Tesla Made Me Money. Now What?
Revisiting my investment thesis on Tesla
I invested in Tesla early. It made me a lot of money. In fact, it has been my best-performing stock pick to date. I’ve previously written about how I decided to get in early using my 10x10 framework for making individual stock picks.
But I also said that I would be reconsidering my position in Tesla, as the company I invested in 2015, is no longer the same today.
It used to be the first desirable EV brand among the well-heeled. Today, it faces much fiercer competition. Elon’s time is also greatly divided across multiple, non-trivial ventures, and not entirely devoted to Tesla.
The Cybertruck is perhaps the embodiment of what Tesla has become today, with its numerous quality issues, and more aesthetic appeal than genuine value to many potential users.
Can The Robo-Taxi Turn Tesla Around?
Tesla recently released two new products. The first, Cybercab self-driving robotaxi for $30,000. Musk said the Cybercab would be in production before 2027, but was met with considerable skepticism as fully self-driving vehicles had been advertised for nine years, and robotaxis for five years.
The Tesla Robovan was also unveiled to much fanfare at the “We, Robot” event hosted at Warner Bros. Studios. The vehicle was designed to carry up to 20 people, or be used to transport goods.
The Robovan is intended for the company’s Tesla Network, an autonomous ridehailing service for purpose-built self-driving cars, as well as Tesla customers’ personally owned vehicles.
Despite the impressive show that was put on, there remain several significant hurdles for Tesla to turn those pre-production prototypes into dollars.
Firstly, Tesla is actually late to the robo-taxi game. Other players like Waymo are years ahead, with actual customers already roaming the streets across various cities in autonomous taxis in partnership with ride-hailing companies like Uber.
Tesla has yet to announce any go-to-market partners. It’s highly unlikely that private Tesla Cybercab owners would want to loan out their cars as part of an autonomous taxi fleet.
Secondly, Tesla is not on the best terms with regulators. In February last year, Tesla recalled full self-driving vehicles by US safety regulators due to the system allowing speeding and other traffic violations. In April this year, regulators also announced an investigation into full self-driving and autopilot systems after a reported 20 crashes involving autopilot following the earlier recall.
Buy, Sell or Hold?
I’ve decided to hold onto my Tesla shares for the time being. I might reduce my stake slightly later depending on future updates.
Tesla has had numerous challenges shipping autonomous driving on their existing fleet of vehicles, so the proof of the Cybercab and Robovan will be in the doing, not the talking.