Is Elon Musk an asset or a liability to Tesla? Or both?
Throughout my analysis of Tesla, I have compared Tesla to Apple, the Model 3 to the iPhone, and Telsa founder Elon Musk to Apple co-founder Steve Jobs. What I am struggling with is this: Can Tesla become as successful as Apple, and can Tesla cars turn into an iPhone-like franchise, taking electric-vehicle market share from nothing to 10% to 30% of the global automobile market?
Tesla’s competitors, despite their strengths, also have the weaknesses of being profitable, dividend-paying companies with a decidedly lower tolerance for sustained losses. The Apple example shows that replacing a benevolent dictator/visionary is extremely difficult but not impossible. Success depends on timing, the company’s competitive and financial strength at the time, depth of management — and luck. Tesla nowadays seems to lack management depth. The company seems closer to the Apple of 1985 than of 2011, and can hardly afford to lose its overworked genius/benevolent dictator.
Forward, reverse, forward Tesla is growing at the speed of a Silicon Valley startup, but in addition to writing a lot of software, it is building Gigafactories, a global Supercharger network, service centers, and stores, and designing its own self-driving processor — all while competing against car companies that are better capitalized and on the 50th iteration of their ICE products .
This is why Tesla spends zero on advertising but Tesla’s passionate owners create a bigger sales force than all GM, Ford F, -1.91% , and Fiat-Chrysler FCAU, -3.72% dealers combined — a force that strengthens with every Tesla sold. What is Tesla worth? Now let’s figure out how much Tesla is worth. Will Tesla’s semi-truck or full-self-driving cars see the light of day over the next five years? I don’t know, but at that point it won’t matter. Let’s say Tesla sells its average car for $40,000. Today the average car in the U.S. sells for $38,000, but with the Tesla there are gas savings and little or no maintenance required, so I am giving Tesla a $2,000 benefit of the doubt. In fact, today the average Tesla sells for $50,000.
Neither bears nor bulls will like the preceding math excursion. Bears would probably argue that Tesla may not be able to get to 2 million cars a year , and if it does, it will not be able to achieve 20% margins. Bulls will argue that the above assumptions are too conservative — if Tesla can do 2 million cars, it can do 5 million.
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