Firstly, this is
not an investment theses, nor is it my goal. It's just a lazy thought, one possible future of them all. Some of the reasoning Tesla could hit 10T in 20-30 years:
- What we know of Tesla today may be tiny subset of what Tesla is in 15-20 years. Tesla's vision and goalposts are pushed forward constantly, and Tesla the company has proven adept at keeping at existing opportunities, while pivoting and developing skills towards new ones (eg. becoming leader in autonomous driving). This is driven by Musk's ambition, and also by his capability to rally company and great talent behind himself. Honestly, this aspect of the company is worrying me to some extent, as I feel Elon is constantly on the edge of burning out workforce, one slip away from minor or perhaps major disaster. Yet, this is also a reason that Tesla's limits are undiscovered, and more importantly they're
undiscoverable from this vantage point. Here is one example: we knew about Master Plan. But Master Plan didn't say anything about eliminating dealer from equation, developing autopilot, incoming autonomy and possible shared mobility. These are all opportunities that opened up along the way, as original goals of Master plan were being pursued.
- Tesla started as a car manufacturer, and it now affects many industries with massive revenues/capitalization: car manufacturing, dealerships including service centers(I believe 600B market cap industry in NA alone!), parts supplies, vehicle supply chain (increased vertical integration and bringing higher value work back home), it owns internal software for supply chain mgmt, there is autonomy (drivers are 7% of workforce in NA!!!) and potential shared mobility, gas stations, gas drilling/exploration, electrical energy supply, peaker plants replacement, grid balancing, bringing electricity to countries without grid, electricity storage for all sorts of purposes we haven't though about yet, cargo transportation (semis)... I don't know where Tesla will end up, and they can't pursue _everything_, but opportunities in front of them are MASSIVE. There is no other company that has natural entry into so many different industries. And for every $ disrupted industry loses, disruptor is likely to pocket at least some dimes.
- And final two elements to big numbers, natural inflation and "winner takes all" evolution of the markets. What do I think with later? It's my sense market capitalization have been growing faster than rate of inflation, perhaps much, much faster). It used to be oil companies at the top, and they have natural limits to growth. Today's kings are tech companies, you know, software that eats world, yadda, yadda. In any case, this is unprecedented period of time, where small number of individuals can create something through software, and Tesla is doing that, with extension into the real physical world of production. But I do see them as kings of tech first, and everything else secondary. So I believe that companies that do well will get bigger not only absolutely, but also relative to the median participant in S&P500, with this effect stronger the further we look in the future. And serendipitously, Elon's ambition and Tesla's open opportunities could make Tesla absolutely the largest of these new giants.
Or maybe not, as I'm not sure if future as I describe it will be interesting to Elon... First part for sure will be interesting, but money is in the later part (transition from 1T -> 10T), and that could be just a "boring execution" for Elon, so he may not care about it. and succession is always tricky...
It's late and these are poorly organized thoughts - perhaps I'll come back to clarify and rewrite. Hopefully it makes some sense in this form.
Again, I see this as a potential future, far from even remotely probable, and yet, if you look where Tesla was in 2010, I think most people would be blown away with where it is now.
So yes, I see Tesla under-performing short term, and OVER-performing long term. And that comes to expectations management (I am so tempted to say Elon sucks at it, but I don't want to ruin preceding feel good content