What’s the one thing more polarizing than Donald Trump? The valuation of Tesla’s stock. To the true believers it is the future of not just transportation but energy itself and this absolute conviction has taken the stock to stratospheric highs.
- Tesla Valuation Equals Auto Industry but Only Sells 0.005% of all Cars
- EV Cheaper, Cleaner, More Powerful that Internal Combustion Engine
- EV Biggest Problems? Recharge Times and Range Anxiety
- Nevertheless, the Future is Electric
- Is Ford Mach-e the Tesla Killer? Reviewers Love It
- 50,000 Mustangs Ready to Hit the Road
- EV Pickup Trucks – Faster, Stronger, Much Less Expensive
- Tesla Truck – Designed for GQ Rather Than Work?
Tesla Valuation Equals Auto Industry but Only Sells 0.005% of All Cars
As the chart below shows Tesla’s valuation is now equal to pretty much the whole auto industry combined. This is an astounding statistic given the fact that car manufacturing is one of the largest businesses in the world and that Tesla’s share of that market is a tiny one half of one percent. The company sells 400,000 cars out of 80 million units sold annually across the world.
EV Cheaper, Cleaner, More Powerful that Internal Combustion Engine
The bet on Tesla is a bet on an electric vehicle (EV) future which is destined to supplant the internal combustion engine (ICE). The EV vehicle has numerous advantages over the gasoline powered cars. First and foremost it is non-polluting, emitting no exhaust or greenhouse gasses. It’s cheap to run. A 300 mile battery charge only costs the equivalent of two gallons of gasoline. Third and perhaps most important of all an EV car has virtually no maintenance costs. Since there are no moving parts to the engine the only wear and tear in on the tires and breaks.(Its true that eventually EV owners would have to change the battery pack – which would run into thousands of dollars, but recent advances in battery technology are making it possible to create 1 million mile batteries which for all intents and purposes would render that point moot)
EV Biggest Problems? Recharge Times and Range Anxiety
So virtually from every angle the EV vehicle is superior to the ICE engine. Then why haven’t consumers flocked to the product? Part of the reason is pure inertia. EVs are very new, their base models are more expensive than ICE engine cars and there are far fewer models to choose from, but mostly the reason is range anxiety. ICE engines can be refilled with fuel in a matter of minutes. EV engines require a minimum of half an hour at a supercharger station or overnight if plugged into a home outlet.
Still, the Future is Electric
The fear of running out of “gas” and the still clunky process of “refueling” has kept many consumers from even considering an EV car as a serious choice. But as recharging technology improves and more importantly as government regulations force automakers to reduce greenhouse emissions the EV is destined to become the transportation of the future and much of Tesla’s valuation is based on the idea that it will be the dominant force in this new sector.
There is only one problem with that thesis.
C-O-M-P-E-T-I-T-I-O-N is Coming
Up to now Tesla has had the market all to itself. The Nissan Leaf was a toy car that couldn’t drive more than 70 miles without recharging. The Chevy Volt while providing a perfectly serviceable driving experience is at least $10,000 more than the Bolt and looks like a cheap version of a Ford Pinto. The Jaguar E Pace has utterly uncompetitive range numbers and the Porsche Taycan is simply four orders of magnitude too expensive for the average car buyer.
Is Ford Mach-e the Tesla Killer? Reviewers Love It
But now Tesla may be facing true competition for the very first time. Ford has just released the Mustang Mach e – and while the Mustang purists are outraged at the appropriation of the brand for what is effectively an EV SUV – reviewers have been absolutely gaga over the design, the handling and the overall driving experience of the car. Just watch any YouTube review and you will quickly understand the transformational potential of the product.
Although Mustang Mach e is marginally shorter on range, it is the first EV competitor that not only matches but in many cases improves the EV driving experience. There is no doubt that Tesla has defined the electric car concept for the current generation of consumers. But at its core the company is basically a technology designer rather than a mass producer of consumer goods. It’s production shortfalls are well known and throughout its life the company survived through endless capital raises to keep the business afloat.
50,000 Mustangs Ready to Hit the Road
Ford on the other hand is one of the stalwarts of the auto industry and will be able to meet demand should Mr. and Mrs. Suburbia finally decide to give EV a chance. Ford is planning to produce 50,000 Mustang Mach-e in 2022 and if they meet their quota the Mustang will become the first popular EVs outside of Tesla.
The Pickup Truck is the Killer Application For Electric
But the Mustang is really not the killing blow to Tesla. The ultimate EV market lies with pick up trucks, not cars. Indeed, aside from Tesla, most of the world’s car manufacturers are moving away from making sedans as consumers especially in the US prefer SUVs and pick-up trucks.
EV Pickup Trucks – Faster, Stronger, Much Less Expensive
The EV engine was made for the pick up truck. Not only is it virtually maintenance free, it can carry greater loads because of the steady and consistent power output of the batteries. But for all the suburban cowboys perhaps the biggest advantage of all is the fact that they no longer have to spend $100 per week filling up the gas tank. The moment every carpenter, handyman and farmer discovers this cost difference the ICE pick up truck will become the relic of antique car shows.
Tesla Truck – Designed for A Fashion Magazine Rather Than Work?
Tesla does have a pick up truck model on offer but it looks like it was designed by editors of GQ rather than anyone who actually hauls things for a living. There are other startup competitors like Rivian which look promising as well but of course the champion of pickup trucks is Ford Motor company which produces the world most popular model- the F-150. Ford plans on making a full EV F-150 version in 2022. Early demand has been so strong that it already announced an increase of its original production run by 50%.
If the design specs on F-150 are as good as they are on Mach-e (and there is little reason to think otherwise) the Tesla trade is dead. Tesla becomes just another car company rather than Tony Stark’s – eh Elon Musk’s – magical carpet ride. Indeed the auto trade of next year may well be Short #TSLA / Long #F as car companies finally electrify their fleets and electrocute TSLA’s ridiculous valuation.