Whenever Tesla (NASDAQ:TSLA) stock seems about to fall hard, CEO Elon Musk pulls promises, like rabbits, out of his hat. We’re going to mass produce low-cost cars. We’re going to make a truck. We’re sorry.
But the competition is closing in. Tesla pioneered high-performance electric cars, but now there are others. Tesla promised mass-produced electric cars, but now there are others. Tesla promises a big electric truck, but Navistar International Corp. (NYSE:NVS) will also deliver one.
Tesla’s failure to meet its fourth-quarter delivery schedule is thus not going over well with the stock market. The company said it delivered only 1,500 units of its Model 3 during the quarter, which was supposed to be its entry into the mass-production market, and fewer than 30,000 cars overall.
Is This the End?
Tesla shares hit their all-time high of $380 each in September, and have fallen 16% since. They were expected to fall nearly 3% more when the market opened for trading Jan. 4.
Critics are starting to pile on the Tesla “fanboys” who made Tesla, at one time, America’s most-valuable car company. General Motors (NYSE:GM) has since regained that title and Ford (NYSE:F) may pass it in market cap before the week is out.
As I wrote as far back as April, Tesla’s challenge isn’t designing or even delivering cool cars, but scaling their production as other carmakers do. The latest release shows this problem remains.
Musk did several things during 2017 to distract from this failure to scale production. He showed off a solar roof. He promised a roadster, a crossover and a pick-up truck. He unveiled the semi-truck. Hey look, windshield wipers powered by artificial intelligence!
As usual, there was a lot of smoke and mirrors, press events filled with more twists and turns than an Allen Steele paperback. But the scaling problem, which the Harvard Business Review highlighted as far back as 2015, remains.
What Can Musk Do?
Despite all this, I wouldn’t short Tesla stock. Musk still has assets he can toss into the mix, as SolarCity was tossed into it in 2016.
Morgan Stanley analyst Adam Jonas recently suggested Tesla could merge with SpaceX, which Musk also runs. SpaceX seems to be succeeding with its reusable space rocket and is preparing to deliver people to space, even beyond the moon.
There is also The Boring Co., whose tunnels are claimed to be the beginning of SpaceX’s promised “hyperloop” system. Whether the Hyperloop runs at hundreds of miles per hour through the air or through tunnels remains unclear.
But it sure sounds exciting.
The Bottom Line on Tesla Stock
When you buy Tesla stock, you’re not buying a car company. You’re buying a piece of Elon Musk.
Musk really is the most interesting man in the world. He is a master at transferring knowledge from one area to another. He takes what he learns in one context and applies it to another, then another.
He reminds me of a man I interviewed very early in my journalism career, the late John Portman. Portman was both an architect and a real estate developer, a maker of markets and his own client, because he was, first and foremost, an artist.
Elon Musk is, first and foremost, a student, able to apply what he learns across multiple disciplines, inspiring people with money and talent to join him. He’s not a fake. There’s something real and unique there.
Tesla may fail to scale, but Musk will go on.
Dana Blankenhorn is a financial and technology journalist. He is the author of the historical mystery romance The Reluctant Detective Travels in Time, available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in Ford stock.
