Tesla fans and haters are both destined for disappointment (TSLA)

  • 时间: 2018-09-23 07:03:38

If you think Tesla is an impressive, yet relatively small and definitely very young car company, you live in a lonely world.

On the borders of your sparsely populated realm, you'll find the Empire of Hatelandia and the Kingdom of the Fans. The politics of these diametrically opposed regions are not especially complicated. Hatelandia thinks Tesla should vanish amid fusillades of bankruptcy and salvos of SEC investigations. Fandom thinks Tesla will conquer everything and the future of mobility will be ruled by the benevolent if at-times-mad King Elon.

The conflict between these two sides has heated up to an alarming level in the past year. The haters can smell blood. The fans don't want to abandon their increasingly difficult-t0-defend hyper-optimism and gallivanting naivete.

Only on Wall Street and in the wider financial world has the conflict moderated — but mainly for bullish investors, and Tesla's biggest supporters have trimmed their enthusiasm at the same time they've lowered their target prices on Tesla stock. The bears, by contrast, have gone into mauling mode.

Sadly, the company's encouraging if somewhat unexciting reality is getting lost in all the bellicose thrust and parry.

Over time, Tesla has demonstrated a reliable pattern

Tesla has been around for 15 years — a drop in the bucket for the auto industry, where carmakers such as General Motors and Ford have been around for over a century — and in that time CEO Elon Musk's electric carmaker has demonstrated a reliable pattern.

First, announce something ambitious and cool. Generate enthusiasm for the new cool thing, but then launch it later than expected. Struggle to build it, initially. Contend with waves of skepticism. But then figure out the new cool thing, largely through rapid trial and error, and settle into something that resembles business-as-usual.

Then repeat the whole zany process.

When Tesla launched its Model S sedan in 2012, the vehicle was well received but beset with early production problems. Likewise with the Model X SUV, launched in late 2015. Both vehicles are now truckin' along at Tesla's factory, headed toward a steady 100,000-per-year manufacturing pace.

Between 2012 and today, Tesla's stock went parabolic, so the arrival of this well-worn pattern with the Model 3 sedan has attracted much more attention, most of it negative. It obviously didn't help that the "production hell" Musk started talking about during the Model X's challenges in 2016 has been vastly more hellish with the Model 3.

But Tesla and Musk appear to have sorted out much of the Model 3's growing pains, and although the company had to resort to some extreme (if in retrospect innovative) solutions like throwing up an assembly line under a tent in the factory parking lot, Model 3 production has now hit a sustainable tempo.

That doesn't mean Tesla will soon be making a million Model 3 cars per year, but it does mean that it won't make fewer than 2,000 per week.

Tesla could grow up to be ... medium-sized!

Tesla passed FCA and Ford in market cap in 2017 and challenged GM.
Andy Kiersz/Business Insider

Let's take a broad view and say that Tesla can manufacture something like 200,000 to 300,000 vehicles in total in 2018. That would be, at the low end, twice as many as in 2017. And it would be nowhere near the 10 million that GM made and sold last year.

If you simply break these numbers down, you come to a conclusion that's infuriating for Hatelanders and Fandomaniacs alike: Tesla is a promising small company that could grow up to be a successful medium-sized car company, serving both the upper levels of the electric mass-market and much of the luxury EV market.

Accept that conclusion, and two others follow: the company's shares have been overvalued by bullish investors, and Tesla isn't likely to make the bears happy by vanishing.

A precious few analysts were leaning toward a middle-ground position a few years ago, before Tesla's stock broke through $300 in 2017 and surged toward $400. The argument was that all the upside was already priced in. Clearly, some of those tweeners missed out on the 2017 rally, but they've also avoided the subsequent volatility that has beset shares of late. They also dodged the entire "go private" circus.

It's hard to be neutral on Tesla

The Tesla Model 3.
Hollis Johnson/Business Insider

You don't hear much from this neutral-Switzerland camp in the Great Tesla War because, to put it bluntly, its members are right. Their fundamental analysis is correct: Tesla doesn't deserve to be worth $300 to $400 per share — $150-$250 is more like it. Their view that bankruptcy is non-trivial, but unlikely is also correct. And they certainly don't think Tesla is going to vanquish the rest of the auto industry — because circa late 2018, EV sales add up to just 1% of the global market.

However, if you think the silent middle ground is boring, think again. The Middle Realm wants you to know that in under five years, Tesla has produced the three best electric vehicles ever manufactured in human history. Sure, Tesla has struggled to build those cars, but the company hasn't had much practice and hasn't taken any breaks to consolidate its experience. Meanwhile, topline revenue has been growing at a predictable $200 million per quarter for a few years.

Considered in that light, the Middle Realm looks less like the home of the small, young car company I mentioned at the beginning, and more like one of the greatest success stories, against spectacularly steep odds, the world of business has ever seen.