The current view from Wall Street analysts and an oft argued point from Tesla critics is they should be priced like an Auto company. So it follows Tesla's stock is still overpriced relative to legacy auto manufacturers. This article tries to explain why that isn't true, and why Tesla's future value is at least one Trillion dollars
To start let's look at the Tesla's core products and areas they have significant investment in.
One of Teslas core product is their Gigafactories. Gigafactory 1 in Nevada was the prototype and the others being build are version 2, as they build out more and more of these all over the planet they can be used to output a wide variety of products. That they only produce batteries and cars at the moment is missing the point.
If Tesla can build something as complex as a car from the Gigafactory what's to stop them building easier to manufacturer things like phones,tablets, planes,TVs air conditioning units, washing machines etc.
The amount of software and hardware development accomplished by Tesla over the life of the company is astounding, and it only grows by the day. Their car software if the most advanced by a order of magnitude vs competitors. They have demonstrated this when they fixed a brake issue with over the air update and when they unlocked extra speed and range for all existing customers.
Another sphere that Tesla leads is their self driving technology. They have the advantage of having designed and built a custom chip for their Neural Net powered self driving stack. This puts them at the front of the pack in the race for full autonomy.
Having the skills to develop such complex hardware and software is a huge asset to the company and is the most overlooked advantage by analysts and detractors.
The fossil fuel powered industrial revolution has allowed us to advance our lifes in untold ways. We wouldn't be where we are now without it. However it's become clear it's time to move on to a new cleaner and more distributed way of generating and using energy.
Enter Tesla Energy.
Collecting the abundant energy from the Sun, the sea and wind is a solved problem. It is about to become cheaper than Oil, obviously the incumbents would prefer the status quo but progress cannot be stopped only slowed. This energy can be stored in huge batteries distributed all over the world limiting the transport distances allowing for smooth output and cheaper energy costs.
Few people will be sad to say goodbye to the big Oil companies who pollute the planet, manipulate price and trigger wars.
Yes Tesla make automobiles, but are they anything like the cars traditional auto makes? The answer is no, Tesla cars are redesigned from the ground up to make use of electric batteries, software, self driving, over the air updates, internet and almost zero maintenance costs. Legacy auto is now scrambling to catch up, it remains to be seen if they can. It's going to be too late for soon.
So comparing Tesla to other Auto companies is a stupid as was comparing Amazon to Barnes and Noble in 1999. Tesla are disrupting multi-trillion dollar industries and they will take the lions share. Agree? Disagree? Feel free to discuss below, all view welcome.