UPDATED 2 FEB 12020

Tesla: the ’20s

As you may know, I am currently bullish on $TSLA. My projection for stock price is (USD) $600 in '20, $3000 by '25 and $12,000 by '30. This is basically 33%/47%/39% annual growth. This is also projecting for a market cap of about $2 Trillion a decade from now, which sounds fairly radical because the largest US-based corporation has a market cap of around $1 Trillion today.

Update: As of February 2, 2020, the company has blown past all the predictions in this article, now trading at over $770 - and my portfolio is up over 210% on average. I still maintain my $12,000 target for '30, but I now think it's also likely we will see a price of $5000 by '25.

In this post, I will explain my bull case and why, in fact, Tesla is my ONLY investment in the public markets (the majority of my net worth lies in private equity): Because I am following a very low-risk approach with my personal finances, to counterbalance the extremely high-risk nature of my work, and provide a stable substrate upon which to take big risks.

CR: TESLA CHINA

Therefore, it must follow that I am convinced Tesla is almost guaranteed to succeed in both the short and long term. Here's why:


“Competition” – or the lack thereof

To say that Tesla has competitors, as of today, is honestly laughable. The truth is the harbingers of the “Tesla killer” were all Wall St. shorts and auto industry incumbents who had no idea what they were up against, and no idea about electric cars or even the (relatively) simple software industry.

Despite nearly 2 years of volatile sideways sliding for $TSLA, not a single competitor has produced anything of the slightest competence. The best the entire auto industry could do is the Porsche Taycan, which is barely comparable to the Model S from eight years ago, at a price so ridiculously expensive the only Tesla you can buy for a bigger price has more than double the range and beats it out in effectively every other metric as well.

But nobody has a Taycan yet, anyways. If we look at the third party EVs people are actually buying in noticeable quantities, they are all at least 10 years behind by performance, for the same base price as the Model 3:

Brand Vehicle Nominal range Acceleration Price
Tesla Roadster '20 1000 km 1.9 s $250,000
Tesla Cybertruck '20 800 km 2.9 s $70,000
Tesla Model S '19 610 km 2.4 s $100,000
Tesla Model 3 '19 560 km 3.2 s $57,000
Tesla Model X '19 528 km 2.7 s $105,000
Tesla Model Y '20 482 km 3.5 s $61,000
Porsche Taycan '20 450 km 2.6 s $185,000
Tesla Model S '12 426 km 4.2 s $80,000
Chevrolet Bolt EV 383 km 6.5 s $38,000
Nissan LEAF 252 km $30,000
Volkswagen e-Golf 300 km 10.4 s $29,000
BMW i3 '19 246 km 8.0 s $43,000

Why is the competition so incompetent?

Mind the harsh language, but incompetent is actually the perfect word for what's going on here – in-competent, as in, incapable of competing.

They seem to be at least 5 years behind in all applicable areas. This is such a drastic lead for Tesla, I can barely understand it, but here's my guess as to where the barriers lay:


Cashflow & why Tesla is a good company today

Despite years of losses (capital expenditures to scale manufacturing and set up economies of scale, has nobody on Wall St. ever scaled a new product before?) I believe Tesla is now fundamentally stable as an auto manufacturer without exterior investment. We've gotten to a point where the company is able to make profits relatively consistently QoQ, both production and deliveries are scaling exponentially (albeit not lightning fast), and here are the important parts:

Tesla has the luxury appeal and cult-like following of the iPhone; and the perfomance, cost, features, and scale of Android. It is really the best of both worlds, and it does not have any actual competitors.

Watch the Q4 results come in January.

I'm betting it's going to be a bad day for the shorts.


Innovation – the future of Tesla

Let's not forget that the world is not static. Investment decisions are forward looking, and so we must not only examine the competitive advantages of Tesla today in its cars, but also look at the broader future of the company.

As CEO Elon Musk wrote nearly four years ago, Tesla is now into its second phase of development after already completing all tasks on the original master plan. (Basically, three electric vehicles in descending order of price and ascending order of volume) This means not only continued scaling of the consumer auto products, but also the introduction of several new product lines, a bigger energy component, and innovative new processes for more efficient and performant manufacturing.

For example the new Model Y wiring as patented earlier this year, pictured below, reportedly will reduce related costs and materials by over 90% for the new SUV, which may end up being an even bigger market than the Model 3. (SUVs are, after all, more popular than sedans in North America)

CR: TESLA, US PATENTS

Here's a summary of the second phase master plan:

  1. Solar roof tiles w/ integrated battery storage
  2. Release EVs in all major form factors
  3. Autonomous driving by fleet-wide data collection + machine learning
  4. Passive income from cars w/ shared robot taxi service

Here's what I think this actually means:

Near term, Tesla will release more automotive products in both the consumer and business markets. This includers new cars and trucks like the Model Y and Cybertruck, but the really interesting one is the Semi, because this is not a luxury consumer product, it is an asset that will actually save money for almost any business that uses long range road logistics in the developed world. Semi truck is a sleeper product for sure.

We will probably also see much more focus on the home energy solutions, like powerwall and the solar roof tiles, but as you may know from my other writings, I am not a fan of solar energy, and I'm a bit skeptical of this component: however, I do recognize there is a demand for the products, regardless of their merit, and Tesla is well positioned to make a good profit machine here.

At least it's not coal.

Closing up the short term, we will probably see various developments basically extending the same functionality of Tesla consumer products to enterprise use cases like mass power generation and storage solutions, and continued investment into economies of scale for Li-on battery production; as well as the aforementioned release of full self-driving and likely a ridesharing-killer robot taxi fleet. Not sure how Uber, Lyft & co will deal with this threat.

Long term, and I'm not sure how much of this will happen in the '20s, I believe Tesla plans to expand into aerospace with electric aircraft for both logistics and consumer air travel. There is a YC-backed startup, Heart Aerospace, already trying this, but I think Tesla will outcompete with its sheer size advantage. Aero is a lot harder than auto and I doubt a new upstart will be able to take Musk Co head on in the next decade or so. Maybe an acquisition in the middle of the decade?


In Summary: Bull case for TSLA

Tesla has:

It is the only company I am comfortable investing in on the public market, because it has the best attributes of private startups and public megacorps all in one, and is radically undervalued at its price as of this writing.

I know this post has been very biased, after all, my investment in this company literally pays my living expenses. History shall tell whether I am radically wrong about my claims herein (Update: I've been right about 1/3 so far since writing this article), but I believe strongly that Tesla is damn near guaranteed to succeed over the next several years, and barring some large organized crime or government fraud against the company, I don't see any obstacles.


@jwmza · December 28, 12019


DISCLAIMER: THIS ARTICLE AND THE JWMZA.COM SITE IS NOT AFFILIATED WITH TESLA, INC. THIS WEBPAGE AND THE CONTENTS THEREOF ARE THE PERSONAL OPINION AND VIEWS OF JL MORRISON; AND PUBLISHED FOR EDUCATIONAL AND ENTERTAINMENT PURPOSES. INFORMATION MAY BE INACCURATE OR MISLEADING. JL MORRISON WILL NOT AND CANNOT BE HELD LIABLE FOR ANY RESULTING DAMAGES FROM YOUR DECISIONS BASED ON THIS INFORMATION. JL MORRISON IS AN AMATEUR PERSONAL INVESTOR, NOT AN INVESTMENT OR FINANCIAL ADVISOR. CONSULT A PROFESSIONAL AND CONDUCT YOUR OWN DUE DILIGENCE BEFORE MAKING ANY INVESTMENTS IN SECURITIES.