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TSLA "Almost a Mass Psychosis" -- Lutz

MARKM3

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Dec 5, 2018
152
136
Raleigh
'Almost a mass psychosis': Tesla's 250% stock rally makes no sense, Bob Lutz says | Markets Insider

"Bob Lutz has no idea why Tesla stock has rocketed more than 250% in six months.
Neither do Wall Street's brightest minds, the auto-industry veteran — who sat on the boards of Ford, Chrysler, and General Motors during his career — said on the BBC Business Daily podcast this week.
"I talked to people at Goldman Sachs, who are usually the world's greatest experts on explaining stock prices, and they're now asking me whether I have any idea what the heck is going on with Tesla stock," he said.

Nobody can explain it, it's so far beyond any fundamental return that any shareholder could ever expect."
Elon Musk's electric-car startup currently boasts a market capitalization of $145 billion — dwarfing Ford, Chrysler, and GM's combined market cap of $103 billion. Tesla stock is no longer tethered to anything tangible, Lutz argued.
"It's driven purely by psychology or almost a mass psychosis," he said, warning the rally won't last. "Ultimately, the share price responds to financial fundamental reality, and that day will come."
An overstated growth opportunity
Lutz downplayed the market opportunity for electric vehicles in the interview. The shift from conventional to electric cars is "somewhat of a fiction," he said, as global demand for them is largely fueled by government subsidies.
Electric vehicles are expensive and unprofitable to produce, Lutz added, and inconvenient to use due to their long charging times. As a result, he expects them to only account for 15% of the global auto market by 2030.


Despite his bearish view on Tesla's industry, Lutz praised the automaker's products. "There's nothing wrong with the car," he said. "It is one of the best-driving, best-performing, best-looking premium sedans in the world."
Fund managers, short-sellers, and even politicians sounded the alarm on Tesla last week after its shares soared by a third in two days. "Watch out Tesla believers," former presidential candidate Ralph Nader tweeted.
 

pz1975

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Aug 30, 2013
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Lutz has clearly never owned an EV. Most of his claims sound like the concerns ignorant people have when they are first asking me about owning an EV. I was reading through just thinking in my head wrong...wrong...wrong...
 
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Mo City

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Jul 17, 2016
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The stock price isn't based on present reality. Never has been.

It's based on perceived future growth prospects.

The market recently came to grips with the fact Tesla will not collapse due to (take your pick) lack of per unit cost control, questionable future demand, inability to ramp production, Elon being a flake, something nefarious about the Solar City acquisition, blah, blah, blah. All of the bear nonsense has been trashed.

At the same time, the market is slowly putting two important things together most of us here have accepted for years: (1) The transition to EVs is truly inevitable and (2) Tesla will not have legit competition for several years. A third pillar that Tesla is moving at breakneck speed to increase the gap (perhaps even blow it wide open) has not taken hold yet.

Tesla will not have legit comp until someone in Europe or the U.S. can (1) produce a vehicle with specs that are very close to the Model 3 or Y, (2) sell at a price that is also very close and (3) do so on a very large scale.

#3 is why Tesla has the EV field to itself for a long time. It's possible Tesla could have 6, 7 or 8 gigas operating before a single Euro or U.S. competitor has one!

Tldr version is the market no longer sees the bear outcomes as likely and it's more accepting of the various bull cases.

Remember, conventional wisdom is always late to disruptive parties.

Now that the worst downside scenarios are barely believed, there was nothing for the stock to do but go way up. The lines have moved.

Volatility will stay and the ride could still induce nausea, but the long term is up.
 

M3BlueGeorgia

Active Member
Dec 10, 2018
1,400
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Atlanta, GA
Lutz has clearly never owned an EV. Most of his claims sound like the concerns ignorant people have when they are first asking me about owning an EV. I was reading through just thinking in my head wrong...wrong...wrong...

Mass Psychosis is how to describe people who still ignore BEVs and pine for ICEs.
I follow the ICE-centric website jalopnik.com, mainly because they have some fun articles and for perspective, but some of the articles can be batshit crazy.

They had an article recommending a sports car to someone with early stage ALS and $45K to spend. (Doesn't seem real, but who knows)
To me the obvious choice would a new LR AWD Model 3 plus FSD, so he have both a better sports car now and a better vehicle later when he needs more driver assist (but can still drive). However, on this ICE-centric site, they came up with a series of impractical ICE sports cars.

I Need To Buy A Sports Car Now, Because I May Not Be Able To Later! What Should I Buy?
 
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MARKM3

Member
Dec 5, 2018
152
136
Raleigh
The stock price isn't based on present reality. Never has been.

It's based on perceived future growth prospects.

The market recently came to grips with the fact Tesla will not collapse due to (take your pick) lack of per unit cost control, questionable future demand, inability to ramp production, Elon being a flake, something nefarious about the Solar City acquisition, blah, blah, blah. All of the bear nonsense has been trashed.

At the same time, the market is slowly putting two important things together most of us here have accepted for years: (1) The transition to EVs is truly inevitable and (2) Tesla will not have legit competition for several years. A third pillar that Tesla is moving at breakneck speed to increase the gap (perhaps even blow it wide open) has not taken hold yet.

Tesla will not have legit comp until someone in Europe or the U.S. can (1) produce a vehicle with specs that are very close to the Model 3 or Y, (2) sell at a price that is also very close and (3) do so on a very large scale.

#3 is why Tesla has the EV field to itself for a long time. It's possible Tesla could have 6, 7 or 8 gigas operating before a single Euro or U.S. competitor has one!

Tldr version is the market no longer sees the bear outcomes as likely and it's more accepting of the various bull cases.

Remember, conventional wisdom is always late to disruptive parties.

Now that the worst downside scenarios are barely believed, there was nothing for the stock to do but go way up. The lines have moved.

Volatility will stay and the ride could still induce nausea, but the long term is up.

Great read. I think it is important to point out that legacy automakers are not really behind, as demand for EV's are not as massive as many make it out to be. Tesla made 400,000 EV's in 2019. Ford made 5.5 million vehicles. There is artificial demand due to government regulations. I don't think a company like Ford is late to the game with the Mach E - here is why.

Only now are they starting to see consumer demand shift to EV's, and primarily due to government regulation and push and Tesla finally being able to product a decently priced EV. Up until a few years ago, that wasn't possible.

America, for example, is not that big of a market for EV's. The reason being, is because they are still very expensive (about $10,000-$15,000 over a ICE).

Legacy car makers are not "pioneers" in the car industry, they are driven to be profitable and there are a TON of variable with that. Tesla, founded by Elon Musk, was not put on this earth or founded to be a highly profitable car company. He founded the company to help accelerate the world to sustainable EV transport.

A company like Ford can sit back, wait for Tesla to prove the market and then come in with a very competitive EV and MATCH the price of Tesla when it has taken them 10+ years to get to this point.

I don't think the market will react too kindly to Tesla now that the major automakers are serious about EV's and their future. Why are people buying Audi Etron, Reserving Mach E, etc etc and not buying a Tesla? Porsche Taycan? Why? Why buy those over Tesla?

Tesla Stock is just an anomaly that once the market catches up, will bite them in the ass. Not all consumers care about Supercharging and a little bit of technology. It's more about price and serviceability.
 
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Uncle Paul

Well-Known Member
Nov 1, 2013
6,299
7,598
Canyon Lake,CA
People are also beginning to factor in that many large cities are mandating transformation away from polluting vehicles in their city centers. Automobile exhausts are making their citizens sick and this is resulting in a tremendous burden on their medical infrastructure.

Tolerance for gassers is done. No longer will manufacturers allow poisonous vehicles to prowl their streets.

Gevernment rebates have also eliminated the price disparity between the old and new technology.

Saw a post the fully 1/3 of Germany workforce is in the gas vehicle production. If they don't adapt quickly to the new reality they will face economic devastation.
 
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adiggs

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Sep 25, 2012
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Portland, OR
Great read. I think it is important to point out that legacy automakers are not really behind, as demand for EV's are not as massive as many make it out to be. Tesla made 400,000 EV's in 2019. Ford made 5.5 million vehicles. There is artificial demand due to government regulations. I don't think a company like Ford is late to the game with the Mach E - here is why.

Only now are they starting to see consumer demand shift to EV's, and primarily due to government regulation and push and Tesla finally being able to product a decently priced EV. Up until a few years ago, that wasn't possible.

America, for example, is not that big of a market for EV's. The reason being, is because they are still very expensive (about $10,000-$15,000 over a ICE).

Legacy car makers are not "pioneers" in the car industry, they are driven to be profitable and there are a TON of variable with that. Tesla, founded by Elon Musk, was not put on this earth or founded to be a highly profitable car company. He founded the company to help accelerate the world to sustainable EV transport.

A company like Ford can sit back, wait for Tesla to prove the market and then come in with a very competitive EV and MATCH the price of Tesla when it has taken them 10+ years to get to this point.

I don't think the market will react too kindly to Tesla now that the major automakers are serious about EV's and their future. Why are people buying Audi Etron, Reserving Mach E, etc etc and not buying a Tesla? Porsche Taycan? Why? Why buy those over Tesla?

Tesla Stock is just an anomaly that once the market catches up, will bite them in the ass. Not all consumers care about Supercharging and a little bit of technology. It's more about price and serviceability.

That's one interpretation.

Have you at least test driven any of the Tesla models? If not, I strongly recommend doing so - you might have a new opinion about the demand shift to EV's being primarily due to government regulations afterwards.


One point of information that may help - Tesla no longer benefits from the US Federal tax credit. There doesn't seem to be all that big of an impact on US sales / demand, suggesting that maybe people in the US are buying Teslas for some other reason.
 

MARKM3

Member
Dec 5, 2018
152
136
Raleigh
That's one interpretation.

Have you at least test driven any of the Tesla models? If not, I strongly recommend doing so - you might have a new opinion about the demand shift to EV's being primarily due to government regulations afterwards.


One point of information that may help - Tesla no longer benefits from the US Federal tax credit. There doesn't seem to be all that big of an impact on US sales / demand, suggesting that maybe people in the US are buying Teslas for some other reason.

Because they reduced the vehicle price to compensate for that, just like ford will. Also, yes I own a Model 3. Horrible ownership experience outside of actually driving the Car. The car is amazing, but it ends there.

You do know, a Ford Mach E is going to put that same smile on peoples face that a Tesla does, right? It has the instant torque, low center of gravity, and mustang handling. It will wow everyone that drives it, and many who have driven it say so. It is no different than driving a Tesla.
 

adiggs

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Supporting Member
Sep 25, 2012
5,027
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Portland, OR
Because they reduced the vehicle price to compensate for that, just like ford will. Also, yes I own a Model 3. Horrible ownership experience outside of actually driving the Car. The car is amazing, but it ends there.

You do know, a Ford Mach E is going to put that same smile on peoples face that a Tesla does, right? It has the instant torque, low center of gravity, and mustang handling. It will wow everyone that drives it, and many who have driven it say so. It is no different than driving a Tesla.

I'm sorry to hear about your ownership experience. (Sidebar - my personal ownership experience has been great, but I also know there are many for whom it has not been great. It's the single biggest issue I'm tracking and watching in the context of my 10+ year investment horizon - I really don't see anything else on the horizon getting in the way of Tesla's ~50% annual unit growth)

And yes - I do expect that Mach E buyers are going to have a lot of the same "OMG instant torque / best thing I've ever driven" experience. I've also steered people to the Leaf, as well as talked to Leaf owners who've had the same experience. It's part of why I believe that EV's represent a fundamentally better technology than the one they're replacing.

My expectation for the Mach E is that Ford will sell as many of them as they want to, and that they can get batteries for. Unfortunately, it is also my expectation that:
a) Ford will effectively only sell it in California (and possibly the other states that follow California's credit scheme) for 10-20k units / year
b) Sell them in Europe to reduce their European carbon emission fine

In effect, Ford will produce and sell the Mach E as a compliance car, and won't be interested in selling the Mach E in whatever numbers demand for the car would support.

Also that the Mach E sales aren't in place of Tesla sales - they will replace other ICEV SUV / crossover sales (if nothing else, due to the fact that today, EV sales are replacing ICEV sales as EVs ramp from a few % of the global market to something more noticeable.
 

MARKM3

Member
Dec 5, 2018
152
136
Raleigh
I'm sorry to hear about your ownership experience. (Sidebar - my personal ownership experience has been great, but I also know there are many for whom it has not been great. It's the single biggest issue I'm tracking and watching in the context of my 10+ year investment horizon - I really don't see anything else on the horizon getting in the way of Tesla's ~50% annual unit growth)

And yes - I do expect that Mach E buyers are going to have a lot of the same "OMG instant torque / best thing I've ever driven" experience. I've also steered people to the Leaf, as well as talked to Leaf owners who've had the same experience. It's part of why I believe that EV's represent a fundamentally better technology than the one they're replacing.

My expectation for the Mach E is that Ford will sell as many of them as they want to, and that they can get batteries for. Unfortunately, it is also my expectation that:
a) Ford will effectively only sell it in California (and possibly the other states that follow California's credit scheme) for 10-20k units / year
b) Sell them in Europe to reduce their European carbon emission fine

In effect, Ford will produce and sell the Mach E as a compliance car, and won't be interested in selling the Mach E in whatever numbers demand for the car would support.

Also that the Mach E sales aren't in place of Tesla sales - they will replace other ICEV SUV / crossover sales (if nothing else, due to the fact that today, EV sales are replacing ICEV sales as EVs ramp from a few % of the global market to something more noticeable.

Yeah I can see ford doing that for the first few years, until at minimum they can meet battery production at mass. I read an article that said one ford dealership in california has over 100 reservations at just that one store. People are loving the vehicle.
 

MARKM3

Member
Dec 5, 2018
152
136
Raleigh
I'm sorry to hear about your ownership experience. (Sidebar - my personal ownership experience has been great, but I also know there are many for whom it has not been great. It's the single biggest issue I'm tracking and watching in the context of my 10+ year investment horizon - I really don't see anything else on the horizon getting in the way of Tesla's ~50% annual unit growth)

And yes - I do expect that Mach E buyers are going to have a lot of the same "OMG instant torque / best thing I've ever driven" experience. I've also steered people to the Leaf, as well as talked to Leaf owners who've had the same experience. It's part of why I believe that EV's represent a fundamentally better technology than the one they're replacing.

My expectation for the Mach E is that Ford will sell as many of them as they want to, and that they can get batteries for. Unfortunately, it is also my expectation that:
a) Ford will effectively only sell it in California (and possibly the other states that follow California's credit scheme) for 10-20k units / year
b) Sell them in Europe to reduce their European carbon emission fine

In effect, Ford will produce and sell the Mach E as a compliance car, and won't be interested in selling the Mach E in whatever numbers demand for the car would support.

Also that the Mach E sales aren't in place of Tesla sales - they will replace other ICEV SUV / crossover sales (if nothing else, due to the fact that today, EV sales are replacing ICEV sales as EVs ramp from a few % of the global market to something more noticeable.

And in no way am I trying to steer your confidence away from tesla and your investment, I'm sure it will be fine
 

M3BlueGeorgia

Active Member
Dec 10, 2018
1,400
1,283
Atlanta, GA
Because they reduced the vehicle price to compensate for that, just like ford will. Also, yes I own a Model 3. Horrible ownership experience outside of actually driving the Car. The car is amazing, but it ends there.

You do know, a Ford Mach E is going to put that same smile on peoples face that a Tesla does, right? It has the instant torque, low center of gravity, and mustang handling. It will wow everyone that drives it, and many who have driven it say so. It is no different than driving a Tesla.

Except the owners will have to interact with Ford dealerships, and having done that in the past, that's an incredible negative that Ford can't escape from.

While Tesla's Delivery Centers suffer from the volume of cars they have to process in the repeated quarter-end pushes, Tesla dealer-free business model is far, far, far superior to that used by the legacy manufacturers.
 
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MARKM3

Member
Dec 5, 2018
152
136
Raleigh
Except the owners will have to interact with Ford dealerships, and having done that in the past, that's an incredible negative that Ford can't escape from.

While Tesla's Delivery Centers suffer from the volume of cars they have to process in the repeated quarter-end pushes, Tesla dealer-free business model is far, far, far superior to that used by the legacy manufacturers.

No, I think you are forgetting all the positives about the Dealership model. Within 50 miles of you there should be several ford dealerships, all owned and operated by different people with different managers with different levels of customer service. I've NEVER had bad service at a car dealership. The buying process is a pain, but they all have adapted.

For example, right now on your local ford dealership they have all the prices listed on cars in inventory. You can immediately go to the dealership, pay that internet price for the vehicle, and in about 3-4 hours be on your way.

So what is the big deal about going to a dealership? How is tesla model superior? How is it superior that they don't want to take my trade in unless it is a tesla, that they're two hours away, that their service is backed up 2+ weeks, that they don't have parts for 4 months, that they can't fix my squeaks, rattles, or paint?
 

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