My fellow SA contributor Paulo Santos articlulated the change in the short thesis very well, I thought: "
Why I Won't Sell Tesla Short Going Forward" It's
no longer a bankruptcy thesis, it's an overvaluation thesis.
I actually don't think it's wildly unreasonable to believe that Tesla is overvalued. I think Benedict Evans (a partner at Andreessen Horowitz and a student of S-curves and disruptive technologies) makes a
strong argument that in the long run (think 10-20 years) the EV business — without autonomy — will probably become just as commoditized as the ICE vehicle business. Without autonomy, there are no network effects and no other obvious ways to avoid commoditization. I actually think that Tesla fans are often too cavalier in their dismissal of this argument, and I respect Bendict's systematic thinking.
On a shorter time horizon — let's say within the next 5 years — it seems to me like there's a good chance Tesla will kick ass. Supercharging, battery costs, and U.S. direct sales are all hard competitive advantages on Tesla's side. Maybe also electric drivetrain engineering.
But even if it takes 10 years or more, I think other automakers will eventually catch up on all those things. It seems like Tesla's lead in EVs can't be sustained forever and ever.
Apple has a network effect: the app ecosystem. That's the barrier to entry that makes smartphone OSes an iOS/Android duopoly. Without autonomy, EVs have no network effect and a barrier to entry as low as ICE vehicles.
If you fundamentally accept this, it becomes harder to articulate why Tesla should be in any way exceptional 15 years from now — leaving aside autonomy, and talking only about EVs.
Which is why I wrote this article yesterday: "
Tesla Is Now A Self-Funding AI Lab" Tesla can become a much larger company than any automaker ever has been by capturing a 10%+ global market share in autonomous ride-hailing. This is the only way I see Tesla getting to an Apple-like or Google-like valuation, as opposed to a Toyota-like or GM-like valuation.
