A year to be remembered, Tesla has endured a number of misfortunes thanks to the virus pandemic and yet it's head firmly remains above the water. 2020 has not only been a good year for Tesla's growth but a fantastic year to show their resistance and robustness to less than ideal scenarios. If companies were to have a 'right of passage', 2020 would've been it
Tesla's share price is something of great achievement, not only because past concerns and short selling thesis have been crushed but because it marks an ethos change is in the wider society
The Tesla Electric Vehicle has been denounced countless times, by all other producers - yet with increasing popularity, the Tesla fleet takes the stage as the number one
My ambitions for Tesla are huge, I can't help but feel compassion for the company due to their genuine purpose of heading toward a cleaner and more sustainable future
A key attribute of any successful investment thesis is that we think critically, so we must ask ourselves why Tesla has experienced such growth at such high levels of demand
Is the collective phycology of the world shifting to one of being environmentally friendly and adopting cleaner habits? - I think so, and I couldn't be happier about it
The environmentally friendly is becoming economically viable - this alone is a reason why the clean energy market is booming yet it remains in its infancy. Now, we're entering the 2020's with a reputation to forge
For those following Tesla long enough, especially in regard to its finances, you'll remember the Pre Split days up until late 2020
The current price exists as a 5-for-1 representation of its pre-split price. Meaning, the price today is one-fifth of it's previous
If we convert that back into a pre-split day value, we sit at a massive...$3528.35, I shock myself every time I write it
The split was a good choice for Tesla though, it allowed the price to be cheaper for those to get on board and support the company
Many of the people supporting such an ethos change are those in the younger demographics, of whom are 'likely' to have less disposable income (or money to invest)
By performing a stock split, Tesla opened up the gates to this group and offered them a means to invest their money - in return, I'm sure they will make some serious profits if they haven't already!
This is one reason why growth has been so explosive toward the end of the year, the ability to increase the number of investors and allow their confidence to be communicated through a hearty financial investment
An enthusiast of Tesla's success is the ARK investment group, these guys are huge advocates in what we can call 'societies future'
Tesla is a large slice of their investment pie and their analysts believe we're just getting started
Pre-Split in February 2020, a prediction was made by Cathy Woods (Founder, CEO and CIO of Ark Invest) that Tesla would reach $7000 dollars by the end of 2024
At today's Post-Split price, that sets the bar at $1400. We sit at just about half of that today, at the start of 2021...
This leaves a large amount of time to grow, especially if we see a similar growth trend to the previous 2 years, however, 2021-2024 is an interesting time period
Within these years, Elon has announced a number of new additions to the Tesla Fleet
The Semi Truck is to begin production in 2021 (that's this year!)
The Second Generation Roadster is pencilled in for a 2022 launch, along with a now delayed..but still achievable release of the Cybertruck, for 2022 - an add-on option for this will be the Cyber ATV (all-terrain vehicle) featured at the Cybertruck release, shown below
And of course, perhaps the most anticipated addition - the Tesla 'Model 2'. This is the unofficial name for the most affordable vehicle from Tesla, but it's pretty much a placeholder until Elon reveals the actual name
The less than $25,000 vehicle might exist as the inflexion point for the company (another one)
With regard to the worldwide adoption of electric vehicles - this might be the platform to achieve it
Over the past years, Tesla's success has been thanks to its vehicles set at a higher price range within its fleet. It's with these platforms the company has gained a reputation and a following
Now we sit on the horizon of a shifting ethos, introducing a product into the affordable bracket...very much makes sense ( it's the biggest part of the consumer base )
The concept of 'butts in seats' is an idea that it's hard to appreciate a Tesla vehicle until you try one, once the affordable vehicle is out there - 'butts in seats' might lead to a significant hype and spike in gratitude for the company
Coming up in the next few years, is the introduction of Model 2 at $25,000 and the Cybertruck at around $40,000 dollars base price
The margins for Tesla's vehicles are already great and it's only getting better through economies of scale and the use of common parts across their fleet
It's with the assumption that when the mass market vehicles are released, the margins per vehicle will be substantial!
Additional to the vehicle side of things, we have Tesla Energy, Tesla Insurance, FSD, Vehicle Customisation, Super Chargers and the whispers of new projects like a Tesla HVAC (heating ventilation and air conditioning ) units entering the mix
Furthermore, they have new factories being set up in China, Europe and the United States - the ability to produce locally to your continent offers serious advantages!
These are massive ventures on their own, but to keep this post... the future is looking ambitious, but achievable! I'm sure when all of the above have entered the market, ARK invest and all other analysis will have to reevaluate because yet again Tesla would have grown
The Tesla Piggybank
Calling it a piggybank hardly serves it justice, but I'm going with it!
Tesla holds a whopping 20 Billion USD is reserve funds, you know, just for a 'rainy day'. By 'rainy day' I do mean for emergencies but also for investment in growth, acquisitions, investing in capability...or whatever they want
The company leaps through into 2021 with huge momentum and a substantial war chest, these two factors certainly set them up for a handful of advantages, and more than a few
Despite having all that money behind him, Elon does well to keep his cool and remain humble
Additionally, with a rocketing share price - they always have an option to raise funds which they've already done multiple times (quite rightfully!)
They can even raise funds with pretty insignificant levels of dilution to the stock, so there's little fear of 'damaging' the momentum of the trendline - it's a win-win
The Roaring 20's
Whilst roaming Twitter on a more than unusual New Years Eve, I came across an interesting tweet from Elon in a response to a fellow Twitter user
This is what it was:
For those unfamiliar, Elon is giving us a bit of a throwback to the 1920's - named the roaring 20's due to the amount of prosperity and wealth enjoyed in the decade
It was also a crowning moment for the automotive industry, their adoption and momentum were growing as an alternative to their previous mode/s of transport, it's when auto vehicles became affordable for the first time!
And it made me think of something, doesn't this sound familiar?
Not merely because we exist a century later in the '20s of our century, but because we have a similar pivot point
Specifically, the Ford Motor Company had championed their way through to become the industry leader thanks to the Ford Model-T (known as the first affordable automobile)
Though Ford gained the top spot based upon this product, they were unrivalled in another realm, manufacturing
And yet I ask myself again, doesn't this sound familiar?
Casting our minds back to Battery Day, we can remember Elon speaking about the importance of manufacturing and how Tesla will not only create products to provide a cleaner future but be the leader of manufacturing excellence
Ford revolutionised the industry because they understood that producing a prototype was easy, the manufacturing on a mass scale is the difficult part. Elon understands this too, he talks about it often
Yet here we are one century onward from the ICE vehicle inflexion point staring at the horizon of the EV adoption, based on a more than similar principle, mass manufacturing
As previously spoken about, the true mass production vehicle for EV's has yet to be produced - but once it is, we may give birth to a new 'Roaring' decade. It might be that the Tesla fleet combined (Models S, E, X, Y and cyber truck) can be as pivotal as the Ford Model T
Nevertheless, the road to 2030 is one of great interest to many investors. The decade holds so much potential for development and growth and we're barely at the start of it
In the thick of the information age, any adoption can be encouraged far quicker than in previous times, if you, like I, believe in the clean revolution, we have a duty to champion the cause
I think we should support the sentiment Elon's tweet and do what we can to solidify the idea of a prosperous decade for the benefit of the planet ( as well as for our economies )
If we were to succeed in this, what a memory it would be and what a story it would tell
The 2020's - the decade that saved us...
I wish you all the best in 2021, stay ambitious and keep your hopes up!
Many thanks for reading