My suggestion isn’t really aligned with your initial hypothesis, about the potential for LW to be more efficient than the efficient market because of comparative advantages at spotting niche things. I don’t know much about cars, about car manufacturers, or about investment. So I’m not using some expert niche knowledge that I would realistically expect to be more efficient than the market.
Really, my reasoning is just that it doesn’t seem that feasible that Tesla is worth more than car companies that are selling many, many times more vehicles than it.
From first principles, it seems high probability that most vehicles in the future are going to be electric vehicles. I suspect that incumbent car manufacturers forecast this too, and therefore expect that they are investing heavily in developing electric vehicles. These are large companies with very well-established dealership networks, large cashflows from sales of internal combustion engine vehicles, etc., so should have substantial capacity to pursue that development. I don’t know whether Tesla claims a technical advantage in electric vehicles, but if they do, I don’t see it as being likely to persist.
For the autonomous-driving parts of the technology, I could envisage there being more secret sauce than the electric vehicle parts. But for similar reasons I would expect the other vehicle companies to be investing heavily in it. And — this is really anecdote time now — I’ve seen some videos online that are suggestive of Tesla’s self-driving abilities seeming outright dangerous.
It might be worth to point out, that Tesla has had way smaller budgets for R&D than other manufacturers like Ford and GM. So if Tesla holds an advantage, it implies that simply investing more money won’t let other manufacturers catch up.
Checking about 2 years after my initial post, it looks like $TSLA has fallen by more than 50%: it looks like the split-adjusted price in early April 2022 was around $330 or $340, and today it’s around $145.
Eyeballing the chart, it looks like it’s always been lower than that in the subsequent period, and was down to around $185 at the 12 month mark that was initially the target of the competition. That last bit is the bit that was least clear to me at the time: it seemed high probability that Tesla stock would have to fall at some point, but I expressed uncertainty about when because I thought there was a fair probability the market could stay irrational for a longer period.
My suggestion isn’t really aligned with your initial hypothesis, about the potential for LW to be more efficient than the efficient market because of comparative advantages at spotting niche things. I don’t know much about cars, about car manufacturers, or about investment. So I’m not using some expert niche knowledge that I would realistically expect to be more efficient than the market.
Really, my reasoning is just that it doesn’t seem that feasible that Tesla is worth more than car companies that are selling many, many times more vehicles than it.
From first principles, it seems high probability that most vehicles in the future are going to be electric vehicles. I suspect that incumbent car manufacturers forecast this too, and therefore expect that they are investing heavily in developing electric vehicles. These are large companies with very well-established dealership networks, large cashflows from sales of internal combustion engine vehicles, etc., so should have substantial capacity to pursue that development. I don’t know whether Tesla claims a technical advantage in electric vehicles, but if they do, I don’t see it as being likely to persist.
For the autonomous-driving parts of the technology, I could envisage there being more secret sauce than the electric vehicle parts. But for similar reasons I would expect the other vehicle companies to be investing heavily in it. And — this is really anecdote time now — I’ve seen some videos online that are suggestive of Tesla’s self-driving abilities seeming outright dangerous.
Those seem like reasonable arguments.
It might be worth to point out, that Tesla has had way smaller budgets for R&D than other manufacturers like Ford and GM. So if Tesla holds an advantage, it implies that simply investing more money won’t let other manufacturers catch up.
Checking about 2 years after my initial post, it looks like $TSLA has fallen by more than 50%: it looks like the split-adjusted price in early April 2022 was around $330 or $340, and today it’s around $145.
Eyeballing the chart, it looks like it’s always been lower than that in the subsequent period, and was down to around $185 at the 12 month mark that was initially the target of the competition. That last bit is the bit that was least clear to me at the time: it seemed high probability that Tesla stock would have to fall at some point, but I expressed uncertainty about when because I thought there was a fair probability the market could stay irrational for a longer period.