It is hard to be an investor and not have an opinion of Elon Musk because he owns Tesla, Space X, Solar City Corp and Twitter. Each of the companies started from start ups and became successful, being successful does not mean the graph was a straight line upwards. The graph often times went very close to worrying about the payroll or lack of cash.
In a book called Power Play – Tesla, Elon Musk and the Bet of the Century by Tim Higgins – an automotive and technology reporter with the Wall Street Journal, published by Doubleday, NY, 2021. Mr. Higgins describes how the dream of battery cars started and when Mr. Musk became involved. In all likelihood, if Mr. Musk was not involved electric cars would be more hobby orientated than becoming mainstream as they are today.
Tesla started building a $100,000 Roadster and moved to the Model S, X, Y. 3. The dream of a $35.000 vehicle is still a dream because battery prices have to fall in order for the company to make money. A number of years ago, Mr. Musk said he would produce a $35,000 vehicle and half of million people put down deposits of $1,000. The car still has not been made but with Mr. Musk perhaps it was aspirational rather than reality.
In the book pre 2020, Tesla never made money and came dangerously close to not meeting payroll on a number of quarters. Similar to many companies Mr. Musk would announce what the sales were and then those in the company would have to deliver given the type of company Tesla had evolved to – it is different than how GM. Ford, Chrysler and Toyota do business. The other companies produce vehicles and have dealers sell and finance the cars. Tesla has showrooms and delivers a vehicle when people order a vehicle.
In all manufacturing companies, what people envision happens at large manufacturing companies does not always happen at small and medium sized companies particularly when they ramp up production.
Linking to dividend paying stocks, Tesla does not pay a dividend but it is an interesting company to watch because they are helping change the automotive industry to save the world. If you like Tesla or love it, buy the vehicle but understand while it is an important company, others can do exactly the same thing, is it better? In the coming years we will see because Tesla has owned the space, however every year every auto manufacturer will be bringing out new electric vehicles, will Tesla keeps its market share? likely not.
There are more questions than answers, till the next time – to raising questions.