As of this writing, Tesla, the brainchild of Elon Musk, has a current market value of $59 billion. That’s $15 billion more than Ford and $7 billion more than GM, companies that actually make lots of cars at a profit. That valuation is nothing more than a complete hallucination. Tesla lost $397 million in the first quarter of 2017, so what could Wall Street possibly see in this company to justify this valuation, that has seen a 67% increase just this year?
In the near future, Tesla will unveil its Model 3, even though they don’t even have a beta prototype yet. Musk has recently indicated that they will simply skip this rather important step in the process and go straight to production. This will put thousands of improperly tested vehicles on the street with very dangerous possibilities. There’s a reason that the big three put at least 6 months of testing in on every car they release. They’ve all suffered the consequences of devastating lawsuits. Musk seems to think he’s above all that.
And why not? The media fawns all over him like salivating dogs whenever he opens his mouth, no matter how insane his ramblings might be. A hypertunnel in one of the most earthquake prone zones in the world? What could possibly go wrong where the slightest seismic shift would create a 200 mph pile of twisted steel underneath the ground and ruin a multi-billion dollar investment? He’s the poster child for technical self-delusion, a childish thought process where technology solves any and all problems.
His cars have certainly grabbed the attention of the automotive world, but so far, his success has been primarily a myth, and not based in anyone’s realistic version of what might be considered a successful business.
Even though auto writers describe the experience of driving a Model S as incredibly thrilling, they’re almost unanimous in their shock at the incredibly poor quality of the automobiles, basically putting them on par with Soviet era Ladas. That’s not a recipe for success, particularly when their automotive concept is so simple that it can be vastly improved upon with little effort.
Tesla sells cars directly and provides almost no support to the buyer once they drive away in the car, because they don’t have a network in place to support the product, but isn’t that the new method of doing business? Sell it online and you’re done.
Recently, I read an article that indicated current Tesla owners were feeling anxious about the new 3 because it will create too much competition at the charging stations, and there are far too few of those around the country to support any type of mass expansion at the trough. There is a bit of irony there in which those buyers, who wrap themselves in their green-washed blankets of self-congratulations for buying an electric car in order to save the world, are now seething at the thought of having to share their electric resources with the unwashed. That does make me chuckle a bit.
With their resources and knowledge of the entire process of manufacturing, selling, and supporting their products, the major manufacturers will win this battle rather easily, and Teslas will quickly become novelty collectibles.
One positive effect of all this will be a drastic kick in the pants for the major automobile manufacturers around the world. He’s shown them where to go, and now it’s time to sit back and watch the destruction of Tesla.