DO NOT, DO NOT INVEST IN TESLA
My ire for Elon Musk and Tesla has often been implied and has equally often been stated out loud. I have mentioned in passing my disgust for Tesla, and I focused on it more in my discussion of their Q3 results. I don’t think it will take long to explain why you should not throw your money into Tesla (note from Henry in the future, it did end up taking pretty long.)
First, you have to watch out for the FOMO feeling. It is so hard to stay smart when you see idiots making money. That principle extends across all of finance and life as well. It is sooooo tempting to get into crypto when you see people you know are idiots making money. Even though you know crypto has no value, you still feel the urge. That same principle applies well to Tesla. You see your idiot friend who spits out phrases like “Elon’s goated” or “Tesla to the moon” make 200% on their money, and you kick yourself for not being as dumb as him. You have to stick to your guns. You cannot allow yourself to be tugged into something you know is wrong.
Second, and this has more to do with the company itself, rather than social pressure, Tesla is about to get stomped. Tesla was at the top of the game for a while, and they still are, but barely. I have been calling this for four years, but I think it is finally happening, Tesla is facing real competition. Competition is hurting sales and market share. For example, in Q1 of 2023, Tesla’s market share was 61%, now in Q3 of 2023, it is 50%. Here, let me check the numbers real quick, oh yeah, that is an 11% decline in market share in half a year, all while slashing prices by 25%. Do you know what is quite a bit harder to make when your prices are lower? Profits. Oh, by golly, Henry do not worry your pretty little head, the Cybertruck will save us! No, it will not. Not only is the Cybertruck one of the most disgusting trucks I have ever seen, it is the third electric truck on the market. Rivian already has a truck out on the market for about the same price, and their truck is doing extremely well. Ford has their Lightning on their market, and it is 20 grand cheaper than the Cybertruck will be. Oh, and, THE CYBERTRUCK HAS NOT EVEN HIT MARKETS YET.
Third, it is not even the electric trucks that Tesla is being beaten on, every car company is catching up to Tesla. Mercedes, BMW, Porsche, Volvo, etc. are all getting better and better at making electric cars, and now they are actually selling some. Mercedes for example just revealed a car that has a longer range than anything Tesla has made so far. Tesla’s main thing has always been their battery, now they do not have that advantage. These powerhouses are selling enough to start taking Tesla sales, which is worrying.
Fourth, BYD, the “Chinese Tesla” is taking Tesla’s lunch money. New startups like BYD and Rivian (but mainly BYD) are making dents in Tesla’s armor. BYD has sold 4,000 fewer electric cars so far this year than Tesla, and will assuredly overtake Tesla by the end of the year. BYD is growing massively and has taken the Chinese market away from Tesla. A Chinese market that accounts for 50% of Tesla sales. Tesla tried to get into a price war with BYD, but you know what the Chinese government really doesn’t like? When American companies try and bully Chinese companies on Chinese land.
Fifth, you are trusting Elon Musk with your money. LEADERSHIP, LEADERSHIP, LEADERSHIP, what is the most important trait in any company? It is leadership. Elon Musk is an unhinged man overwhelmed by the world around him. Nothing that I have seen so far has told me that Elon is the man to lead Tesla toward a golden future. Heck, nothing so far has told me that Elon won’t lead Tesla into the ground. There are startup leaders and there are leaders. Elon is a startup leader, he is in over his head, and he is not a strong enough man to get the right people around him who will tell him what he has to hear.
To summarize, Tesla is being assaulted on every side. Competitors are coming out of every hole in the ground and are out-producing them, out-engineering them, and outselling them. Century-plus old car companies like Ford and Mercedes are making cars to challenge Tesla. Decade-old car companies like Rivian (14 years) and BYD (25 years) are out-innovating Tesla. Tesla does not have the experience to weather this storm, and they do not have the youth to power through. Tesla does not have a man at its helm that will lead it to the Promised Land; Tesla does not have a man at its helm that could lead it to sell a burger.
