Ah, yes, the moderate middle man who knows better than anyone — that’s what my title implies, right? Not exactly. If the stock is going to go up significantly in the timeframe someone is going to invest in it, then the “bull” is clearly right in net. If the stock is going to go down significantly in the timeframe in question — and that could just be a timeframe people are discussing — then the “bears” win. My point is not to claim that one side is going to win over the other in any given timeframe or that both are wrong (that wouldn’t make any sense — unless we’re talking about the stock price staying the ).
In fact, this is not even inherently about the stock price! It’s just that the bull vs. bear debate tends to matter more to stock traders and investors or at least get framed in those terms. It’s more about the growth and success of the company. So, let’s get to these things.
Tesla Pros Bears Don’t Accept
Many Tesla bears or Tesla critics have only negative things to say about Tesla. You don’t grow at the rate Tesla has grown and come to dominate the hottest trend in the global auto market by being shi**y at everything. And on a much deeper corporate level, you don’t grow at the rate Tesla has grown and come to dominate the hottest trend in the global auto market while making huge profits by being shi**y at everything. In fact, you’ve got to be really good at some things. It’s not just marketing or straight-line acceleration with Tesla. It’s not Kool-Aid and crack hype. Tesla does several things ridiculously well. The Tesla pros that I think critics often ignore include:
Useful, efficient, cost-saving vertical integration. Tesla, almost always out of necessity, has engaged in a great deal of vertical integration. This, in part, has led to Tesla having jaw-dropping gross margins and a huge competitive advantage over the competition financially. It has also allowed Tesla to innovate much more quickly, adapt to various market issues (like shortages of automotive computer chips).
Direct sales is a massive relief to normal humans. Some people like to haggle. They’re weird. Most people do not want to haggle over pricing or extra policies or paperwork or whatever at a car dealership where they know they are not going to win. They also don’t want to walk out of a dealership with a car payment that’s a couple of hundred dollars a month more than they planned. We want a clear price. We want to consider the cost in peace and quiet. And we want to make the purchase on our terms. As long as Tesla’s the only game in town for that, Tesla’s got my money — and this is how many people feel. We don’t want to be roped around or even the threat of being roped around, and we don’t want the final price changing on us after we’ve made our decision and started signing papers.
In-house Tesla software. Tesla software is not perfect. In fact, I’ve got a lot of gripes with it and am surprised Tesla, a Silicon Valley company (by birth at least), doesn’t do a better job on this front. However, in-housing software, being able to add any new features you want when you want to add them, being able to adapt, and being able to smoothly integrate all the tech and software of the car (and even beyond the car) is something special that makes Teslas operate better and feel more finely tuned. Again, it’s also a place where Tesla can rather easily cut costs as it needs to — compared to relying on outside software companies.
The Supercharger network … would have been one of my points a few weeks ago. But now Ford and GM are joining arms with Tesla and their EV drivers will have Supercharger access. I cannot overstate the importance of this for them, and I do think it poses a threat to Tesla’s car sales — it removes a clear and obvious mote and a major factor that has led many a person to buy a Tesla instead of another EV. That said, it’s also still a massive corporate advantage since Tesla sets the prices, Tesla will have a bigger and bigger customer base, and if the competing charging networks continue to lag behind Tesla’s, the company could end up with a near monopoly on EV fast charging.
Of course, there are also some little things that are black and white that some Tesla bears won’t acknowledge, like the fact that Tesla has superb, industry-leading gross margins; the fact that the Tesla Model Y is the best selling vehicle model in the world right now because it’s genuinely an awesome product for the money; the fact that Tesla attracts top engineers and has superb engineering; and the fact that Tesla has some genuine innovation going on when it comes to manufacturing.
Tesla Cons Bulls Don’t Accept
Many Tesla bulls don’t accept a few things as well. Of course, that doesn’t mean all bulls don’t know or accept these things. But it’s clear that many don’t.
Tesla reliability and maintenance could be real concerns. The idea that Tesla cars will be much cheaper to maintain in the long term may or may not be true. We need more time to see how things go. There’s plenty of tech in Tesla cars that isn’t super cheap if it breaks. (How long will those touchscreens last? How much will it cost if some wires get old out of warranty?) Also, Tesla is constantly changing things, and that makes it hard to have broad, competitive repair options and low costs for those repairs. Furthermore, there are a lot of challenges developing 3rd-party Tesla repair options and lack of alternatives allows Tesla to limit innovation and keep costs high. It’s a genuine problem. Tesla has been “winging it” for a long time, and that could come back to bite 7-year-old, 8-year-old, 9-year-old (etc.) Tesla owners on the buttocks. If long-term repair costs are higher than we’ve typically expected, that could leave a stain on the company, push down resale values, and have a variety of negative ramifications for the company. (Even more so if you consider that Tesla owns and resells a lot of used Teslas.)
Tesla service scheduling is a sh**show. I just wrote about this, so I won’t elaborate on it.
Tesla AI may be a money furnace that never pays off. As long as the AI dream is hot, Tesla’s focus on AI gets the company praise and massive hype. The claim, which most bulls strongly assume is true, is that Tesla’s one of the top AI leaders in the world. However, “Full Self Driving” is a disaster, imho, and is nowhere close to Level 4 or 5 capability. The hype around robotaxis has been absurd if you look backward — and I’m shocked there’s not a huge class action lawsuit on the topic — and that may eventually catch up to Tesla and haunt it. Some of the focus has shifted to the idea of a Tesla bot that will be able to do amazing things and make the company a stadium full of cash. However, there again seems to be more hype around this idea than is merited, with experts in the field noting various flaws and limitations. If it turns out that this is really just another expensive side project that doesn’t live up to our dreams, and the Tesla bot ends up being an expensive toy for a small number of buyers, will Tesla’s status and valuation as an AI leader dissolve? What would it mean if most of the world started to see Tesla as an AI failure rather than an AI leader? One has to at least consider this possibility and acknowledge it.
Is demand for 2–4 Tesla models unlimited? Okay, that’s an absurd way to put it, but the point is that Tesla bulls generally assume that if Tesla builds 10 more gigafactories in the next decade, there will definitely be buyers for the relevant number of Model 3, Model Y, Model C (a placeholder for the $25,000+ model), and Cybertruck vehicles. In the near term, there’s the assumption that demand will grow with production capacity if Tesla builds two more gigafactories in the next couple of years. However, there’s a genuine risk of market saturation for the Model 3 and Model Y. There’s also a genuine risk that if a Model C got to market, it would cannibalize a significant number of sales of those models. There’s also the risk that Tesla struggles to produce and sell a $25,000 model. Today, the Model Y is the top selling vehicle in the world. At its price point, that’s astounding, but there’s no guarantee that its current sales level will continue or, more relevant for what I think many bulls assume, will significantly rise if Tesla gets more factories online. How much higher can it really go? Are there markets where people are starting to think “another Tesla?” and look elsewhere for their next EV? Also, as I mentioned above, as great as opening up the Supercharger network is, there’s no doubt about it that doing so weakens Tesla’s competitive advantage on the vehicle front and makes it much easier for person to buy a Ford or GM EV. Ford and GM could sell a lot more EVs now! And that could be to the detriment of Tesla. And which automakers will join the Supercharging fun next?
I’m sure I forgot some things. And I’m sure some of you can make these arguments better than I did — on either side. The overall point in my mind is that there is much more we don’t know than we know, we sometimes forget or don’t admit how much we don’t know, and we are in very uncharted territory with Tesla. Everyone is free to have their guess on how things turn out! But pretending we know with certainty that Tesla will continue to succeed to an enormous degree or start to fail and falter a bit more — well, I don’t think we should do that.
There’s a lot that we know, but there’s much more that we don’t know.
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