Investors interested in electric vehicles often gravitate toward Tesla (NSDQ: TSLA), in part because of charismatic CEO Elon Musk’s flair for self-promotion.
For Tesla evangelists, the company’s self-inflicted production woes and cash-burning ways don’t register; after all, the apologists reason, headaches of this nature are part and parcel with innovation and disruption.
Musk also has a knack for rolling out overly ambitious production and financial targets or a shiny new product whenever investors need a distraction to keep the faith. For the most recent example, check out the Tesla semi, which the company touts as “the safest, most comfortable truck ever” and is designed to deliver “badass performance.”
Please disregard Tesla’s overleveraged balance sheet, operational issues, insane equity valuation and acquisition (bailout) of SolarCity Corp. Nothing to see there. Put your brain on autopilot and enjoy the ride all the way to zero. Sell Tesla Motors.
We also prefer to stand aside on established automakers for leverage to electric vehicles and autonomous driving because these innovations require significant capital investment in a highly competitive market and involve the cannibalization of the incumbent market for conventional autos.
Let’s not forget about Alphabet (NSDQ: GOOG) and other technology giants’ push into autonomous vehicle technologies. And even vacuum cleaner-maker Dyson plans to develop electric vehicles.
Some companies may take market share amid all this disruption, but this race remains in the early stages.
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Elliott and Roger on Jan. 30, 2020
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