by banks who keep profit margins as high as possible to maximize cashflow (basically gouging anyone that tries to be useful). Tesla evades this system as much as it can.
In case of inflation, in case of a financial crisis, in case of a supply chain crisis, which company would you rather own? Tesla, GM, Apple. Its no longer a matter of goodwill or charity to be in Tesla, it seems to be a safe place to put your money. Also as dividend is often taxed it could be that Tesla will start to buy back its own shares some time in the future. Google does that already (3% per year). Personally I just want it to build those 100 battery factories Elon said where necessary to transition the planet to sustainable energy, but whatever comes next, I’m in!