I’ve watched Tesla with interest as it has gone from a niche sports car for a handful of wealthy Silicon Valley execs, to being valued on the basis of becoming the largest producer of $35k mass-market hatchbacks.
Today Tesla’s market cap surpassed that of Ford. It was already more valuable than Nissan, and is now nearly five times the valuation of Mitsubishi. Toyota is a juggernaut and dwarfs all other brands with its market cap of $182bn.
There’s a lot of consternation at Tesla, which has yet to make a profit and has produced 186,000 cars in total over its lifespan, being more valuable than Ford, which sold 3 million cars in America last year alone.
But the two are not exclusive - in order for Tesla to grow, it has to take market share from competitors. I suppose a parallel would be complaining that Google is worth more than Yellow Pages, or that Apple, with one handset, is worth more than Nokia who make 100.
Tesla have done a lot of innovative things - they’ve taken an engineering driven approach to building a car. At the top end of cars this is nothing special, but the low end of the market is traditionally driven by pointless adverts showing exactly the same little hatchbacks driving around a city knocking over giant buckets of paint while girls sing. In other words - marketing bullshit. They have are literally differentiating themselves on whether you can drive three attractive friends to a party while doing loop the loops past high fiving construction workers.
The software and UI for almost all cars remains absolutely terrible and Tesla have got to grips with this.
I don’t believe we’ll see mainstream fully-autonomous self-driving cars within the next 10 years, but I do think Tesla will be the first to achieve it, Uber, Google and Apple are all just wasting time and money on it.
The Steve Jobs factor is high in Elon Musk, and I do worry that he’s spread too thin. But, thus far, he’s built a solid team with almost no departures and achieved an enormous amount.
I see no reason why Tesla shouldn’t achieve a valuation similar to Toyota, which would be a 4X from today. So I’m long Tesla, as I have been for about a year now.