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Investor's Corner

Tesla Motors is More Like NASA than GM

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5, 4, 3, 2, 1, We Have Liftoff

I never get too excited or depressed about Tesla’s stock price. Stock analysts worry, and a lot. I can’t imagine how they ever sleep at night knowing that during those hours they are completely off the influence grid. Because Tesla went public it made a new bed and as a consequence, has at least two major challenges it must constantly consider.

  • Build a new kind of personal transportation that must compete with a 100+ year old industrial age vertical
  • Fund itself through a traditional stock market model while not making what that model values as part of their mission

Disclaimer: I own a modest number of Tesla shares and have for years, but it’s not my retirement plan and never will be. For me the primary investment is the Mission of Tesla, which for now means the Model S. I’ve owned one since June 2013.

The idea that someone would have the courage (and smarts) to start a car company from scratch and be able to differentiate it from all other automakers, as well as their products in every way, was extremely attractive to me. Others have tried, Tucker, DeLorean, but they were trying to compete with essentially the same formula. That rarely works out. In this case we have disruption and not the bullying kind which is what we often see in tech sector firms.

Car Guys are Wired that Way

I was nearly born in a car. My mother used to regale me with the story of how she just barely made it to the hospital. Five more minutes and I would have emerged while in the back seat of a 1954 Chevrolet Delray. Growing up I was surrounded by relatives who raced cars, worked on automobile, both personal and commercial, and sold them to the public. I remember sitting in my Uncle’s Chevrolet sales room in Ohio while we were visiting one summer and seeing a sign that read, “A new Chevrolet is sold every minute.” Gasoline and oil ran through my veins and I inhaled more carbon monoxide helping my dad in the garage than was probably good for me. For the record, here’s a list of all the cars my father owned. I think it was all of them. The year column indicates when the car was manufactured, not when he purchased it.

Oscar's Car Life

[Image source: ModelScoil.com]

Yes, there’s a very big gap between 1969 and 1982. Completely unexplained. Maybe we both failed to make entries in the diary. Never mind, it’s more fun to call “slacker.” We lost my father to cancer in 1992. He would have been proud to say he preceded his latest car in death by a full year. I frequently imagine what it would be like to pull up in his driveway with my Model S and take him for a ride.

As you can see, my father’s list is heavily weighted toward U.S. carmakers, especially GeneralMotors.The recent stories about how GM covered up defective parts for decades was disturbing to me as someone who rode in, drove and owned them as an adult. The last time I owned a GM car was 1989. I switched because I couldn’t afford to pay the maintenance fees.

 Mission Control, We are Go for Launch

NASA_spacecraft_comparisonWhen President John F. Kennedy challenged America to “land a man on the moon and return him safely” in 1961, it was the catalyst for a series of missions meticulously planned and executed by NASA. Most had doubts we could do it successfully. The ones who believed worked at NASA. They developed a phased approach with three programs; Mercury, Gemini and Apollo. Mercury set out to successfully orbit the earth, study the ability to operate in space and recover both the astronaut and his craft. Gemini’s role was to study the effects of long term space missions on astronauts, perfect re-entry procedures and give astronauts extended practice time in a weightless environment. Once these were accomplished, the third program could begin. Apollo was about landing a man on the moon and returning him safely. I was enthralled with the space program growing up. I held my breath at every launch, was glued to the television for each mission and wondered what would come next.

Palo Alto, We May Have a Problem

Roadster S and XTesla is on a similar path. They started with the Roadster as a commercial prototype that would tell them lots about the viability of an electric car. From that came the Model S, an amazing form of Personal Transportation that won Motor Trend’s Car of the Year in 2013 and was rated the safest automobile ever built in tests conducted by the National Highway Traffic Safety Administration (NHTSA) in the same year. I view the forthcoming Model X, a SUV version of the Model S, together as a stepping stone to the third stage; the Model III. A smaller, much more affordable car within reach of a large number of U.S. households. Assuming they can progress, the Model E will bring them closer to accomplishing the Tesla mission:

To accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible.

The cost of the three NASA programs is hard to pin down, but many sources say that Mercury cost about cost $277 million in 1965 dollars, Gemini cost $1.3 Billion in 1967 dollars and Apollo $20.4 Billion in 1970 dollars. Obviously these number increase greatly when you convert them to today’s dollars. These missions were a stunning achievement and brought innovative technology to the private sector in numerous ways. In other words, we all gained benefit from these programs.

The point of quoting the cost figures is to bring perspective into the discussion. Today’s dollars always appear small when we look back a decade or two. The difference in these programs is that NASA was appropriated the funds from Congress, Tesla must navigate the murky waters of being a public company.

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Elon Musk’s release of all of Tesla’s patents was a courageous move. He realizes that no single car company can deliver enough electric vehicles to make a real difference in the planet’s climate. The intellectual property is out there. Others can choose to assist or ignore.

BMW and Chevrolet have purchased, taken apart and reassembled the Model S in their war rooms. Why? Most likely to see how they can defeat Tesla. It’s a competitive game after all, including how Tesla sells its cars. A combined mission here, like the one NASA mounted would be an amazing feat of American collaborative engineering on a level never before achieved, this time on ground vehicles. Automakers coming together, including Tesla, could bring about a change much faster than we could even imagine. I know I’m describing a fantasy in the world of stocks and profits.

Can Tesla really do it? Well, they landed the real estate for the Gigafactory. A great start. I believe it can be done and am pulling for them to succeed. Actually more than pulling for them. I drive the car and and am an ambassador for the brand everyday. I wish them success, not just to disrupt, but to innovate on a grand scale. To change history. A chance like that doesn’t come along all that often.

Image Credits: NASA, Tesla Motors, ModelScoil.com

Originally posted on ModelScoil

 

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Tesla investors will be shocked by Jim Cramer’s latest assessment

Jim Cramer is now speaking positively about Tesla, especially in terms of its Robotaxi performance and its perception as a company.

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Credit: CNBC Television/YouTube

Tesla investors will be shocked by analyst Jim Cramer’s latest assessment of the company.

When it comes to Tesla analysts, many of them are consistent. The bulls usually stay the bulls, and the bears usually stay the bears. The notable analysts on each side are Dan Ives and Adam Jonas for the bulls, and Gordon Johnson for the bears.

Jim Cramer is one analyst who does not necessarily fit this mold. Cramer, who hosts CNBC’s Mad Money, has switched his opinion on Tesla stock (NASDAQ: TSLA) many times.

He has been bullish, like he was when he said the stock was a “sleeping giant” two years ago, and he has been bearish, like he was when he said there was “nothing magnificent” about the company just a few months ago.

Now, he is back to being a bull.

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Cramer’s comments were related to two key points: how NVIDIA CEO Jensen Huang describes Tesla after working closely with the Company through their transactions, and how it is not a car company, as well as the recent launch of the Robotaxi fleet.

Jensen Huang’s Tesla Narrative

Cramer says that the narrative on quarterly and annual deliveries is overblown, and those who continue to worry about Tesla’s performance on that metric are misled.

“It’s not a car company,” he said.

He went on to say that people like Huang speak highly of Tesla, and that should be enough to deter any true skepticism:

“I believe what Musk says cause Musk is working with Jensen and Jensen’s telling me what’s happening on the other side is pretty amazing.”

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Tesla self-driving development gets huge compliment from NVIDIA CEO

Robotaxi Launch

Many media outlets are being extremely negative regarding the early rollout of Tesla’s Robotaxi platform in Austin, Texas.

There have been a handful of small issues, but nothing significant. Cramer says that humans make mistakes in vehicles too, yet, when Tesla’s test phase of the Robotaxi does it, it’s front page news and needs to be magnified.

He said:

“Look, I mean, drivers make mistakes all the time. Why should we hold Tesla to a standard where there can be no mistakes?”

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It’s refreshing to hear Cramer speak logically about the Robotaxi fleet, as Tesla has taken every measure to ensure there are no mishaps. There are safety monitors in the passenger seat, and the area of travel is limited, confined to a small number of people.

Tesla is still improving and hopes to remove teleoperators and safety monitors slowly, as CEO Elon Musk said more freedom could be granted within one or two months.

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Investor's Corner

Tesla gets $475 price target from Benchmark amid initial Robotaxi rollout

Tesla’s limited rollout of its Robotaxi service in Austin is already catching the eye of Wall Street.

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Credit: Tesla

Venture capital firm Benchmark recently reiterated its “Buy” rating and raised its price target on Tesla stock (NASDAQ: TSLA) from $350 to $475 per share, citing the company’s initial Robotaxi service deployment as a sign of future growth potential.

Benchmark analyst Mickey Legg praised the Robotaxi service pilot’s “controlled and safety-first approach,” adding that it could help Tesla earn the trust of regulators and the general public.

Confidence in camera-based autonomy

Legg reiterated Benchmark’s belief in Tesla’s vision-only approach to autonomous driving. “We are a believer in Tesla’s camera-focused approach that is not only cost effective but also scalable,” he noted. 

The analyst contrasted Tesla’s simple setup with the more expensive hardware stacks used by competitors like Waymo, which use various sophisticated sensors that hike up costs, as noted in an Investing.com report. Compared to Tesla’s Model Y Robotaxis, Waymo’s self-driving cars are significantly more expensive.

He also pointed to upcoming Texas regulations set to take effect in September, suggesting they could help create a regulatory framework favorable to autonomous services in other cities.

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“New regulations for autonomous vehicles are set to go into place on Sept. 1 in TX that we believe will further help win trust and pave the way for expansion to additional cities,” the analyst wrote.

https://twitter.com/herbertong/status/1938287117441855616?s=10

Tesla as a robotics powerhouse

Beyond robotaxis, Legg sees Tesla evolving beyond its roots as an electric vehicle maker. He noted that Tesla’s humanoid robot, Optimus, could be a long-term growth driver alongside new vehicle programs and other future initiatives.

“In our view, the company is undergoing an evolution from a trailblazing vehicle OEM to a high-tech automation and robotics company with unmatched domestic manufacturing scale,” he wrote.

Benchmark noted that Tesla stock had rebounded over 50% from its April lows, driven in part by easing tariff concerns and growing momentum around autonomy. With its initial Robotaxi rollout now underway, the firm has returned to its previous $475 per share target and reaffirmed TSLA as a Benchmark Top Pick for 2025.

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Tesla blacklisted by Swedish pension fund AP7 as it sells entire stake

A Swedish pension fund is offloading its Tesla holdings for good.

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tesla
(Credit: Tesla)

Tesla shares have been blacklisted by the Swedish pension fund AP7, who said earlier today that it has “verified violations of labor rights in the United States” by the automaker.

The fund ended up selling its entire stake, which was worth around $1.36 billion when it liquidated its holdings in late May. Reuters first reported on AP7’s move.

Other pension and retirement funds have relinquished some of their Tesla holdings due to CEO Elon Musk’s involvement in politics, among other reasons, and although the company’s stock has been a great contributor to growth for many funds over the past decade, these managers are not willing to see past the CEO’s right to free speech.

However, AP7 says the move is related not to Musk’s involvement in government nor his political stances. Instead, the fund said it verified several labor rights violations in the U.S.:

“AP7 has decided to blacklist Tesla due to verified violations of labor rights in the United States. Despite several years of dialogue with Tesla, including shareholder proposals in collaboration with other investors, the company has not taken sufficient measures to address the issues.”

Tesla made up about 1 percent of the AP7 Equity Fund, according to a spokesperson. This equated to roughly 13 billion crowns, but the fund’s total assets were about 1,181 billion crowns at the end of May when the Tesla stake was sold off.

Tesla has had its share of labor lawsuits over the past few years, just as any large company deals with at some point or another. There have been claims of restrictions against labor union supporters, including one that Tesla was favored by judges, as they did not want pro-union clothing in the factory. Tesla argued that loose-fitting clothing presented a safety hazard, and the courts agreed.

tesla employee

(Photo: Tesla)

There have also been claims of racism at the Fremont Factory by a former elevator contractor named Owen Diaz. He was awarded a substantial sum of $137m. However, U.S. District Judge William Orrick ruled the $137 million award was excessive, reducing it to $15 million. Diaz rejected this sum.

Another jury awarded Diaz $3.2 million. Diaz’s legal team said this payout was inadequate. He and Tesla ultimately settled for an undisclosed amount.

AP7 did not list any of the current labor violations that it cited as its reason for

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