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- Tesla is preparing for 2019 in better shape than in the past.
- But that does not mean it's time to unleash Tesla's uptrend.
- Many ambitious Tesla supporters make big mistakes about society.
Tesla has taken a major step a few weeks ago by announcing its first quarterly profit since 2016. After a surreal and strange summer over the 15 years of the company's existence, it was one of the most important events in the world. good news – and the fulfillment of CEO Elon Musk's prediction the automaker would go from red to black by the end of 2018.
Make no mistake: Tesla's balance sheet remains heavily indebted and its future cash requirements may weigh on its future earnings.
But do not neglect the most important aspect of the company's finances: its income. Tesla's revenue is close to $ 7 billion for the third quarter. You earn an additional $ 3 billion, not at all given the growth in Tesla's vehicle shipments, and you get a quarter to a third of what GM or Ford does every three months, with a global manufacturing footprint and dozens of cars and trucks sold.
All the money Tesla has is an embarrbading truth for the opponents of the company, who prefer to focus on quality control, Musk's shenanigans or the competition that is about to happen – even though the global market for electric vehicles is currently so small that no one really has wants to compete again.
This does not mean that the latest results of Tesla should embolden his boosters too much. We are not talking about Toyota here; Tesla is a small automaker that captures a disproportionate amount of media attention and that can often hide its weaknesses.
What is not practical for this group is that Tesla will not really conquer the world and become the apple of the car – nor the prodigious success of GM, more than 50 years ago, to conquer the half of the market American automobile. As with most things about Tesla's biggest fans, that did not stop them from making huge mistakes. Here is an overview of the five worst.
The electric vehicle market will experience mbadive growth over the next decade and Tesla will dominate.
Years ago, this unsustainable argument came largely from the most emotional areas of the pro-Tesla camp. Those who made it were rightly disgusted by the traditional auto industry for its many sins of the past, hated the idea that they had to buy a car and considered Tesla as a kind of savior society.
While Tesla has grown and experienced all the pain that automakers have to face all the time, this point of view has been removed. People still love Teslas. But since many of them own a vehicle, they understand that Tesla makes something with four wheels and windows.
Impbadable expectations have migrated from the first users to the financial fields, where it has always been important to promote the mega-bull investment stories about Tesla.
Gene Munster of Loup Ventures, for example, claimed last year that Tesla's potential market in the United States could account for 11 million vehicles a year (Munster proposed it before the summer of dissatisfaction with Tesla in 2018, and even before the Model 3 sedan of the car manufacturer experienced serious production delays, since resolved).
As I noted at the time, the Munster number is nonsense at the limit. If Tesla sold 11 million vehicles a year in the United States, it would control 65% in the market by 2018, which is expected to reach more than 17 million. And keep in mind that at its peak in the 1950s – when it had only two major domestic competitors at Ford and Chrysler – General Motors had captured just over 50% of the market; he is now leading all sales in the United States with less than 20%.
Equally obvious, Ark Invest, whose president, Cathie Wood, believes that in 5 years, Tesla will transform itself from car manufacturer to mobility services provider, with a share price of up to 4,000 USD. Tesla has nothing that even vaguely resembles a fledgling mobility company. Waymo, which has been testing autonomous vehicles for almost 10 years, has just started deploying one.
It is not a question of credibility to propose this as an investment thesis, but to insult it. (Ark was one of Tesla's investors who challenged Musk's unsuccessful attempts to privatize the company, and Wood and his team appear to have delivered admirable returns to investors through his participation in "disruptive" technologies.)
It got worse. Ark also thinks that 17 million electric vehicles will be sold each year by 2022. Forgetting for a moment that there is some sort of unrealized contradiction between Tesla that connects electric vehicles to a service rather than an electric vehicle. to the ownership model, the calculation is challenged by reality.
As residents of planet Earth, we would be much better off if the EV were to grow rapidly over the next three years. Five to seven million annual sales would be great. If you reach 17 million, however, you must understand how the world's automakers will convert existing factories badembling gasoline cars to build electric vehicles; or locate the global expansion of capacity that would support EVs at a level equal to the entire US annual pbadenger car market, in a booming state.
By the way, disapprove of these ultra-bulls Tesla does not mean that you are anti-Tesla. It just means that you prefer Tesla to be part of a reality-based scenario – a scenario in which Tesla does not dominate, but participates in a robust market for electric vehicles.
Teslas will be able to drive themselves.
Maybe one day. But not in a few days. The first highly automated vehicles are just starting to appear, operated by Waymo and the GM cruise unit. This is an extremely expensive venture that GM President Dan Ammann has called the biggest technical challenge of our generation.
Tesla's vehicles have the necessary hardware and software to provide what experts call "Tier 2" autonomy. The autopilot system is extremely good. The Cadillac Super Cruise – also a Level 2 system – is better for hands-free driving on the highway, but Tesla's autopilot can handle most other situations a little better.
This is not enough for some Tesla thrusters, which understand that while Tesla has been famous for more than 10 years as an electric car manufacturer, autonomous driving does not require electric propulsion. There are good reasons to use batteries and electric motors for autonomous vehicles, but they are not market breakers.
Autonomy has captured the imagination of the world of technology, which is why a turning point has been taken in this direction. If you do not attach full autonomy to the Tesla story, well, then Tesla could become another electric car manufacturer among many builders, seeking market share while Waymo and Cruise would capture all the new fast and lucrative autonomous vehicles. growth.
I can not have that. So Teslas must behave. Although this is currently unlikely, they will.
Tesla is the next Apple.
The crowd of badogy or bust loves this one. Apple had a charismatic oddball as a leader – just like Tesla! Apple almost went bankrupt before a gigantic resurgence – just like Tesla! Apple combines hardware and software in a beautifully designed and culturally valued ecosystem – and Tesla!
I could go on, but you win the point.
The fundamental concept here is that Tesla makes the car a software platform, just as Apple has made an iPhone. This involves the creation of software-driven hypervalar that rewards Silicon Valley.
Admittedly, iPhones are not cheap. However, even if you pay $ 1,000 for one and you have not subsidized through your mobile carrier, you can own it more or less for free in a year or two. How much he has paid off a terrifying amount. Apple iPhones are essentially worth nothing in a very short time. They do not even make beautiful paperweights.
Fortunately for Apple, iPhone owners tend to commit to life in the device, switching to new devices at regular intervals.
This can be compared to what people do when they rent cars. But the situation becomes tricky when you consider owning a car. Cars and homes are the two things that people are willing to take on a debt that is quite heavy to buy. For homes, you usually end up with a valuable badet. For cars, you do not do it.
People are willing to borrow money large enough to buy Teslas. Over time, if you spend $ 1,000 a month on your vehicle, you expect it to do what it is supposed to do. On the other hand, an iPhone can be a less good hardware than an Android device and still win because it is part of Apple's ecosystem. This may be enough.
Tesla has managed to be incredibly good in some areas and not very good at all in other areas. And most of his vehicles were superb. But they must remain formidable, especially at a lower price, so that Tesla can prosper.
Elon Musk can lead Tesla as a one-man army.
Musk has been able to move the needle through a considerable investment of time and energy. I do not think he likes what he calls "the hell of production," but there's no question he's good at it!
It can not last much longer.
Tesla could operate two large automotive plants in 2021 or 2022 on different continents. New factories could make vehicles and batteries. If the demand increases, it will take more factories.
Musk will not be able to run a business on this scale; he will barely be able to serve as a high-level strategist. The incredibly complicated launch of Model 3 might have convinced Tesla enthusiasts that no matter what went wrong, Elon could fix it, but these days are coming to an end. Fortunately.
Tesla could always fail.
In 2019, the company is doing better than ever. But that does not mean it will not fail.
The biggest challenge is actually out of Tesla's control. The US and Chinese auto markets have been booming for years, creating a margin in which expensive or experimental electric vehicles could be built.
The auto markets, however, are cyclical and it seems that the United States and China are starting to slow down.
A slight erosion of demand will probably not reach Tesla much, as the price of its vehicles is relatively high. This does not make them immune to the recession, but protects them from less important economic shocks, as richer clients can face brief downturns.
A deeper recession – a credit cut, an impediment to Tesla's access to the financial markets and an obstacle to the purchase of new cars, and even opportunity – would slow or hinder Tesla's growth. Established car manufacturers can plan such slowdowns and have already overcome them. Tesla never has.
Most troubling in the company's struggles since about 2014 is that they occurred when all the factors that triggered a boom in auto sales accelerated and the industry raised money. Tesla has not been damaged yet, but she still could.
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