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The stock is not the company, and the company is not the technology, and the technology is not the charismatic CEO. The EV technology is likely here to stay reg

The stock is not the company, and the company is not the technology, and the technology is not the charismatic CEO. The EV technology is likely here to stay regardless of where that "chart" continues, or at least is much more dependent on the physical realities of the technology than it is on the hype. Amazon grew so big in part because of the dotcom bust which took to the grave uneconomic players from their competition horizon.

AnthonyMouse 7y ago
In this case basically all of those things are wrong. Up until now (and possibly still now), the fate of Tesla has been in their ability to raise capital to develop technology and build factories. They raise capital by selling shares or borrowing money using their ability to issue shares as collateral, so a high share price is a prerequisite to their ability to raise enough capital and therefore exist as a company. Meanwhile the charismatic CEO has been a major contributor to increasing the share price. Without the charismatic CEO they don't have a high share price, without a high share price they don't have capital, without capital they don't exist. At some point they'll be past that dynamic, but they weren't always, and maybe they're still not. And it's an open question whether the existing auto industry would pick up the ball on electric vehicles if Tesla ceased to exist. It's not hard to argue that they're only doing it now because Tesla is forcing them to -- they could have started 30 years ago and they didn't -- and they don't seem particularly enthusiastic about it even now. They also have a lot of incentives to avoid it, because it requires investing a lot of money in new R&D and retooling factories, and then giving up very lucrative service charges since electric drivetrains are much simpler and require less maintenance. And if Tesla imploded it would be easy for anyone inclined to succumb to those incentives to point to it as an indication that electric cars weren't a good market to be in, as a justification for not entering it. So right now the world kind of needs Tesla to succeed, at least until they've forced most of the incumbents to release competitive electric vehicles, which they haven't actually done yet.
- H8crilA 7y ago
  Why do you think then that EVs have a "profitability cliff" after which it will just magically work, bubble capital access or no bubble capital access? To me it sounds like you're presenting a case for why EVs are not the solution. To rephrase the question: what will change in the structure of reality that will make EVs a great business? To guide the answer: me currently being able to type it comes from decades of silicon semiconductor manufacturing improvements (none of which were bubble-funded; silicon is often not a massively profitable business but profitable; though those were govt bootstrapped).
  - AnthonyMouse 7y ago
    > Why do you think then that EVs have a "profitability cliff" after which it will just magically work, bubble capital access or no bubble capital access? When Tesla started out, there was no model for this. Nobody had ever made an electric car that was reasonably competitive with gasoline powered cars. Nothing before Tesla was that fast with that much range. They might have spent billions of dollars trying to develop it and failed. It's hard to raise that much money when there is that amount of risk. But once you're actually doing it, the risk is proved out and there is a known viable model for success and all that's left is to mass produce the design. So now they've essentially done that for sedans and we're waiting on trucks. > To rephrase the question: what will change in the structure of reality that will make EVs a great business? Have a look at oil prices right now. They're a lot lower than they were end of last year. That's what a reduction in demand does. The reduction in demand came from the coronavirus, but you get a similar effect from replacing a relatively small percentage of vehicles with electric ones, because they use 0% as much oil as ICE vehicles. In theory low oil prices are bad for electric cars, but they're also bad for oil producers, who are then making dramatically less money. And the amount of money they're making is the primary lobbying force against having a carbon tax. The other impediment is the pinch the consumer would feel at the pump, which low oil prices also address, as does a larger number of consumers driving electric cars. Take all those things together and it becomes a lot easier to get a carbon tax. So you build enough electric cars to make the oil industry bleed enough that they're no longer strong enough to resist the need of everyone else in the world to kill them, they are then killed, and ~100% of new cars become electric. Which makes electric cars a good business to be in. But first you have to get over the hump.

AnthonyMouse 7y ago

In this case basically all of those things are wrong. Up until now (and possibly still now), the fate of Tesla has been in their ability to raise capital to develop technology and build factories. They raise capital by selling shares or borrowing money using their ability to issue shares as collateral, so a high share price is a prerequisite to their ability to raise enough capital and therefore exist as a company. Meanwhile the charismatic CEO has been a major contributor to increasing the share price. Without the charismatic CEO they don't have a high share price, without a high share price they don't have capital, without capital they don't exist. At some point they'll be past that dynamic, but they weren't always, and maybe they're still not. And it's an open question whether the existing auto industry would pick up the ball on electric vehicles if Tesla ceased to exist. It's not hard to argue that they're only doing it now because Tesla is forcing them to -- they could have started 30 years ago and they didn't -- and they don't seem particularly enthusiastic about it even now. They also have a lot of incentives to avoid it, because it requires investing a lot of money in new R&D and retooling factories, and then giving up very lucrative service charges since electric drivetrains are much simpler and require less maintenance. And if Tesla imploded it would be easy for anyone inclined to succumb to those incentives to point to it as an indication that electric cars weren't a good market to be in, as a justification for not entering it. So right now the world kind of needs Tesla to succeed, at least until they've forced most of the incumbents to release competitive electric vehicles, which they haven't actually done yet.

H8crilA 7y ago
Why do you think then that EVs have a "profitability cliff" after which it will just magically work, bubble capital access or no bubble capital access? To me it sounds like you're presenting a case for why EVs are not the solution. To rephrase the question: what will change in the structure of reality that will make EVs a great business? To guide the answer: me currently being able to type it comes from decades of silicon semiconductor manufacturing improvements (none of which were bubble-funded; silicon is often not a massively profitable business but profitable; though those were govt bootstrapped).
- AnthonyMouse 7y ago
  > Why do you think then that EVs have a "profitability cliff" after which it will just magically work, bubble capital access or no bubble capital access? When Tesla started out, there was no model for this. Nobody had ever made an electric car that was reasonably competitive with gasoline powered cars. Nothing before Tesla was that fast with that much range. They might have spent billions of dollars trying to develop it and failed. It's hard to raise that much money when there is that amount of risk. But once you're actually doing it, the risk is proved out and there is a known viable model for success and all that's left is to mass produce the design. So now they've essentially done that for sedans and we're waiting on trucks. > To rephrase the question: what will change in the structure of reality that will make EVs a great business? Have a look at oil prices right now. They're a lot lower than they were end of last year. That's what a reduction in demand does. The reduction in demand came from the coronavirus, but you get a similar effect from replacing a relatively small percentage of vehicles with electric ones, because they use 0% as much oil as ICE vehicles. In theory low oil prices are bad for electric cars, but they're also bad for oil producers, who are then making dramatically less money. And the amount of money they're making is the primary lobbying force against having a carbon tax. The other impediment is the pinch the consumer would feel at the pump, which low oil prices also address, as does a larger number of consumers driving electric cars. Take all those things together and it becomes a lot easier to get a carbon tax. So you build enough electric cars to make the oil industry bleed enough that they're no longer strong enough to resist the need of everyone else in the world to kill them, they are then killed, and ~100% of new cars become electric. Which makes electric cars a good business to be in. But first you have to get over the hump.