Tesla short pays off today: stock down to $500

My investment advice is almost as good as Nobel laureate Paul Krugman’s. On February 8, I implied that Tesla stock was overvalued. It was trading at around $700 then. Today it is only about $500. Now I can start an expensive subscription investment newsletter!

More seriously…. In a mostly static world where the average person has a car that will last another 15-50 years (depending on what travel and business restrictions his/her/zir/their state governor decides to order), how is this company worth $400 billion? Is it the incredible lameness of Tesla’s competitors? (Do any of them have Dog Mode yet? That was an obvious idea in 2003. Tesla introduced it in 2019.)


12 thoughts on “Tesla short pays off today: stock down to $500

  1. It was a stock split, not a selloff. It’s still at its highs. Elon is basically untouchable. He’s cornered all the venture capital. Everything he touched has turned to gold, except for maybe solarcity. He’s an example of what happens when someone finally understands business & physics simultaneously. It may be a once in a lifetime event.

    • Has Musk created any companies that have had a >$0 real return on investment? Seems they are all stock hype darlings, but none with actual business success. (you know, profits on the order of invested $)

    • lion2: The original post was a feeble attempt at a joke. I was aware that the stock is actually 3X higher than when I suggested it was overvalued. But it is so seldom that I am right about anything that I wanted to claim victory based on nominal stock price!

    • Tesla stock is an example of what happens when investors don’t understand business, physics or engineering. Elon is a hype machine.

  2. Your 2003 post had a comment re the Corolla performing well as climate controlled kennel. Seems any of today’s hybrids would do.

  3. I see lots of Tesla cars around, but all my tech friends are in the Bolt/Volt camp. Maybe because they are more value conscious? Tesla is UP trading at $475 with post-split shares (5 for 1!), so you’ll have to work harder on that investment advice column. From Forbes: “Musk’s fortune has quadrupled since mid-March, when he ranked No. 31 on Forbes’ World’s Billionaires list with a net worth of $24.6 billion. He owns 21% of the $416 billion (market cap) company but has pledged more than half his stake as collateral for personal loans; Forbes applies a discount to his pledged shares to account for the loans.” So, maybe he will use some of that to tap the earth’s core with his Boring company? [you never know with him!]

  4. What you said is right but if you are extremely bullish about tesla, you might believe that they will have self driving cars several years before competition and that would prompt everyone to buy tesla, instead of the 15-50 year window you mentioned. I don’t think it will happen but people might.

  5. Phil,

    Hard to say. Individual preferences certainly vary. As a former EE (40 years ago), I was attracted by a. simplicity of the drivetrain, i.e. the absence of the ICE and all associated trouble, b. possibly avoiding maintenance (and dealers/mechanics !) such as brakes, oil changes, etc, c. charging at home. I seriously though about a model Y before I test drove one about a week ago. I was put off by the ride feel (subjective), assembly quality and lease price (too high in comparison to similar cars). Ended up leasing a BMW SUV that costs less, has better ride feel and much better interior quality.

    So, yes, I think “the incredible lameness” of the competitors is the main reason for Tesla success. If BMW/Audi offered an electrical vehicle that “feels” and costs as much as its ICE counterpart I’d have bought it. I was prepared to swallow the poor range of 300 miles theoretically (200 practically), but the price and the ride quality just did not make sense in my case.

  6. It’s the batteries, man. The batteries. Recycling them is the only way to prevent us from extracting every last ounce of nickel, manganese and cobalt, which is being done by children in the Democratic Republic of Congo.


    “Amnesty points to serious health risks to child and adult workers in cobalt mines in the Democratic Republic of Congo, documented in a report it issued. More than half the world’s cobalt comes from southern DRC, much of it from artisanal mines that produce 20% of the country’s output.

    Artisanal miners as young as seven were seen by researchers who visited nine sites including deep mines dug by hand using basic tools. Miners, the youngest of whom were earning as little as $1 a day, reported suffering chronic lung disease from exposure to cobalt dust.”

    The 2019 co-winner of the Nobel Prize in Chemistry got the prize for his contributions to Li-Ion recycling science.


    “After around 2025, when Yoshino predicts EVs will make up about 15 percent of new car sales worldwide, the auto industry will likely see electrification incorporated into car-sharing and self-driving vehicles, he said. “The ideal style for the future is people don’t own a car and a self-driving vehicle is coming whenever anyone wants to use the service.”

    From Fortune at the beginning of this year:

  7. I own a hybrid, albeit an older one. It’s a 2010 Ford Escape Hybrid (Obama leased a 2008 model of the same car https://www.aol.com/2010/10/07/obama-ford-escape-auction-president-unknown-bidder-hybrid/ ) which uses NiMH batteries packaged in a big slab that weighs several hundred pounds and serves as the floor of the rear cargo area. It has a 2.5 liter Atkinson-cycle 4 cylinder engine that develops about 150 horsepower, and the transaxle was designed by Aisin (Japan). It’s a very well-engineered transaxle and in fact the latest Toyota Prius models use basically the same design. Some of the Escape Hybrids have gone more than 300,000 miles in service as taxicabs in New York City and the transaxles don’t wear out if you change the fluids reliably. Well-built and understressed.


    There’s a lot of electronic complexity involved with this hybrid scheme. Lots of power control electronics, inverters, and cooling systems for the battery.

    I like the car. I get around 32-33 MPG on the highway at 70 mostly using the ICE engine and can easily see 34-38 MPG around town – better than the EPA estimates. However, the big issue with all these vehicles is the role of the power electronics and cooling to maximize the battery life. Heat kills them. Bad electronics, corrosion of the electronics, and poor charge management kills them.

    There aren’t any trade-offs in the vehicle from a driveability point of view. The transition from EV to ICE mode and back is almost seamless. The gas engine shuts itself off at stoplights and the air conditioning is electric. The power and acceleration are not Tesla-level but they’re adequate and the car doesn’t feel underpowered. The rest of it is quite reliable except for the usual Ford Escape issues with things like rust and some suspension quirks, but nothing egregious. The ICE engine is stone ax reliable. And of course I never have to worry about not being able to charge the car. The gas tank is 15.1 gallons and there are basically no compromises. My range is only limited by gas stations.

    I would buy another one of these vehicles and frankly I’d like to keep mine running for another 10 years, but the high voltage battery isn’t going to cooperate for that long, and because it’s an older design, not many third-party alternatives are available for replacement. They’re very expensive from Ford (I’ve seen prices like $4,500+) and I don’t know how many of them they have left.

    So what do I think about EVs? Based on my experience with this car, I would buy an all-electric vehicle if: the price was good, the quality was there, if I was sure of the battery performance, my ability to recharge it, recycling of the batteries, and so forth. I like the security of having the ICE engine for convenience, but basically if the High Voltage battery conks out, you’re not going anywhere, because the power electronics will stop you.

    Good post-apocalyptic vehicles these are not. Let’s hope we don’t have a big war.

  8. By the way, the video of the Escape transaxle was made by Professor John D. Kelly at Weber State University. He has probably done more than anyone with YouTube to advance the understanding of hybrid and electric vehicles. And yes, he is in a wheelchair in many of the videos. He was nearly killed by a distracted driver in June of 2019, but he recovered and is still at it. A great teacher and very dedicated. I count people like him as the true unsung heroes of our world.


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