Tesla stock is down almost 10% today, after its 2012 earnings report became public. Tesla missed its projections and investors hammered the stock in response. So what did I just do? I just bought a lot of TSLA. Why did I do it? Because I'm betting on Elon.
There's a SeekingAlpha analyst report that's very bearish on Tesla stock. The author writes:
"Tesla's current market value is 250 times higher than it would be if it were being valued as a car manufacturer rather than an idea whose time is about to come. If Tesla were valued as a car manufacturer at Ford's valuation ratio, it would have to produce about 440,000 cars each year. That's over 20 times its current production goal. Are there that many luxury car buyers out there who are willing to live with the limitations of an electric car? It seems doubtful to me."
Here's the problem with the author's perspective: He doesn't understand Elon's master plan, nor does he appreciate Elon's "relentlessly resourceful" ability to execute on that plan.
If you just consider TSLA stock based on what the company has achieved to date, I'd agree that the stock's price is still inflated beyond what its current-day business metrics would justify. As the analyst points out:
"If Tesla were valued as a car manufacturer at Ford's valuation ratio, it would have to produce about 440,000 cars each year. That's over 20 times its current production goal. Are there that many luxury car buyers out there who are willing to live with the limitations of an electric car? It seems doubtful to me."
But here are a few counter points to consider:
But my last point is that I'm specifically betting on Elon Musk, the CEO of Tesla. He has single handedly pushed Tesla through tremendous obstacles to get it to where it is today. Above all else, I believe in Elon. I don't care if Tesla stock drops even more; I'll just keep buying it because it'll be on sale. If there's anyone that can create a new mass market car company -- which nobody has been able to do since the 1920's -- it'l be Elon.
Sue and I took a tour of the Tesla Model S factory in Fremont, CA today. This is the old NUMMI plant. If you haven't heard the NUMMI story between GM & Toyota, and you're a car buff, there's a This American Life episode about it that's just mind blowing. The net of it is that GM tried to learn Just In Time assembly practices from Toyota, they built a factory together for Toyota to transfer this know-how to GM, and GM completely blew it. The factory shut down and was sitting idle after that fiasco.
When Elon Musk was looking for a place to build his new Model S sedan, he approached Toyota with a $50MM bid for it, which Toyota accepted. Why would Toyota sell a car production plant arguably worth $1 billion or more for $50MM? For the answer to that, you really have to understand the relationship between Musk and Toyota, which is well portrayed in this 2010 WIRED magazine article.
As a reservation holder for the Model S, I'm proud to support one of the most amazing entrepreneurs of our generation. What makes Elon even more amazing is that he's not only revolutionizing the automobile industry, but the space industry as well, with SpaceX... at the same time. Elon, my hat is off to you.
Below are a number of pictures and vidoes of the factory and the event, which was very well done.
Getaround is a car sharing service like Zipcar, except that it uses people's private vehicles instead of a fleet. It's a bit like AirBnB for cars. Getaround is part of the "collaborative consumption" movement, which believes that if we could share things we don't use most of the time it would be better for us in a lot of ways. Sharing cars means less cars on the road, which means less pollution, and generally less "stuff."
I'd never used Getaround and a few weeks ago I was trying to figure out why. I pinged Jessica, one of the founders, and told her that what I'd realized was that I didn't want to have to go to someone's house and "borrow" their car. The thought of actually interacting with the owner of a car was awkward enough that it had kept me from trying the service.
Jessica told me about a new type of rental they now have called "Instant," where I can use the Getaround mobile app to rent a car instantly and unlock it with my phone, meaning I wouldn't have to meet the owner or wait for approval. (This dovetails really well into my recent blogs about the power of mobile and apps to transform businesses, and how Fortune 1000 CEOs are going to get fired for missing it.) Getaround Instant was exactly what I was looking for, so my brother-in-law Dal and I decided to give it a try.
I had a few hiccups that Getaround is still working through (for example, Getaround verifies a driver's driving history with the DMV in real-time, and since my last name has a hyphen in it, but the DMV doesn't account for hyphens, my rental request initially broke Getaround's booking system. But both Jessica and Matt were very proactive at resolving these speed bumps). Overall the process was incredibly smooth: