Elon Musk Doubles Down on Tesla Stock
As the founder and CEO of Tesla Motors, Inc. (NASDAQ:TSLA), Elon Musk has to occasionally defend TSLA stock from the bears. Hordes of vultures constantly circle over Tesla stock, waiting for Elon Musk to slip up before striking.
I don’t really understand the ideological opposition to the company, but maybe that’s because I like disruption. People like Elon Musk look for problems in the world and try to fix them by upending the system and building a great company like Tesla. Everybody else just tries to imitate what’s already been done; it’s safer and more comfortable that way, I guess.
But Tesla stock wouldn’t be as valuable as it is today if Elon Musk had followed those who came before him. Tesla would probably be a penny stock if Musk started his quixotic journey by building affordable electric cars. His predecessors tried and failed with that method.
Thankfully, Elon Musk is smarter than that. He understood what it would take to keep Tesla alive, and he knew he needed that to achieve his vision. Tesla is just one-half of Elon Musk’s plan to change how we consume energy.
But he isn’t a tree-hugging, green-tea-sipping, Hollywood hippie who thinks activism will change the world. Elon Musk likes to get things done, so he created a company and gave it direction. Tesla will accomplish its mission while also making profits for TSLA stockholders.
That’s what the bears can’t wrap their heads around.
Elon Musk Wants Tesla to Enter Germany
Musk wants to take Tesla into the home of quality automakers: Germany. He’s aiming to deliver 1,000 Tesla vehicles per month and build a battery factory in Germany that would compete with Daimler AG. (Source: “Tesla in Talks With Germany Over Possible Battery Factory,” Bloomberg, November 17, 2015.)
“A few hundred cars per week is a tiny drop in the bucket for the German auto market,” said Musk. “But it is our aspiration to sell more than 1,000 cars a month in Germany. Do I think we’ll get there? Yes.” (Source: “Tesla in Talks With Germany Over Possible Battery Factory,” Vanity Fair, October 8, 2015.)
Musk is clearly sending a sign to the skeptics that the company is far from done. It will continue to make unconventional moves and take the fight to new fronts. But if there’s one thing I’ve learned, it’s that no amount of Elon Musk being right will shut the bears up.
In fact, his recent statements remind me of an old Elon Musk quote that perfectly sums up his attitude: “Optimism, pessimism, f*** that; we’re going to make it happen,” said Musk. “As God as my bloody witness, I’m hell-bent on making it work.”
Tesla Could Be Top Stock of the Next Decade
One way or another, the bears will find an argument against TSLA stock. At first, they were skeptical about the very notion of Tesla, thinking that an electric car company couldn’t possibly survive against the existing automakers.
Who would buy an electric car that looked like a box? What happens if you take the car too far from its charging station?
Tesla answered these questions by starting off with a sleek sports car named the “Roadster.” It quickly became a luxury item, while maintaining much higher margins than a dull, regular sedan would have brought in.
Then Tesla followed the Roadster up with the gorgeous “Model S,” a luxury sedan priced near $100,000. It was expensive, but it rated extremely high among customers and critics alike. Once again, the margins were high and Tesla was slowly ramping up its volume.
That was Elon Musk’s brilliant strategy with Tesla stock: build beautiful cars that speak for themselves. He didn’t try to convince people that migrating to electric cars was the morally correct thing to do; that’s both foolish and unfair. Instead, he gave them a car that excites them, that emits a status of luxury and freedom, and that makes consumers rush down to the dealership and wait in line to get one.
Then he used the profits from those cars to build less expensive cars. It’s Econ 101: as volume grows, prices per unit drop. But Elon Musk knew that Tesla couldn’t compete on volume straight out of the gate, so it made sense for the company to start at the top of the price ladder and work its way down.