I hope you enjoyed your weekend. Welcome back to another exciting episode of Ask Ash, where I interview WatchMojo Founder & CEO Ashkan Karbasfrooshan and ask him questions on various things, ranging from covering what is going on in the news, to career advice for students and entrepreneurs.
Today I wanted to talk about the EV industry, specifically Tesla. Tesla is one of, if not the biggest electric vehicle companies in the world, and has not only done electric cars, but has also dived into batteries, and space travel as well. The EV industry is only getting bigger and seems to be the way of the future, so I wanted to get some of Ash’s thoughts on Tesla itself.
Do you invest in Tesla Shares? If so, when did you start investing?
I mentioned Tesla in my Anti-portfolio article, it was a stock I was looking at for years, but never got around to pulling the trigger.
And finally, years after not getting around to it, I finally bought some shares once it announced its Bitcoin plans, not so much because of crypto itself, but because if you study the history of GM, so much of the value it created came from GMAC, which is known as Ally today, but was the linchpin of much of GM’s financial success in the 20th century. If Tesla can find a way to ride the EV and cryptocurrency waves, then it has more upside.
Do you think that Tesla would be the brand it is today without the social impact of Elon Musk?
Of course not, and Tesla would not be where it is without Elon at the helm.
Historically, companies with high-profile executives don’t do better than low-profile executives. But, when it comes to new products, new technologies, etc., you need visionary risk-takers who are wired differently. Elon Musk certainly fits that description.
Tesla was founded in 2003, but Elon wasn’t the sole founder of the company, once the original co-founders left, he had free rein to implement his vision. It IPOd in 2010, by then, Tesla was a good example of the importance of focusing on clients and customer satisfaction, and less about having a mercurial founder/leader. Elon really took on another dimension in the past two years, so years after its founding and IPO…
The question is, as EV becomes the standard and traditional carmakers enter the fray, is Tesla better suited with Elon Musk running the company? Or someone with a more traditional background. Recall Apple brought in John Sculley and fired Steve Jobs… but then years later a more mature Steve Jobs came back with a vengeance. I’m not sure if Jobs would have had the same run in later years were it not for the personal lessons of his firing.
In fact, you may recall that before launching the DeLorean Motor Company, John DeLorean was a very successful executive at GM. He left to launch DMC, and it wasn’t a success… the point being, what makes Elon an amazing leader of a 10-20-year-old innovative carmaker may not be what’s required as Tesla takes on well-funded, traditional carmakers entering the EV space.
The following is some more information about the EV Industry, and Tesla as a whole.
EV Market categories
- Battery Electric Vehicle BEV
- Hybrid Electric Vehicle HEV
- Plug-in Hybrid Electric Vehicle PHEV
- Vehicle Class
- Mid Priced
- Vehicle Type
- Two Wheelers
- Passenger Cars
- Commercial Vehicles
EV Sector – Numbers
- Size of market today
U.S Automotive Industry = $562.2 billion* in 2020
Global Electric Vehicle Market = $162.34 billion* in 2019
- Projections etc.
The global electric vehicle market, which was valued at $162.34 billion in 2019, and is projected to reach $802.81 billion by 2027*, registering a CAGR of 22.6%.
North America is estimated to reach $194.20 billion by 2027, at a significant CAGR of 27.5%. Asia-Pacific and Europe collectively accounted for around 74.8% share in 2019, with the former constituting around 52.3% share. North America and Europe are expected to witness considerable CAGRs of 27.5% and 25.3%, respectively, during the forecast period. The cumulative share of these two segments was 40.1% in 2019 and is anticipated to reach 51.0% by 2027.
It now represents 3% of all car sales, but that could surge to 10% by 2025 “as the auto sector is transformed green over the coming years,”
The Main Player: Tesla’s Financials
TSLA was one of the most powerful leading growth stocks of 2020. It is the clear leader in the red hot electric vehicle space, showing triple-digit, quarter-over-quarter earnings growth of 140%, 300%, 105% for the quarters ended March, June, and September of ‘20.
In January 2021, They reported their sixth consecutive quarter of profit.
TSLA’s quarter-over-quarter revenues are far from stable, although they are certainly not lacking, with 39% growth reported in their most recent quarter.
TSLA is expected to earn $2.40/share once their final quarter is reported for fiscal ‘20, and the street is currently looking for them to earn $3.87/share in 2021, which would be 61% growth. But they missed the expectations by reporting 0.80 / Share for the Q4 2020 Jan’21.
The company also reported positive free cash flow for 2020 of $2.79 billion, more than double its 2019 figure of $1.08 billion.
Institutional sponsorship in TSLA has picked up every quarter, for the last 7 quarters. TSLA’s annual earnings growth has been accelerating at a furious pace since 2017.
TSLA broke out through $154.99 on April 27th and ran up to an all-time high of $718.72 on December 31st for a gain of 364% in 32 weeks.
For the full year 2020, Tesla posted a $721 million GAAP net income, $2.5 billion non-GAAP net income. GAAP net income for the fourth quarter stands at $270 million, while non-GAAP net income for Q4 2020 stands at $903 million.
Q1 2021 Earnings Reports
$TSLA beats on EPS and Revenue
Revenues up 74% YoY and they are selling cars…
It followed the typical pattern of earnings season, ER beat and the stock is down after hours which is simply an opportunity for retail traders to keep on adding to their portfolios.
Elon Musk on $TSLA:
“I think long term people will think of Tesla as much as an AI & Robotics company as we are a Car & Energy company”
Record Numbers by Tesla Q1 2021 = $594 million dollars profit.
Tesla Convertible Securities
The strength in the $325 billion Convertibles sector reflects a combination of factors, notably the surge in the shares of Tesla which has the largest weighting in the U.S. convertible market at around 9%. Tesla alone accounts for about half the 36.6% return on the ICE* BofA U.S. Convertibles index ( Intercontinental Exchange – Bank of America).
Then there is the Tesla factor. Its largest convertible issue, a 2% bond due in 2024, has risen more than sixfold to a price of $938—its face value is $100. Tesla stock is up sevenfold to $580.
Convertibles were one of the strongest asset classes in 2020, returning about 45%, led by big gains in Tesla (TSLA), the largest convertibles issuer.
Other participants – Main players
China’s Tesla – NIO $NIO
Shanghai’s ambitious EV car company is ready to take on Tesla. Elon Musk to acknowledges NIO as their competitor.
The Asia-Pacific EV market contributor was the highest revenue contributor, accounting for $84.84 billion in 2019, and is estimated to reach $357.81 billion by 2027, with a CAGR of 20.1%.
One of the main strengths of NIO is its Battery Swapping Strategy & the other being it offers a lifetime Free Power Swap service to its users.
The electric vehicle industry has long struggled to develop an effective solution for battery swapping to overcome the high costs of charging and replacing batteries. NIO introduced its next-generation approach to battery swapping with the NIO Power Grid technology in 2014. Power Grid offers a combination of multiple power charging solutions focused on enhancing the user experience. The core of this strategy is based on NIO’s chargeable, swappable, and upgradable smart power service system.
As of June 2020, NIO had built 135 Power Swap stations in 59 cities across China. At NIO’s Power Swap stations, every battery pack removed from a vehicle goes through a thorough electrical performance inspection. If no problems are detected, the battery is recharged and prepared for the next user. But if a fault is identified, the battery is taken out of circulation for repairs to ensure the safety of all batteries in the system.
NIO has been granted 1,200 patents for its battery pack, vehicle, power-swap stations, and cloud-based scheduling system. With this technical advantage, NIO has introduced the first end-to-end holistic ecosystem for electric vehicle production, sales, and service. They believe their unique approach to battery swapping will level the playing field for EVs and help overcome the critical user concern about range anxiety.
On the other hand, Tesla could not master this battery swapping technology yet and they are relying more on increasing the battery charging stations for now. But they are continuing their research on the battery swapping tech.
Churchill Capital Corp IV SPAC – Lucid Motors $CCIV ( one of the largest EV SPAC deal done)
China’s Xpeng $XPEV
General Motors $GM
Honorable mention to Workhorse Group $WKHS
What a Bore!
If we think Tesla is just a ‘boring’ EV car company, think again and read ‘between the lines!
Elon Musk has got a solution to avoid the daily ‘traffic’ problem that’s been plaguing the commuters and car users for decades now. Enter ‘The Boring Company’ with its solution of constructing tunnels and infrastructure named Loop & HyperLoop.
Elon Musk’s Social Impact
Tesla doesn’t need a PR and an Investor-Relations department. We just have to click the follow button to Elon Musk’s handle.
Elon Musk is a bigger brand than Tesla itself. Hence, we always notice all the financial media outlets pick up on his tweets for some segments of their news, some as fillers, some as a topic of their podcasts, live youtube sessions and et al.
His tweets can cause quite a ripple to the stocks or cryptos that he mentions. He tweeted about ETSY, Shopify, GameStop, and finally, I can truly say he is the father of DogeCoin. I would go on record saying that All over the world, people have come to know about DogeCoin through him and his tweets.
For More Information on Tesla and the ICE, Check Out Below:
The Intercontinental Exchange is an American Fortune 500 company formed in 2000 that operates global exchanges, clearinghouses and provides mortgage technology, data, and listing services. The company owns exchanges for financial and commodity markets and operates 12 regulated exchanges and marketplaces. This includes ICE futures exchanges in the United States, Canada, and Europe, the Life futures exchanges in Europe, the New York Stock Exchange, equity options exchanges, and OTC energy, credit, and equity markets.
*Tesla releases Q4 FY 2020 results: Record deliveries herald record profits http://disq.us/t/3uh8ymt