Don’t Give Up on Tesla, Musk and Electric Vehicles

David Fessler By David Fessler
Energy and Infrastructure Strategist

Alternative Energy

Plenty of my friends were skeptical when I told them my wife and I were getting a Tesla (Nasdaq: TSLA) Model X. But we found that the easiest way to convert them to believers – and potential EV buyers – was to put them in the driver’s seat.

The first time someone puts their foot to the floor of a Model X – or any other EV for that matter – their driving world is completely disrupted. The quiet whine of an electric motor (or motors if your EV is all-wheel drive) propels you forward at an insane rate.

It’s something most drivers have yet to experience. But thousands more do every day.

As an investor, I can’t think of a more disruptive company than Tesla. It sells its cars directly to buyers, doing away with dealerships.

Tesla’s also disrupting the energy business. Its Powerwall energy storage system is a big hit with homeowners, especially those installing solar panels.

The Powerwall stores excess energy produced while the sun is shining. Then, in the evening, the Powerwall uses that excess energy to run the household.

Tesla makes much larger energy storage systems too. These are geared toward large industrial customers and electric utilities.

The World’s Hottest-Selling EV

I like Tesla’s products, but I’m also interested in whether Tesla is a good investment.

The media regularly swarms Musk and the company for missing production targets of its newest EV, the Model 3.

But Model 3 production actually doubled in the third quarter. Tesla handed keys to 83,500 new EV owners.

And now Model 3s are rolling out of Tesla’s Fremont, California, factory at the rate of 4,416 per week.

The company hopes to eventually produce as many as 10,000 Model 3s per week. But even with its limited production so far, it is the best-selling EV on the planet.

(If you’re interested, you can track estimated weekly production using Bloomberg’s “Tesla Model 3 Tracker” here.)

One analyst who has been admittedly dining on crow is Morgan Stanley’s Adam Jonas. Prior to driving a Model 3, Jonas was a skeptic.

After his test drive, he said, “Frankly, our enjoyment of the high-spec version of the Model 3 took us by surprise. It’s hard to say how much this matters. But it matters.”

Here’s some more good news for Model 3 skeptics…

The Model 3 scored a perfect five-star safety rating after being tested by the National Highway Traffic Safety Administration.

In fact, all three of Tesla’s current models – the Model S, Model X, and Model 3 – are some of the safest vehicles on the road today.

(If you’d like to watch the Model 3 crash test videos, you can do so here.)

What About Musk?

Yes, Tesla makes some eye-popping, reliable EVs. But is the CEO playing with a full deck?

Elon Musk definitely marches to a different drum. But anyone who can juggle Tesla, SpaceX and The Boring Company at the same time is bound to be a little different from the rest of us.

Musk’s little tête-à-tête with the Securities and Exchange Commission (SEC) cost him and Tesla a cool $20 million… each. My guess is he learned a valuable lesson.

He’s certainly not going anywhere. After all, he owns 20% of the company.

Ever since his run-in with the SEC, Musk has busied himself with his CEO duties. And Model 3s are rolling off Tesla assembly lines.

By the end of this year, the company could actually be profitable. I expect to see a big jump in Tesla’s share price.

Even if you decide not to bite on Tesla shares, go test-drive an EV. It will disrupt your driving experience.

Good investing,

Dave