Stock topics pop up on here from time to time and they usually don’t hold much interest. This one probably won’t fair much better but I think Tesla does deserve some discussion. I can see this company not only eclipsing the success of companies like Apple and Microsoft but also leading the country into a new wave of prosperity. That’s not a prediction on my part, I’m just saying I can see how that could happen.
I became aware of Tesla a few months ago when the shares were trading between 25 and 30 dollars. I liked the story but didn’t buy because “story” stocks just never seem to work out. I bought a company called Plug Power many years ago because it had a nice story and now the 2000 dollars I bought shares with is worth less than the 8 dollar commission it would take to sale the shares. I’ve learned to tread cautiously with “story” stocks.
While I liked the possibilities a couple months ago I didn’t fully grasp the potential the way I think I do now. They are manufacturing a very expensive car that only rich people can afford so I saw them as only being a niche player never competing in the mass market with the major auto makers. Nissan and Toyota seem to have some pretty nice fuel efficient options for the middle class. Now I see Tesla in a much different light. They have a plan to roll out charging stations across the country and the technology to adequately charge a vehicle in under a half hour.
You may think a half hour is way too long when someone can stop in a gas station to fill up in under five minutes. I know I did. I heard this and I thought “why don’t the make it a battery swap that would only take a few minutes?” The practical answer to that might be the logistics of making a battery swap, I don’t know. It doesn’t matter though because a 20-30 minute charge is a much better idea regardless of the reason for it.
Imagine if they make the charging stations into a pleasurable experience? When we stop to fill our cars we have to put up with the stink of gas & exhaust fumes and the greasy pump handles from all crack heads ahead of us. If we need to go to the bathroom or grab a snack we have to go into one those sleaze ball minimarts. The Tesla charging stations could be modeled after Starbucks, or a partnership with Starbucks, where the customers would have a luxurious waiting area to enjoy tea, coffee or other beverages while using free wifi. There would be pastries and other quality snacks not three day old hotdogs spinning in a carrousel. Their might even be a play structure for children.
Tesla has an aggressive plan to build out these charging stations across the country in just three years. Check out the map here; http://www.teslamotors.com/supercharger This build out plan will effectively be grabbing the market share for such a service before the other auto makers or the service stations have moved a finger in that direction. Tesla will own that market and all the electric vehicles of evry auto maker will be using them.
The owners of Tesla vehicles today own them because they are cool and trendy. It’s basically hip to own a Tesla, not practical. Soon Tesla will be coming out with a middle class vehicle. Potential car buyers who would be in the market for a Camry will look at the Camry at $30,000 vs the Tesla Model X at $40.000. They will mentally deduct the $7,500 in tax and account for the energy savings month after month. They will conclude that owning a Tesla is not only cool and hip but practical too. They will also feel like the cat’s meow when they pull into those charging stations to have a latte, catch up on email and call a friend to say, oh I’m just enjoying a latte while my Tesla is charging.
I firmly believe that the best way to make money in the market is to place your assets in the path of social change. The trick is identifying what the change is and which companies will successfully capitalize on it. I think the trail Tesla is blazing is much easier to see than the trail Apple blazed over the last ten years and as easy, if not easier to see, than the trail Microsoft blazed before that. I know I could easily lose the $8,700 I put into buying the stock but I think the upside potential of a million or more over the next 20 years is worth it.