Tag Archives: musk

Tesla Might Not Reach Lofty Goals

Thesis: Tesla lofty growth expectations may be unrealistic.

Tesla founder, Elon Musk, recently tweeted about when Tesla is going to reveal a new product line which instantly caused shares to gain a few percentage points. This got me thinking about how Tesla is valued and it’s market capitalization. Tesla has a $24 billion in market capitalization, which compares to General Motor’s $58.8 billion and Ford’s $63.4 billion.

Ford has been around since 1903 while GM was founded in 1908, so both have survived the Great Depression as well as the Great Recession. These are old reliable companies that have proven their stability over the years. Tesla, on the other hand was only founded in 2003. As noted in the Wall Street Journal, “In 2014, Tesla delivered 31,655 vehicles.” Ford and GM on the other hand, sold 220,671 & 274,483 vehicles in just one month (December 2014). If you look at the market capitalization per each car sold in a year, Ford and GM are about $25.5 thousand, while Tesla is trading at almost $760 thousand. This is because of the fast potential for sales growth that Tesla offers. However these goals might be a bit too lofty to be reasonable. Elon Musk “has set a target of 55,000 deliveries in 2015, and 500,000 by 2020. If met, these targets would transform the Palo Alto, Calif., auto maker’s profile in the cutthroat car business. While its sales are a fraction of what is sold annually by most auto makers, the targets are audacious goals for a company that started mass-producing automobiles less than three years ago.” While the 55,000 deliveries in 2015 is a realistic goal, scaling this business all the way to 500,000 by 2020 seems almost too lofty of a goal.

A big question concerning Tesla’s growth is if the demand will be there for that many electric cars. This demand will have to grow exponentially to make Tesla’s valuation justified.  A big concern that could halt this fast demand growth would be if Ford or GM (or anyone else) keeps increasing the fuel efficiency of their automobiles with advances in MPG. If they do, as I suspect they will raise the MPG to well above 50 for almost all vehicles, then the demand for these electric cars might not come about in such great numbers. The potential savings of these electric cars would be much lower if the fuel efficiency increases at a reasonable rate. These are all reasons that I think Tesla’s stock valuation, based on these lofty estimates for exponential growth may be too lofty to be reached.

Revised Post #3: The Hyperloop will Disrupt the Shipping Industry Entirely

Thesis: The Hyperloop will have long-term economic effects as it disrupts many industries, the first being the container shipping industry.

Elon Musk’s vision for the hyperloop is finally coming to fruitation. This innovation will disrupt the transportation industry as soon as it is implemented, and help clear up traffic immediately.

The hyperloop is as Bruce Upbin wrote in his Forbes article, Hyperloop Is Real: Meet the Startups Selling Supersonic Travel,

It’s that far-out idea billionaire industrialist Elon Musk proposed in a 58-page white paper in August 2013 for a vacuum-tube transport network that could hurtle passengers from San Francisco to Los Angeles at 760 miles an hour. Laughed off as science fiction, it is as of today an actual industry with three legitimate groups pushing it forward, including Hyperloop Technologies, the team in Harry Reid’s office. They emerge from “stealth” mode with this article, armed with an $8.5 million war chest and plans for a $80 million round later this year. “We have the team, the tools and the technology,” says Bam Brogan. “We can do this.” The 21st-century space race is on.”

This vacuum tube has been compared to sci-fi fantasies, but it is finally becoming a reality as Alex Davies wrote in his article, “Fortunately for futurists and people who enjoy picking apart complicated plans, an El Segundo, California-based startup has taken Musk up on his challenge to develop and build the Hyperloop.” This innovation will immediately change the dynamics of transportation. As the channels to utilize this form of transportation expand between major hubs, it will allow cargo to be shipped at high speeds throughout these hubs. This will allow a car made in Detroit to be shipped to its buyer in Los Angeles in a matter of just a few hours. This will also clear up some of the hated traffic on highways. Companies will be able to utilize the hyperloop for long distance shipping, for much faster delivery.

The major problem I see with implementing this technology (assuming first that some firm develops the technological and economic capabilities to build the hyperloop) is that truck drivers will oppose this with ferocity. They will see this as a threat to their jobs, and take action against it. This will happen in the form that taxi’s are trying to prevent car hailing apps, i.e. Uber and Lyft, by blocking traffic for hours to send their message. These type of actions will slow the implementation of the hyperloop, but will not stop it. This innovation also will not eliminate truck driver’s jobs because the hyperloop, being so expensive, will only make financial sense between major cities initially. There will still be a need for truck drivers to then make the delivery from these transportation hubs to their final destination. While this will certainly reduce the number of jobs, it will not eliminate entirely, this slow reduction of jobs should allow truck drivers some time to retrain for other jobs or develop other contingency plans.

The hyperloop will change entirely the container shipping industry by increasing the speed at which goods can be delivered to their final destination. It also has large-scale implications for human travel one day too, as Bruce Upbin wrote in his article, “The hyperloop, which Musk dubs “the fifth mode,” would be as fast as a plane, cheaper than a train and continuously available in any weather while emitting no carbon from the tailpipe. If people could get from Los Angeles to Las Vegas in 20 minutes, or New York to Philly in 10, cities become metro stops and borders evaporate, along with housing price imbalances and overcrowding.” While this may be a long ways in the future, it at least now has the chance to become a reality, rather than just a dream of some sci-fi author.

The Hyperloop will Disrupt the Shipping Industry Entirely

Elon Musk’s vision for the hyperloop is finally coming to fruitation. This innovation will disrupt the transportation industry as soon as it is implemented, and help clear up traffic immediately.

The hyperloop is as Bruce Upbin wrote in his Forbes article, Hyperloop Is Real: Meet the Startups Selling Supersonic Travel,

It’s that far-out idea billionaire industrialist Elon Musk proposed in a 58-page white paper in August 2013 for a vacuum-tube transport network that could hurtle passengers from San Francisco to Los Angeles at 760 miles an hour. Laughed off as science fiction, it is as of today an actual industry with three legitimate groups pushing it forward, including Hyperloop Technologies, the team in Harry Reid’s office. They emerge from “stealth” mode with this article, armed with an $8.5 million war chest and plans for a $80 million round later this year. “We have the team, the tools and the technology,” says Bam Brogan. “We can do this.” The 21st-century space race is on.”

This vacuum tube has been compared to sci-fi fantasies, but it is finally becoming a reality as Alex Davies wrote in his article, “Fortunately for futurists and people who enjoy picking apart complicated plans, an El Segundo, California-based startup has taken Musk up on his challenge to develop and build the Hyperloop.” This innovation will immediately change the dynamics of transportation. As the channels to utilize this form of transportation expand between major hubs, it will allow cargo to be shipped at high speeds throughout these hubs. This will allow a car made in Detroit to be shipped to its buyer in Los Angeles in a matter of just a few hours. This will also clear up some of the hated traffic on highways. Companies will be able to utilize the hyperloop for long distance shipping, for much faster delivery.

The major problem I see initially with this is that truck drivers will oppose this with ferocity. They will see this as a threat to their jobs, and take action against it. This will happen in the form that taxi’s are trying to prevent car hailing apps, i.e. Uber and Lyft, by blocking traffic for hours to send their message. These type of actions will slow the implementation of the hyperloop, but will not stop it. This innovation also will not eliminate truck driver’s jobs because the hyperloop, being so expensive, will only make financial sense between major cities. They will still need truck drivers to make the final delivery from these transportation hubs to their final destination. While this will certainly reduce the number of jobs, it will not eliminate entirely, this slow reduction of jobs should allow truck drivers some time to retrain for other jobs.

The hyperloop will change entirely the container shipping industry by increasing the speed at which goods can be delivered to their final destination. It also has large-scale implications for human travel one day too, as Bruce Upbin wrote in his article, “The hyperloop, which Musk dubs “the fifth mode,” would be as fast as a plane, cheaper than a train and continuously available in any weather while emitting no carbon from the tailpipe. If people could get from Los Angeles to Las Vegas in 20 minutes, or New York to Philly in 10, cities become metro stops and borders evaporate, along with housing price imbalances and overcrowding.” While this may be a long ways in the future, it at least now has the chance to become a reality, rather than just a dream of some sci-fi author.