‘The weak and ill-constituted shall perish: first principle of our philanthropy. And one shall help them to do so.’ –Nietzsche
Tesla is a car company whose stock trades like a tech company. Tesla might sell 400,000 cars this year. By contrast, Ford might sell 6 million, GM 8.5 million. Granted, the Tesla Model 3 looks and drives like a dream. But when you count salaries and overhead according to Tesla’s own quarterly statements, it costs more to make a Tesla than people are willing to pay for it. And that calculus includes the federal subsidies that will dry up on December 31 of this year. Ford is worth $35 billion and makes money on its cars. Tesla is worth $40 billion and doesn’t. How is this math possible?
Tesla’s stock trades at such a large multiple of its revenue because Musk has convinced shareholders that it’s not a car company, but an artificial-intelligence company that happens to use a fleet of 500,000 cars to collect and label data. It’s a clever sleight-of-hand, but it’s not fooling those who matter. As a fund manager on Wall Street once told me, “You’re not a hedge-fund manager until you’ve shorted Tesla at least once.” […]
We estimate that ninety percent of the startups in the autonomous-vehicle space today will not exist in five years. […] The big crunch is coming because, over the next year, all the major auto and trucking companies will decide on who will be the suppliers for their main production lines in 2022. This won’t be for full self-driving, but for something a little more modest if still vitally important: a car so safe it is incapable of crashing.
