HOW HIGH IS TOO HIGH?
Is Elon Musk himself the chief ingredient in Tesla Motors' trillion-dollar market valuation?
It's true he's been the face of the auto company almost from the beginning. Visionary, but also hypemaster.
HOW MUCH of the current stock price is pure hype?
If the hype is 10%, the stock is overpriced by 10%. If 25%, a 25% overvaluation. And so on.
Tesla fans need to get out of their heads the idea that Tesla is fifteen or twenty times better-- or has a twenty times better future-- than General Motors or Ford. This unrealistic view is based on the most important phrase uttered about Tesla-- whether coined by Musk or one of his team, or one of their fans: "Tesla is more than an auto company."
Is it really?
Maybe at the outset, but legacy manufacturers-- Volkswagen, General Motors, Ford, Hyundai, Mercedes Benz, Toyota-- are scrambling to catch up in tech features, and most importantly, in battery technology.
The Tesla stock price has two props. Two premises. Assumptions which have become assertions.
1.) Tesla will continue to lead in battery efficiency and distance. (Which is, really, the ballgame.)
2.) Tesla will be first to develop Full Self Driving. True autonomous vehicles.
Do these two pillars rest on quicksand?
Re #1. Tesla may have already lost its ten-year lead. Hyundai's Kona Electric has achieved 637 miles per charge. Nio's ET7, 621. The new Lucid Air is getting more than 500. GM's soon-to-appear Ultium battery is said to be state of the art, as is BYD's Blade battery, which will also be used by Toyota.
Re #2. The assumption that Tesla leads in Full Self Driving rests on the assumptions a.) autonomous driving is soon perfectible by anybody; b.) it will be approved for widespread use; c.) consumers in large numbers will buy it. Beyond that is the assumption Tesla, by not using Lidar (a laser imaging device) has chosen the quickest and safest route to the goal. Maybe. But maybe not.
THERE IS also a third pillar sustaining Tesla's stock price, and that's the stock market bubble itself. Once central banks begin seriously raising interest rates in order to quash inflation, what will result? We'll find out.
The entire move to EV's is contingent on battery tech continuing to improve-- batteries becoming more efficient and EV's more affordable. But what if this doesn't occur? (Just as autonomous driving remains a "What if?") Look closely into it, and much of the Tesla strategy remains a huge gamble.
The most worrisome part of the Tesla stock price bubble is Elon Musk himself-- that the company is completely dependent upon one man. The sole face of the company. The corporation's entire PR department in one individual, an individual who reportedly works 80-plus hours a week. What's sustaining him? What happens when Elon Musk burns out?
Musk is far more of a gambler than innovative capitalists of the past like Edison, Ford, Steve Jobs and so on, which has been Tesla's strength. He pushes ahead with his ideas and decisions and expects the company-- and the world-- to catch up. Which means he and his company can move and maneuver way faster than any automotive company ever seen. Which also means that in the face of sudden obstacles, the company may move quickly to correct him. (That Tesla may use something akin to Lidar after all, as rumor has it, may be one example of this.)
THE KEY QUESTION
The key question is: Will Elon Musk's luck run out?