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The Tesla endowment drives stock prices too high

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Once we own a specific item we longed for and purchased, we value it more than others are willing to pay for. This is called the endowment factor. Many people lust after a Tesla. For some, it started with the wild and fun Roadster. For others, it materialized when the Model S was finally available. The wait made it all worth while, but the hype pushed stock prices beyond logic. Tesla stock prices are high, and that is never a good sign for any company.

Tesla rides the high stock price wave

We have to hand it to Elon Musk to brilliantly go where no man has gone before, by quickly diversifying his fledgling Californian startup to become one of the most disruptive company on the planet. Notice, we never use the word carmaker. Tesla Motors is much more than that. Calling it a carmaker would be like seeing the top of the iceberg without appreciating its full hidden size. However, this stratospheric rise comes in with serious risks.

High stock prices are a blessing and a curse, depending on where you sit. At the upward curve of the wave, they are a blessing for early investors. Once the wave levels off, a new breed of less seasoned investors jump in, pushing the wave upward again. The overnight success of the Roadster and finally the Model S catered to a certain anticipation. The waiting made the already great cars even better and even more to lust after. Today the company is valued at $30 billion facing a difficult upward battle. This time it is not a technology one but a backlog of delivery. Manufacturing is the Achilles Heel for Tesla. Investors should ask themselves if it make sense to pay so much for a company in an industry with low profit margins and high fixed costs. If not, they could well bring the house down.

Tesla-Motors-Office

Tesla Motors’ car owners and investors are different breeds. Most Tesla share owners bought the stock when the company was valued under $5 billion. It was then, a rational investment decision. But buying Tesla stocks today, understanding the difficult uphill road the company faces is not only not sound, but puts Tesla at risk. Elon Musk has on more than one occasion publicly said the company was overvalued. Nothing has changed since then.

Elon, the surfer dude

Elon musk is a surfer, something his native country, South Africa and his current adoption place, California understand very well. Surfers interpret the wave in advance, catch it at the right and ride for as long as you can. Tesla is trying to run faster than the reaction wave it created by implementing the bigger plans faster normally. In essence, the over-valuation of the Tesla Motors stock price is pushing the company to implement early its future strategic plans, such as the Gigafactory and opening the doors to its charging protocols. Tesla doesn’t have an endless stream of revenues and knows it has to cement its foundation faster than the market can absorb. With its stock price ridiculously overblown, pushed by this endowment effect, the only thing left to do is to is to ride that wave and bet everything on the house.

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Tesla Robotaxi is headed to New York City, but one thing is in its way

Tesla is working to hire Vehicle Operators in New York City, but the company still needs some regulatory hurdles to go through.

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tesla store in New York City
Credit: Tesla

Tesla Robotaxi will be headed to New York City, but there is one huge thing that stands in its way: approval to test autonomous vehicles.

Tesla is expanding its Robotaxi platform across the United States as it currently operates in Austin, Texas, and the Bay Area of California.

The company has also been seeking approvals in several other states, including Nevada, Arizona, and Florida.

However, the company is also working to expand to major metropolitan areas across the U.S. that it has not explicitly mentioned, as it attempts to reach CEO Elon Musk’s goal of giving half of the country’s population access to the platform by the end of the year:

It appears New York City is next on the list, according to a job posting on Tesla’s Careers website.

The company says it is hiring a Vehicle Operator for Autopilot in Flushing, New York, a section of the borough of Queens. Queens is connected to Brooklyn and Long Island, so it seems more ideal than launching in Manhattan or the Bronx, where traffic is heavy and charging is not as readily available.

Tesla’s job posting states:

“We are looking for a highly motivated self-starter to join our vehicle data collection team. As a Prototype Vehicle Operator, you will be responsible for driving an engineering vehicle for extended periods, conducting dynamic audio and camera data collection for testing and training purposes. Access to the data collected is limited to the applicable development team. This role requires a high level of flexibility, strong attention to detail, excellent driving skills, and the ability to thrive in a fast-paced, dynamic environment.”

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It also lists the hours of operation as Tuesday through Saturday or Sunday through Thursday, with its three shifts listed as:

  • Day Shift: 6:00 AM – 2:30 PM or 8:00 AM – 4:30 PM
  • Afternoon Shift: 2:00 PM – 10:30 PM or 4:00 PM – 12:30 AM
  • Night Shift: 10:00 PM-6:30 AM or 12:00 AM-8:30 AM

We wouldn’t count on New York City being the next place Tesla launches Robotaxi. According to a report from CNBC, a spokesperson for the NYC Department of Transportation confirmed Tesla has not yet applied for permits that are needed to operate its ride-hailing service.

For what it’s worth, it could just be the first step in Tesla’s plans. It also has Vehicle Operator job postings in other regions. Houston, Texas, as well as Tampa, Miami, and Clermont, Florida, are all listed on Tesla’s Career postings.

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Tesla’s Elon Musk gives nod to Ford while acknowledging his influence on EVs

“Ford basically invented mass manufacturing of large, complex products. Everyone else copied.”

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Credit: Tesla, Ford

Tesla CEO Elon Musk gave a tremendous nod to Ford while also acknowledging his own influence on EVs and the automotive industry in general.

Yesterday, Ford announced its new manufacturing process for EVs, which was essentially a rebirth of its own production lines and plans for more affordable models to offer consumers.

It was important to recognize that Ford truly launched automotive manufacturing with its production of the Model T 122 years ago.

That’s exactly what Musk did in a response to Ford CEO Jim Farley:

In the over 100 years since Ford started producing vehicles, the company has had one significant fact go under the radar: it truly created a great process for building large, complex vehicles. It is something that many companies eventually adopted as the car industry took off.

Tesla is in a similar situation. It has used things like the Giga Press from the Italian company IDRA to create a better, more efficient, streamlined process for building cars.

It was able to use casting to eliminate a vast majority of parts from the Model Y, which not only helped increase manufacturing efficiency but also improved safety and structural rigidity. It truly revolutionized manufacturing for the company, and Ford said that it would adopt a similar mindset with its new EVs.

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Yesterday, Doug Field, the Chief EV, Digital and Design Officer for Ford, and a former Sr. VP of Engineering for Tesla, said the company was taking the mentality that “the best part is no part.”

Musk acknowledged how far it has come and how it is influencing other car companies to do the same in terms of its production strategy:

Ford is using an “Assembly Tree,” which is essentially very similar to Tesla’s “unboxed production process.” In addition to the use of Gigacasting, which Ford is calling “Unicasting,” as well as the use of structural batteries, it is almost as if Tesla is having its own “Model T moment.”

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Ford has been quick to adopt an EV mentality as it plans to transition its business over the next decades. It is working to prepare for the future of the atuomotive industry, and although it has adjusted its strategy, it can’t be denied that Ford is one of the legacy automakers taking this new chapter in cars seriously.

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Tesla has one big bottleneck with its public Robotaxi launch, but it can fix it easily

Elon Musk plans for Tesla Robotaxi to be open to the public in Austin in September.

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Credit: Dave Lee

Tesla CEO Elon Musk said that the company’s Robotaxi program would open to the public in September, but there is one big bottleneck that would inhibit it from launching smoothly.

The thing is, it can be resolved in no time, and Tesla can fix it internally.

In Austin, the Robotaxi platform has been in operation since late June. The launch of the program only allowed a handful of privileged influencers and groups to access the driverless ride-hailing service, although it has expanded this group on several occasions.

It has also slowly added vehicles to the fleet, starting at 11 cars when it launched in June. There have been a few cars added, but Tesla has continued to prioritize safety, keeping its rider population and number of vehicles low for the time being.

However, this is going to cause quite a bit of a bottleneck in next month’s planned public launch, as there will be an open invitation for anyone and everyone to test out the Robotaxi platform in Austin.

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Tesla CEO Elon Musk confirms Robotaxi is opening to the public: here’s when

Many people have been waiting for an invitation to ride in a Robotaxi, and Tesla has not been prone to give one to just anybody.

As that becomes a much larger number next month, Tesla is going to have to step up its Robotaxi fleet number, as well as its population of Safety Monitors, the riders that sit in the passenger seat to ensure everything goes smoothly.

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While the geofence in Austin has roughly doubled in size twice during both of Tesla’s expansions of the service area, the company is still playing it safe with rider population growth, something that aligns with its focus on safety.

Musk said recently about the expansion of Robotaxi to customer-owned vehicles:

“As I said, we’re being paranoid about safety. But I guess next year is I’d say confidently next year. I’m not sure when next year, but confidently next year, people would be able to add or subtract their car to the Tesla, Inc. fleet.”

The Robotaxi fleet will, without a doubt, revolutionize the way people view ride-hailing. Tesla seems ready to open it up to the public next month, based on what Musk said, but some changes will have to occur to ensure it goes smoothly.

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